All Related Questions of Cost Accounting

Q: Study the performance report for Leonardo’s Italian Cafe´ in Figure and

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 operation...

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Q: The payroll records of Torero Machining Company show the following information for

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...

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Q: A rush order was accepted by San Diego Machine Conversions for five

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, e...

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Q: What factors should management consider when determining the amount of investment in

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

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Q: What kind of information and data are needed to calculate an order

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

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Q: Albert Machine Tool Company produces tools on a job order basis.

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...

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Q: A partial summary of the payroll data for Burrington Manufacturing Company for

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...

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Q: Fontana Fabricating Company paid wages to its employees during the year as

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

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Q: Using the earnings data developed in E3-1, /

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 follow...

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Q: Using the earnings data developed in E3-1, and assuming

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 followi...

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Q: The total wages and salaries earned by all employees of Cutler Manufacturing

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 sa...

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Q: A weekly payroll summary made from labor time records shows the following

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...

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Q: Go to the companion Website at www.cengage.com/

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...

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Q: The following form is used by MoJo Manufacturing Company to compute payroll

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...

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Q: Marta Johns is the Division Controller and Kevin Deere is the Division

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 re...

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Q: O’Reilly Manufacturing, Inc.’s cost of goods sold for the

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 wa...

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Q: Fayetteville Manufacturing Co. produces only one product. You have obtained

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 manufactur...

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Q: Hidalgo Company manufactures goods to special order and uses a job order

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 a...

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Q: Spokane Manufacturing Co. obtained the following information from its 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 mon...

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Q: St. Lawrence Manufacturing Co. manufactures engines that are made only

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...

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Q: Prepare a performance report for the dining room of Leonardo’s Italian Cafe

Prepare a performance report for the dining room of Leonardo’s Italian Cafe´ for the month of February 2011, using the following data:

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Q: Beth Elkins, a factory worker, earns $1,000

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 co...

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Q: The following data were taken from the general ledgers and other data

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 . . . ....

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Q: The following data were taken from the general ledger of Thornton Merchandisers

The following data were taken from the general ledger of Thornton Merchandisers on January 31, the end of the first month of operations in the current fiscal year: Merchandise inventory, January 1 ....

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Q: The adjusted trial balance for Indy Furniture Company on November 30,

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...

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Q: The post-closing trial balance of Beamer Manufacturing Co. on

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 o...

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Q: Selected account balances and transactions of Alpine Manufacturing Co. follow:

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, respectiv...

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Q: How would you define the following costs: direct materials, indirect

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

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Q: Distinguish prime cost from conversion cost. Does prime cost plus conversion

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

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Q: For a manufacturer, what does the planning process involve, and

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

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Q: How is effective control achieved in a manufacturing concern?

How is effective control achieved in a manufacturing concern?

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Q: What actions should a CMA take when the established policies of the

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

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Q: Clark Kent earns $800 per week for a five-day

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?...

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Q: What circumstances created the need for the Sarbanes-Oxley Act,

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

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Q: When is job order costing appropriate, and what types of businesses

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

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Q: The following data were taken from the general ledger and other data

The following data were taken from the general ledger and other data of Thomas Manufacturing on July 31: Finished goods, July 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....

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Q: When is process costing appropriate, and what types of businesses use

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

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Q: What are the advantages of accumulating costs by departments or jobs rather

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

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Q: Name five key elements of the Sarbanes-Oxley Act.

Name five key elements of the Sarbanes-Oxley Act.

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Q: What are standard costs, and what is the purpose of a

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

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Q: If the factory operations and selling and administrative offices are housed in

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...

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

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

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Q: How does the computation of cost of goods sold for a manufacturer

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

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Q: A. Jolly of Pittsburgh Manufacturing Company is paid at the rate

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...

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Q: How would you describe the following accounts—Finished Goods, Work

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

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Q: Compare the manufacturing, merchandising, and service sectors. How do

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?

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Q: What is the difference between a perpetual inventory system and a periodic

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

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Q: Classify the following as direct materials, direct labor, factory overhead

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. Fiberg...

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Q: How does the cost accounting function assist in the management of

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

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Q: In what ways does a typical manufacturing business differ from a merchandising

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

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Q: How is cost accounting information used by management?

How is cost accounting information used by management?

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Q: Why is unit cost information important to management?

Why is unit cost information important to management?

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Q: Catskill Manufacturing, Inc., records the following use of materials during

Catskill Manufacturing, Inc., records the following use of materials during the month of June: Prepare a summary journal entry for the materials requisitions.

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Q: Prepare a journal entry to record each of the following materials transactions

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...

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Q: Using the earnings data developed in E3-1 and assuming that

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....

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Q: Using first-in, first-out; perpetual inventory costing

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 l...

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Q: Using last-in, first-out; perpetual inventory costing

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 y...

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Q: Using the moving average method of perpetual inventory costing and the information

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...

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Q: In tabular form, compare the total materials cost transferred to Work

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...

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Q: Explain in narrative form the flow of direct materials, direct labor

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

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Q: Benson Company was franchised on January 1, 2011. At the

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 cos...

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Q: Mystic Manufacturing Company maintains the following accounts in the general ledger:

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 ba...

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Q: RDI Company uses backflush costing to account for its manufacturing costs.

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...

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Q: A machine shop manufactures a stainless steel part that is used in

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 tha...

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Q: Venus, Inc., manufactures tennis clothing. During the month,

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...

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Q: Marcia Young earns $25 per hour for up to 400 units

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 hou...

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Q: David Mfg. Company manufactures an integrated transistor circuit board for repeat

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 1,00...

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Q: Aztec Company expects daily usage of 500 pounds of material Inca,

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 num...

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Q: Patriot Company predicts that it will use 360,000 gallons of

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. Th...

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Q: Match the materials control form in the left column with the person

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. Product...

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Q: Go to the text Website at http://www.cengage.

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, En...

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Q: The following data are taken from the general ledger and other records

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 . . ....

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Q: Katy, Inc., manufactures ‘‘smart phones.’’ It is

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...

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Q: In the scenario on page 91, Boston Company was trying to

In the scenario on page 91, Boston Company was trying to decide whether or not to change from a traditional inventory system to a just-in-time (JIT) system. The president, Teresa Francona, wanted to k...

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Q: Milano’s Specialty Clothing, Inc., uses a job order cost system

Milano’s Specialty Clothing, Inc., uses a job order cost system. A partial list of the accounts being maintained by the company, with their balances as of November 1, follows: Cash . . . . . . . . ....

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Q: Scarlatta’s Manufacturing Company uses a job order cost system. The following

Scarlatta’s Manufacturing Company uses a job order cost system. The following accounts have been taken from the books of the company: Required: 1. Analyze the accounts and describe i...

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Q: Go to the Vanguard Investments’ Web site https://retirementplans.

Go to the Vanguard Investments’ Web site https://retirementplans.vanguard.com/VGApp/pe/PubHome for retirement information that is linked to the text Web site at www.cengage.com/accounting/vanderbeck....

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Q: The following actions occurred at Sanibel Sheet Metal Company relative to accounting

The following actions occurred at Sanibel Sheet Metal Company relative to accounting for materials costs for April. Mar. 31 The factory manager informs the storeroom keeper that for the month of April...

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Q: Yusane Bolts, Inc., produces 50,000 units each day

Yusane Bolts, Inc., produces 50,000 units each day, and the average number of units in work in process is 200,000. The average annual inventory carrying cost percentage is 25%, and the average work in...

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Q: T. Hilliary, Inc., uses backflush costing to account for

T. Hilliary, Inc., uses backflush costing to account for its manufacturing costs. The trigger points for recording inventory transactions are the purchase of materials, the completion of products, and...

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Q: An examination of Frosty Corporation’s records reveals the following transactions:

An examination of Frosty Corporation’s records reveals the following transactions: a. On December 31, the physical inventory of raw material was 9,950 gallons. The book quantity, using the moving aver...

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Q: One of the tennis racquets that Set Point manufactures is a titanium

One of the tennis racquets that Set Point manufactures is a titanium model (Ace) that sells for $149. The cost of each Ace consists of: Materials . . . . . . . . . . . . . . . . . . . . . . . . . . ....

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Q: Torre, Inc., manufactures electrical equipment from specifications received from customers

Torre, Inc., manufactures electrical equipment from specifications received from customers. Job X10 was for 1,000 motors to be used in a specially designed electrical complex. The following costs were...

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Q: The following inventory data relate to Niagara Corp.: /

The following inventory data relate to Niagara Corp.: Calculate the following for the year: a. Direct materials purchased. b. Direct labor costs incurred. c. Cost of goods sold. d. Gross profit.

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Q: Marino Company predicts that it will use 25,000 units of

Marino Company predicts that it will use 25,000 units of material during the year. The expected daily usage is 200 units, and there is an expected lead-time of five days and a desired safety stock of...

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Q: Cortez Chemical, Inc., requires 20,000 gallons of material

Cortez Chemical, Inc., requires 20,000 gallons of material annually; the cost of placing an order is $20, and the annual carrying cost per gallon is $5. Determine the EOQ from potential order sizes of...

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Q: Cortez Chemical, Inc., requires 500 gallons of material annually;

Cortez Chemical, Inc., requires 500 gallons of material annually; the cost of placing an order is $20, and the annual carrying cost per gallon is $5. Required: 1. Compute the average number of gallon...

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Q: Stacey Womack is considering the implementation of an incentive wage plan to

Stacey Womack is considering the implementation of an incentive wage plan to increase productivity in her small manufacturing plant. The plant is nonunion, and employees have been compensated with onl...

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Q: The purchases and issues of rubber gaskets (Materials Ledger #11216

The purchases and issues of rubber gaskets (Materials Ledger #11216) as shown in the records of HD Corporation for the month of November follow: Required: 1. Complete a materials ledger account simil...

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Q: The following transactions affecting materials occurred in February: Feb.

The following transactions affecting materials occurred in February: Feb. 1 Balance on hand, 1,200 ft @ $2.76, $3,312.00 (plastic tubing, materials ledger account #906). 5 Issued 60 ft to production o...

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Q: How would you define the term economic order quantity?

How would you define the term economic order quantity?

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Q: What are the costs associated with carrying materials in stock?

What are the costs associated with carrying materials in stock?

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Q: Briefly, what are the duties of the following employees?

Briefly, what are the duties of the following employees? a. Purchasing agent b. Receiving clerk c. Storeroom keeper d. Production supervisor

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Q: Purchasing agents are responsible for contacting vendors from which to purchase materials

Purchasing agents are responsible for contacting vendors from which to purchase materials required by production. Why is the purchasing agent also responsible for reviewing and approving incoming vend...

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Q: Illustrations of forms for requisitioning, ordering, and accounting for materials

Illustrations of forms for requisitioning, ordering, and accounting for materials are presented in the chapter. Would you expect these forms, as shown, to be used by all manufacturers? Discuss.

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Q: The following is a list of manufacturing costs incurred by Orleans Products

The following is a list of manufacturing costs incurred by Orleans Products Co. during the month of July: Direct materials used . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....

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Q: What internal control procedures should be established for incoming shipments of materials

What internal control procedures should be established for incoming shipments of materials purchased?

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Q: Who originates each of the following forms? a. Purchase

Who originates each of the following forms? a. Purchase requisition b. Purchase order c. Receiving report d. Materials requisition e. Debit-credit memorandum

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Q: Elite Manufacturing Company uses a job order cost system to cost its

Elite Manufacturing Company uses a job order cost system to cost its products. It recently signed a new contract with the union that calls for time-and-a-half for all work over 40 hours a week and dou...

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Q: A company may select an inventory costing method from a number of

A company may select an inventory costing method from a number of commonly used procedures. Briefly, how would you describe each of the following methods? a. First-in, first-out b. Last-in, first-out...

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Q: Why do companies adopt the LIFO method of inventory costing? Your

Why do companies adopt the LIFO method of inventory costing? Your discussion should include the effects on both the income statement and balance sheet.

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Q: WTA Manufacturing Company operates on a modified wage plan. During one

WTA Manufacturing Company operates on a modified wage plan. During one week’s operation, the following direct labor costs were incurred: The employees are machine operators. Piece r...

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Q: Terri Whelan, SS# 036-47-2189, is

Terri Whelan, SS# 036-47-2189, is a Grade 1 Machinist who earns $20 per hour. On Monday June 12 through Wednesday June 14, she worked four hours per day on each of Jobs 007 and 2525. On Thursday and F...

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Q: Which of the forms shown in the chapter is the source for

Which of the forms shown in the chapter is the source for the following entries to subsidiary ledger accounts? a. Debits in materials ledger to record materials purchased b. Credits in materials ledg...

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Q: Although payroll records may vary in design, what types of employee

Although payroll records may vary in design, what types of employee data would be found in the payroll records of most manufacturing companies?

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Q: In accounting for labor costs, what is the distinction between the

In accounting for labor costs, what is the distinction between the accounting treatment for regular pay and overtime premium pay?

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Q: Maintaining internal control over labor cost is necessary for a cost accounting

Maintaining internal control over labor cost is necessary for a cost accounting system to function effectively. What are the internal control procedures regarding the charge to the work in process acc...

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Q: What accounts are used to record employees’ withholding taxes and the employer’s

What accounts are used to record employees’ withholding taxes and the employer’s payroll taxes?

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Q: What are the procedures involved in accounting for labor cost, and

What are the procedures involved in accounting for labor cost, and what supporting forms are used for each procedure?

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Q: What is a shift premium, and how is it usually accounted

What is a shift premium, and how is it usually accounted for?

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Q: a. Distinguish between defined benefit pension plans and defined contribution pension

a. Distinguish between defined benefit pension plans and defined contribution pension plans. b. Distinguish between contributory and noncontributory pension plans.

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Q: What are the two alternatives for accounting for the fringe benefits of

What are the two alternatives for accounting for the fringe benefits of direct laborers?

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Q: The general ledger of Smokey Mountain Mfg., Inc., showed the

The general ledger of Smokey Mountain Mfg., Inc., showed the following credit balances on January 15: FICA Tax Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....

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Q: What is the difference between direct and indirect labor?

What is the difference between direct and indirect labor?

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Q: Briefly stated, what are the advantages and disadvantages of (a

Briefly stated, what are the advantages and disadvantages of (a) the hourly rate wage plan and (b) the piece-rate wage plan?

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Q: How does the just-in-time approach to production differ

How does the just-in-time approach to production differ from the traditional approach?

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Q: What purpose do digital records and remote computer terminals serve in a

What purpose do digital records and remote computer terminals serve in a payroll system?

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Q: What would be the appropriate basis for distributing the costs of each

What would be the appropriate basis for distributing the costs of each of the following service departments to the user departments? a. Building maintenance b. Inspection and packing c. Machine repair...

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Q: A manufacturing company has two service and two production departments. Building

A manufacturing company has two service and two production departments. Building Maintenance and Factory Office are the service departments. The production departments are Assembly and Machining. The...

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Q: a. If the direct labor cost method is used in applying

a. If the direct labor cost method is used in applying factory overhead and the predetermined rate is 100%, what amount should be charged to Job 2010 for factory overhead? Assume that direct materials...

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Q: Job 401k required $5,000 for direct materials, $

Job 401k required $5,000 for direct materials, $2,000 for direct labor, 200 direct labor hours, 100 machine hours, two setups, and three design changes. The cost pools and overhead rates for each pool...

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Q: Match each of the following cost pools with the most appropriate cost

Match each of the following cost pools with the most appropriate cost allocation base and determine the overhead rates: Cost Pool Amount Assembly support . . . . . . . . . . . . . . . . . . . . . . ....

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Q: The books of Prestige Products Company revealed that the following general journal

The books of Prestige Products Company revealed that the following general journal entry had been made at the end of the current accounting period: Factory Overhead . . . . . . . . . . . . . . . . . ....

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Q: The payroll records of XU Corporation for the week ending October 7

The payroll records of XU Corporation for the week ending October 7, the fortieth week in the year, show the following: Required: 1. Complete a work sheet with the following column headings: Employee...

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Q: The general ledger of Stephens Products, Inc. contains the following

The general ledger of Stephens Products, Inc. contains the following control account: If the materials charged to the one uncompleted job still in process amounted to $3,400, what amount of labor and...

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Q: The following form represents an account taken from the general ledger of

The following form represents an account taken from the general ledger of Brodsky Costumes Company: Answer the following questions: a. What is the title of the account? b. Is this a departmentalized f...

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Q: ETA Company had a remaining credit balance of $20,000

ETA Company had a remaining credit balance of $20,000 in its under- and overapplied factory overhead account at year-end. The balance was deemed to be large and, therefore, should be closed to Work in...

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Q: What is the difference between throughput time and velocity?

What is the difference between throughput time and velocity?

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Q: Classify each of the following items of factory overhead as either a

Classify each of the following items of factory overhead as either a fixed or a variable cost. (Include any costs that you consider to be semivariable within the variable category. Remember that varia...

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Q: Copper Mountain Company has accumulated the following data over a six-

Copper Mountain Company has accumulated the following data over a six-month period: Separate the indirect labor into its fixed and variable components, using the high-low method.

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Q: Using the data in E4-2 and a piece of graph

Using the data in E4-2 and a piece of graph paper: 1. Plot the data points on the graph and draw a line by visual inspection, indicating the trend shown by the data points. 2. Determine the variable c...

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Q: Determine: 1. The variable cost per unit, the

Determine: 1. The variable cost per unit, the total fixed cost, and R2. 2. The plotted data points using Chart Wizard. 3. Compare the results to your solutions in E4-2 and E4-3.

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Q: Scentsation, Inc., budgeted for 12,000 bottles of perfume

Scentsation, Inc., budgeted for 12,000 bottles of perfume Oui during the month of May. The unit cost of Oui was $20, consisting of direct materials, $7; direct labor, $8; and factory overhead, $5 (fix...

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Q: Go to the companion Web site at www.cengage.com

Go to the companion Web site at www.cengage.com/accounting/vanderbeck and click on the link to Activity-based costing from Economist.com. Required: Answer the following questions based on the article...

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Q: Pan-Am Manufacturing Company prepares cost estimates for projects on which

Pan-Am Manufacturing Company prepares cost estimates for projects on which it will bid. In order to anticipate the labor cost to be included in a request to bid on a contract for 1,200,000 units that...

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Q: Home Entertainment, Inc., manufactures two types of DVD players:

Home Entertainment, Inc., manufactures two types of DVD players: standard and deluxe. It attempts to set selling prices based on a 50% markup on manufacturing costs to cover selling and administrative...

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Q: Bakery Products, Inc., is divided into five departments, Mixing

Bakery Products, Inc., is divided into five departments, Mixing, Blending, Finishing, Factory Office, and Building Maintenance. The first three departments are engaged in production work. Factory Offi...

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Q: Using the information in P4-6, prepare a schedule showing

Using the information in P4-6, prepare a schedule showing the distribution of the service departments’ expenses using the sequential distribution method in the order of number of other departments ser...

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Q: Barbara-Lee Manufacturing Company uses the job order cost system of

Barbara-Lee Manufacturing Company uses the job order cost system of accounting. The following is a list of the jobs completed during the month of March, showing the charges for materials requisitioned...

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Q: What are the arguments for and against ‘‘backflush’’ costing?

What are the arguments for and against ‘‘backflush’’ costing?

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Q: Lexus Products, Inc., has its factory divided into three departments

Lexus Products, Inc., has its factory divided into three departments, with individual factory overhead rates for each department. In each department, all the operations are sufficiently alike for the...

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Q: Julio Manufacturing Company uses activity-based costing. The factory overhead

Julio Manufacturing Company uses activity-based costing. The factory overhead budget for the coming period is $500,000, consisting of the following: Cost Pool Budgeted Amount Direct labor support . ....

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Q: GGT Products, Inc., uses a job order cost system.

GGT Products, Inc., uses a job order cost system. Selected transactions dealing with factory items for the month follow: a. Requisitioned indirect materials from storeroom, $3,200. b. Purchased, on a...

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Q: Manufacturing Company is studying the results of applying factory overhead to production

Manufacturing Company is studying the results of applying factory overhead to production. The following data have been used: estimated factory overhead, $60,000; estimated materials costs, $50,000; es...

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Q: The following information, taken from the books of Nicholas Company,

The following information, taken from the books of Nicholas Company, represents the operations for the month of January: The job cost system is used, and the February cost sheet for Job M45 shows the...

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Q: An analysis of the payroll for the month of November for Hollywood

An analysis of the payroll for the month of November for Hollywood, Inc., reveals the information shown: Crowe, Eastwood, and Carey are production workers, and Penn is the plant manager. Giamatti is...

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Q: Ko-Be Corporation has four departmental accounts: Building Maintenance,

Ko-Be Corporation has four departmental accounts: Building Maintenance, General Factory Overhead, Machining, and Assembly. The direct labor hour method is used to apply factory overhead to the jobs be...

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Q: Planet Products, Inc., completed Job 2525 on May 31,

Planet Products, Inc., completed Job 2525 on May 31, and there were no jobs in process in the plant. Prior to June 1, the predetermined overhead application rate for June was computed from the followi...

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Q: Plano Products, Inc., had a remaining credit balance of $

Plano Products, Inc., had a remaining credit balance of $10,000 in its under- and overapplied factory overhead account at yearend. It also had year-end balances in the following accounts: Work in Pro...

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Q: The cost behavior patterns on page 222 are lettered A through H

The cost behavior patterns on page 222 are lettered A through H. The vertical axes of the graphs represent total dollars of expense, and the horizontal axes represent production in units, machine hour...

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Q: Fahrenheit Company manufactures a product that requires the use of a considerable

Fahrenheit Company manufactures a product that requires the use of a considerable amount of natural gas to heat it to a desired temperature. The process requires a constant level of heat, so the furna...

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Q: A manufacturing process may produce a considerable quantity of scrap material because

A manufacturing process may produce a considerable quantity of scrap material because of the nature of the product. What methods can be used to account for the sales value of scrap material?

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Q: Listed below are the budgeted factory overhead costs for 2011 for Muncie

Listed below are the budgeted factory overhead costs for 2011 for Muncie Manufacturing, Inc., at a projected level of 2,000 units: Expenses: Indirect materials . . . . . . . . . . . . . . . . . . . ....

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Q: How does accounting for factory overhead differ in small enterprises versus large

How does accounting for factory overhead differ in small enterprises versus large enterprises?

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Q: What is the function and use of each of the two types

What is the function and use of each of the two types of factory overhead analysis spreadsheets?

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Q: What are two types of departments found in a factory? What

What are two types of departments found in a factory? What is the function or purpose of each?

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Q: Giovanni Construction Company uses the job order cost system. In recording

Giovanni Construction Company uses the job order cost system. In recording payroll transactions, the following accounts are used: Cash Administrative Salaries Wages Payable Miscellaneous Administrati...

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Q: What are the two most frequently used methods of distributing service department

What are the two most frequently used methods of distributing service department costs to production departments?

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Q: When using the step-down method of distributing service department costs

When using the step-down method of distributing service department costs, if a service department receives services from other service departments, will those costs be allocated back to it even though...

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Q: What are the shortcomings of waiting until the actual factory overhead expenses

What are the shortcomings of waiting until the actual factory overhead expenses are known before recording such costs on the job cost sheets?

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Q: What are the two types of budget data needed to compute predetermined

What are the two types of budget data needed to compute predetermined overhead rates?

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Q: What are three methods traditionally used for applying factory overhead to jobs

What are three methods traditionally used for applying factory overhead to jobs? Discuss the allocation base used in each method.

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Q: What factory operating conditions and data are required for each of the

What factory operating conditions and data are required for each of the traditionally used methods for applying factory overhead to products? Discuss the strengths and weaknesses of each method.

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Q: After a product is inspected, some units may be classified as

After a product is inspected, some units may be classified as spoiled and others as defective. What distinguishes a product as being spoiled or defective?

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Q: Under what conditions would it be desirable for a company to use

Under what conditions would it be desirable for a company to use more than one method to apply factory overhead to jobs or products?

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Q: How does activity-based costing differ from traditional methods of applying

How does activity-based costing differ from traditional methods of applying overhead to products?

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Q: What steps must a company take to successfully employ activity-based

What steps must a company take to successfully employ activity-based costing?

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Q: The factory payroll for the week is $200,000,

The factory payroll for the week is $200,000, consisting of $140,000 earned by 100 direct laborers and $60,000 earned by 30 indirect laborers. The total of factory bonuses to be received at year-end i...

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Q: Distinguish between volume-related and non-volume-related overhead

Distinguish between volume-related and non-volume-related overhead costs.

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Q: If the factory overhead control account has a debit balance of $

If the factory overhead control account has a debit balance of $1,000 at the end of the first month of the fiscal year, has the overhead been under- or overapplied for the month? What are some probabl...

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Q: What are two ways that an under- or over applied factory

What are two ways that an under- or over applied factory overhead balance can be disposed of at the end of a fiscal period? How can one decide which method to choose?

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Q: What are factory overhead expenses, and what distinguishes them from other

What are factory overhead expenses, and what distinguishes them from other manufacturing costs? What other terms are used to describe factory overhead expenses?

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Q: What are three categories of factory overhead expenses? Give examples of

What are three categories of factory overhead expenses? Give examples of each.

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Q: What are the distinguishing characteristics of variable, fixed, and semi

What are the distinguishing characteristics of variable, fixed, and semi variable factory overhead costs?

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Q: When a product’s cost is composed of both fixed and variable costs

When a product’s cost is composed of both fixed and variable costs, what effect does the increase or decrease in production has on per unit cost?

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Q: Bristol Manufacturing, Inc., uses the job order cost system of

Bristol Manufacturing, Inc., uses the job order cost system of accounting. The following information was taken from the company’s books after all posting had been completed at the en...

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Q: What effect does a change in volume have on total variable,

What effect does a change in volume have on total variable, fixed, and semi variable costs?

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Q: What are the advantages and disadvantages of the scattergraph method as compared

What are the advantages and disadvantages of the scattergraph method as compared to the high-low method?

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Q: In P3-11, prepare the entries to distribute the weekly

In P3-11, prepare the entries to distribute the weekly payroll and the costs and liabilities related to the bonus, vacation, and holiday pay, assuming that the fringe benefits of the direct laborers a...

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Q: Clark Kent, Inc., buys crypton for $0.80

Clark Kent, Inc., buys crypton for $0.80 a gallon. At the end of processing in Dept. 1, crypton splits off into products A, B, and C. Product A is sold at the split-off point with no further processin...

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Q: Materials often represent a substantial portion of a company’s assets; therefore

Materials often represent a substantial portion of a company’s assets; therefore, they should be controlled from the time orders are placed to the time finished goods are shipped to the customer. What...

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Q: Seymour Brothers Products, Inc., manufactures a liquid product in one

Seymour Brothers Products, Inc., manufactures a liquid product in one department. Due to the nature of the product and the process, units are regularly lost at the beginning of production. Materials a...

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Q: Orlando Metals manufactures tin. During the process, a byproduct—

Orlando Metals manufactures tin. During the process, a byproduct— scrap metal—is obtained and placed in stock. The estimated sales value of the scrap metal produced during the month of April is $2,000...

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Q: Janitorial Products, Inc., manufactures two products, brooms and mops

Janitorial Products, Inc., manufactures two products, brooms and mops, which are sold in two territories designated by the company as East Territory and West Territory. The following income statement...

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Q: The normal capacity of Austin Adhesives, Inc., is 40,

The normal capacity of Austin Adhesives, Inc., is 40,000 direct labor hours and 20,000 units per month. A finished unit requires 6 pounds of materials at an estimated cost of $2 per pound. The estimat...

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Q: Handyman Helper, Inc., manufactures household products such as windows,

Handyman Helper, Inc., manufactures household products such as windows, light fixtures, ladders, and work tables. During the year it produced 10,000 Model 10X windows but only sold 5,000 units at $40...

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Q: Assume that during the month of April the production report of Austin

Assume that during the month of April the production report of Austin Adhesives, Inc., in E8-10 revealed the following information: Units produced during the month . . . . . . . . . . . . . . . . . ....

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Q: Last year, Tri-Rivers Corporation adopted a standard cost system

Last year, Tri-Rivers Corporation adopted a standard cost system. Labor standards were set on the basis of time studies and prevailing wage rates. Materials standards were determined from materials sp...

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Q: Marblehead Manufacturing, Inc., has two departments, Mixing and Blending

Marblehead Manufacturing, Inc., has two departments, Mixing and Blending. When goods are completed in Mixing, they are transferred to Blending and then to the finished goods storeroom. There was no be...

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Q: The standard capacity of a factory is 8,000 units per

The standard capacity of a factory is 8,000 units per month. Cost and production data follow: Standard application rate for fixed overhead . . . . . . $0.50 per unit Standard application rate for v...

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Q: The normal capacity of a manufacturing plant is 30,000 direct

The normal capacity of a manufacturing plant is 30,000 direct labor hours or 20,000 units per month. Standard fixed costs are $6,000, and variable costs are $12,000. Data for two months follow: For e...

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Q: The overhead application rate for a company is $2.50

The overhead application rate for a company is $2.50 per unit, made up of $1.00 for fixed overhead and $1.50 for variable overhead. Normal capacity is 10,000 units. In one month, there was an unfavora...

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Q: Georgia Gasket Company budgets 8,000 direct labor hours for the

Georgia Gasket Company budgets 8,000 direct labor hours for the year. The total overhead budget is expected to amount to $20,000. The standard cost for a unit of the company’s product estimates the va...

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Q: Using the data shown, calculate the following overhead variances:

Using the data shown, calculate the following overhead variances: Production for the month . . . . . . . . . . . . . . . . . . . . . . . . 9,000 units Direct labor hours used . . . . . . . . . . . ....

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Q: 1,000 units were started and finished. Case 1

1,000 units were started and finished. Case 1: All prices and quantities for the cost elements are standard, except for materials cost, which is $8.50 per pound. Case 2: All prices and quantities for...

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Q: Akron Manufacturing Company manufactures a cement sealing compound called Ultra-Seal

Akron Manufacturing Company manufactures a cement sealing compound called Ultra-Seal. The process requires that the product pass through three departments. In Dept. 1, all materials are put into produ...

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Q: D-List Calendar Company specializes in manufacturing calendars that depict obscure

D-List Calendar Company specializes in manufacturing calendars that depict obscure comedians. The company uses a standard cost system to control its costs. During one month of operations, the direct m...

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Q: Overhead Doors, Inc., manufactures garage doors for homes. The

Overhead Doors, Inc., manufactures garage doors for homes. The standard quantity of direct labor to manufacture a door is 4.5 hours. The standard hourly wage in this department is $12.50 per hour. Dur...

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Q: AACSB Processors, Inc., produces an average of 10,000

AACSB Processors, Inc., produces an average of 10,000 units each month. The factory standards are 20,000 hours of direct labor and 10,000 pounds of materials for this volume. The standard cost of dire...

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Q: This includes standards for such items as food, labor, and

This includes standards for such items as food, labor, and paper products. Given the level of sales volume achieved, the actual costs incurred are compared to the standard costs that should have been...

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Q: Cost and production data for Biloxi Beverages, Inc., are presented

Cost and production data for Biloxi Beverages, Inc., are presented as follows. Required: 1. Calculate net variances for materials, labor, and factory overhead. 2. a. Calculate specific materials and...

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Q: The standard cost summary for the most popular product of Phase-

The standard cost summary for the most popular product of Phase-Five Products Company is shown as follows, together with production and cost data for the period. Standard Cost Summary Materials: 2 gal...

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Q: Suzy-Q Corporation has established the following standard cost per unit

Suzy-Q Corporation has established the following standard cost per unit: Materials—5.5 lb@$2.20 per lb . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $12.10 Labor—1.8 hr@$6.25 per...

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Q: On May 1, Maximus Company began the manufacture of a new

On May 1, Maximus Company began the manufacture of a new mechanical device known as Caesar. The company installed a standard cost system in accounting for manufacturing costs. The standard costs for a...

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Q: The standard specifications for an electric motor manufactured by B&B

The standard specifications for an electric motor manufactured by B&B Electric Corporation follow: Standard cost per unit: Materials (2 lb $5 per lb) . . . . . . . . . . . . . . . . . . . . . . ....

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Q: Poway Shirts, Inc., manufactures men’s sport shirts for large stores

Poway Shirts, Inc., manufactures men’s sport shirts for large stores. Folsom produces a single quality shirt in lots of a dozen according to each customer’s order a...

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Q: Gold Giant Products, Inc., cans peas and uses an average

Gold Giant Products, Inc., cans peas and uses an average cost system. For the month of November, the company showed the following: Each can contain 16 oz, or 1 lb, of peas. Required: 1. Calculate the...

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Q: Fargo Company manufactures products in batches of 100 units per batch.

Fargo Company manufactures products in batches of 100 units per batch. The company uses a standard cost system and prepares budgets that call for 500 of these batches per period. Fixed overhead is $60...

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Q: Metropolis Manufacturing Company manufactures a small electric motor that is a replacement

Metropolis Manufacturing Company manufactures a small electric motor that is a replacement part for the more popular gas furnaces. The standard cost card shows the product requirements as follows: Dir...

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Q: K-Rod Corporation uses a standard cost system and manufactures one

K-Rod Corporation uses a standard cost system and manufactures one product. The variable costs per product follow: Materials (4 parts) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....

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Q: Tech-Elec Manufacturing Company estimates the following labor and overhead costs

Tech-Elec Manufacturing Company estimates the following labor and overhead costs for the period: Variable overhead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $4...

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Q: Using the data provided, / /

Using the data provided, Calculate the overhead cost variances under the three-variance method.

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Q: Wausau Furniture Company uses a standard cost system in accounting for its

Wausau Furniture Company uses a standard cost system in accounting for its production costs. The standard cost of a unit of furniture follows: The following flexible monthly overhead budget applies:...

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Q: Ichiro Inspections, Inc., specializes in determining whether a building or

Ichiro Inspections, Inc., specializes in determining whether a building or house’s drain pipes are properly tied into the city’s sewer system. The company pours colored chemical through the pipes and...

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Q: Folsom Fabricators, Inc., uses a standard cost system to account

Folsom Fabricators, Inc., uses a standard cost system to account for its single product. The standards established for the product include the following: Materials . . . . . . . . . . . . . . . . . ....

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Q: Accelerator, Inc., manufactures a fuel additive, Surge, that

Accelerator, Inc., manufactures a fuel additive, Surge, that has a stable selling price of $44 per drum. The company has been producing and selling 80,000 drums per month. In connection with your exam...

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Q: Prado Corporation manufactures and sells a single product. The company uses

Prado Corporation manufactures and sells a single product. The company uses a standard cost system. The standard cost per unit of product follows: Materials—1 lb plastic@$3.00 . . . . . . . . . . . ....

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Q: Sinaloa Products Co. uses the process cost system. A record

Sinaloa Products Co. uses the process cost system. A record of the factory operations for the month of October follows: Production Summary Units Started in process . . . . . . . . . . . . . . . . . ....

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Q: Stylized Products, Inc., uses a standard cost system in accounting

Stylized Products, Inc., uses a standard cost system in accounting for the cost of production of its only product, Suave. The standards for the production of one unit of Suave follow: Direct materials...

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Q: TBA Products Company manufactures a variety of products made of plastic and

TBA Products Company manufactures a variety of products made of plastic and aluminum components. During the winter months, substantially all of the production capacity is devoted to the production of...

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Q: When a company uses a standard cost system, are the inventory

When a company uses a standard cost system, are the inventory accounts—Finished Goods, Work in Process, and Materials—valued at actual cost or standard cost?

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Q: What might cause the following materials variances? a. An

What might cause the following materials variances? a. An unfavorable materials price variance. b. A favorable materials price variance. c. An unfavorable materials quantity variance. d. A favorable...

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Q: What might cause the following labor variances? a. An

What might cause the following labor variances? a. An unfavorable labor rate variance. b. A favorable labor rate variance. c. An unfavorable labor efficiency variance. d. A favorable labor efficiency...

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Q: Is it possible that a variance of one type might be partially

Is it possible that a variance of one type might be partially or fully offset by another variance? Explain.

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Q: Why is it important to determine controllable variances?

Why is it important to determine controllable variances?

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Q: What is a volume variance?

What is a volume variance?

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Q: What is the significance of a volume variance?

What is the significance of a volume variance?

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Q: How does a standard cost accounting system work, and why is

How does a standard cost accounting system work, and why is it valuable to management?

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Q: Chikin, Inc., specializes in chicken farming. Chickens are raised

Chikin, Inc., specializes in chicken farming. Chickens are raised, packaged, and sold mostly to grocery chains. Chickens are accounted for in batches of 50,000. At the end of each growing period, the...

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Q: How are standards for materials and labor costs determined?

How are standards for materials and labor costs determined?

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Q: How do rate and efficiency variances relate to labor costs?

How do rate and efficiency variances relate to labor costs?

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Q: Is a favorable variance ‘‘good’’ and an unfavorable variance ‘‘bad’’

Is a favorable variance ‘‘good’’ and an unfavorable variance ‘‘bad’’? Explain.

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Q: Chiao and Piaker, CPAs, budgeted for the following professional labor

Chiao and Piaker, CPAs, budgeted for the following professional labor hours for the coming year: partners, 1,500; managers, 5,000; and staff, 20,000. Budgeted billing rates are: partners, $250 per hou...

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Q: Jones and Wang, physicians, budgeted for the following revenue and

Jones and Wang, physicians, budgeted for the following revenue and expenses for the month of September: Depreciation—equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....

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Q: The partners of Harris and Whelan, attorneys-at-law

The partners of Harris and Whelan, attorneys-at-law, decide to implement an activity-based costing system for their firm. They identify the following three cost pools and budgeted amounts for each for...

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Q: From the following list of performance measures, label each one as

From the following list of performance measures, label each one as Financial, Customer, Internal Business Processes, or Learning and Growth: Percentage of on-time deliveries Employee turnover ratio...

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Q: Hi-End, Inc., a chain of gasoline service stations

Hi-End, Inc., a chain of gasoline service stations, has a strategy of charging premium prices for its gasoline by providing excellent service such as attendants to pump gas, clean restrooms, and free...

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Q: Hayes and Manolis have a professional service firm that has the following

Hayes and Manolis have a professional service firm that has the following budgeted costs for the current year: Associates’ salaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....

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Q: Brown and Stetham, plumbers, successfully bid $30,000

Brown and Stetham, plumbers, successfully bid $30,000 for the plumbing work on a new luxury home. Total direct labor cost on the job was $9,500, other direct costs were $2,500, and overhead is charged...

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Q: Boone Oil Company transports crude oil to its refinery where it is

Boone Oil Company transports crude oil to its refinery where it is processed into main products gasoline, kerosene, and diesel fuel, and by-product base oil. The base oil is sold at the split-off poin...

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Q: One of the service businesses referred to in the chapter was the

One of the service businesses referred to in the chapter was the international accounting firm of PricewaterhouseCoopers (PwC). Go to the text Web site at www.cengage.com/accounting/vanderbeck and cl...

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Q: Ed Hickey, the consultant introduced at the beginning of section two

Ed Hickey, the consultant introduced at the beginning of section two of the chapter has obtained the following data relative to the Kaufman and D’Esti consulting job: Assume that th...

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Q: Matthews and Thomas, partners in a systems consulting firm, budgeted

Matthews and Thomas, partners in a systems consulting firm, budgeted the following professional labor hours for the year ended December 31, 2011: Partners . . . . . . . . . . . . . . . . . . . . . . ....

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Q: Matthews and Thomas, the systems consultants, budgeted overhead and other

Matthews and Thomas, the systems consultants, budgeted overhead and other expenses as follows for the year ended December 31, 2011: Overhead: Depreciation—equipment . . . . . . . . . . . . . . . $ 6...

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Q: The partners of Mayweather and Pacquiao, a security services firm,

The partners of Mayweather and Pacquiao, a security services firm, decide to implement an activity-based costing system. They identify the following three cost pools and budgeted amounts for each for...

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Q: Boyer and Kubek, architects, have been using a simplified costing

Boyer and Kubek, architects, have been using a simplified costing system in which all professional labor costs are included in a single direct cost category, professional labor; and all overhead costs...

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Q: Referring to P9-6, compare the results of the cost

Referring to P9-6, compare the results of the cost allocations to the Young Products and Doug’s Markets jobs under the simplified costing system and the activity-based costing system. Label each diffe...

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Q: Mercury Athletics manufactures sporting goods that are then sold to retailers.

Mercury Athletics manufactures sporting goods that are then sold to retailers. It is a very competitive industry where quality and price are important to gain space on retailers’ shelves. Mercury’s st...

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Q: Dayton Dairies is a vertically integrated company that has dairy farms,

Dayton Dairies is a vertically integrated company that has dairy farms, processing plants, and retail ice cream stores. Dayton’s strategy is to maximize shareholder value by providing top-of the- line...

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Q: Shank and Verst, attorneys-at-law, provided legal

Shank and Verst, attorneys-at-law, provided legal representation to Baldwin Equipment, Inc., in a product liability suit. Twenty partner hours and 65 associate hours were worked in defending the compa...

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Q: Manufacturing data for the months of January and February in the Mixing

Manufacturing data for the months of January and February in the Mixing Department of Cappy Cleaning Products follow: All materials are added at the start of the process. Labor and factory overhead a...

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Q: The budget for the Baldwin Equipment, Inc. job in P9

The budget for the Baldwin Equipment, Inc. job in P9-1 consisted of the following amounts: Partners’ salary and overhead . . . . . . . . . . . . . $6,300 Associates’ salary and overhead . . . . . . ....

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Q: Why is it important for professional labor hours to be budgeted with

Why is it important for professional labor hours to be budgeted with extreme care?

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Q: What is the difference between the accounting treatment of overhead for a

What is the difference between the accounting treatment of overhead for a service business and for a manufacturer?

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Q: Explain how a budgeted income statement for a service business may be

Explain how a budgeted income statement for a service business may be used for both planning and control purposes.

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Q: What are the two main things that an activity-based costing

What are the two main things that an activity-based costing system attempts to accomplish relative to direct and indirect costs?

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Q: Explain the concept of a cost/benefit decision and how it

Explain the concept of a cost/benefit decision and how it relates to job costing systems.

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Q: Give five examples of nonfinancial performance measures.

Give five examples of nonfinancial performance measures.

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Q: Name the four categories that performance measures are typically divided into,

Name the four categories that performance measures are typically divided into, and give an example of a performance measure for each category.

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Q: What factors help to explain the growth of service businesses relative to

What factors help to explain the growth of service businesses relative to manufacturing businesses in the United States in recent years?

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Q: What factors would you consider in deciding whether to use direct labor

What factors would you consider in deciding whether to use direct labor dollars or direct labor hours in charging overhead to jobs in a service firm?

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Q: On December 1, Lake George Production Company had a work in

On December 1, Lake George Production Company had a work in process inventory of 1,200 units that were complete as to materials and 50% complete as to labor and overhead. December 1 costs follow: Mate...

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Q: Distinguish between a direct cost and an indirect cost when the cost

Distinguish between a direct cost and an indirect cost when the cost object is the job.

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Q: The fixed overhead budgeted for Hamlet Company at an expected capacity of

The fixed overhead budgeted for Hamlet Company at an expected capacity of 500,000 units is $1,500,000. Variable costing is used internally, and the net income is adjusted to an absorption costing net...

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Q: Grecian Products, Inc., has two divisions, Athens and Sparta

Grecian Products, Inc., has two divisions, Athens and Sparta. For the month ended March 31, Athens had sales and variable costs of $500,000 and $225,000, respectively, and Sparta had sales and variabl...

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Q: The sales price per unit is $13 for the Dakota Company’s

The sales price per unit is $13 for the Dakota Company’s only product. The variable cost per unit is $5. In year 2011, the company sold 80,000 units, which was 10,000 units above the break-even point....

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Q: Jackson Company sells its only product for $50 per unit.

Jackson Company sells its only product for $50 per unit. Fixed expenses total $800,000 per year. Variable expenses are $1,000,000 when 40,000 units are sold. How many units must be sold to earn a net...

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Q: A new product is expected to have sales of $100,

A new product is expected to have sales of $100,000, variable costs of 60% of sales, and fixed costs of $20,000. 1. Using graph paper, construct a break-even chart and label the sales line, total cost...

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Q: Leisure Products, Inc., manufactures and sells two products, golf

Leisure Products, Inc., manufactures and sells two products, golf balls and tennis balls. Fixed costs are $100,000, and unit sales are 60,000 sheaths of golf balls and 40,000 cans of tennis balls. The...

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Q: A company has sales of $1,000,000,

A company has sales of $1,000,000, variable costs of $250,000, and fixed costs of $600,000. Compute the following: 1. Contribution margin ratio. 2. Break-even sales volume. 3. Margin of safety ratio....

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Q: A company has prepared the following statistics regarding its production and sales

A company has prepared the following statistics regarding its production and sales at different capacity levels. 1. At what point is break-even reached in sales dollars? In units? 2. If the company i...

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Q: Lewis Products, Inc., desires to earn an after-tax

Lewis Products, Inc., desires to earn an after-tax income of $150,000. It has fixed costs of $1,000,000, a unit sales price of $500, and unit variable costs of $200. The company is in the 30% tax brac...

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Q: Fill in the missing figures for each of the following independent cases

Fill in the missing figures for each of the following independent cases:

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Q: Dribble, Inc., manufactures basketballs. The company’s forecasted income statement

Dribble, Inc., manufactures basketballs. The company’s forecasted income statement for the year, before any special orders, is as follows: Fixed costs included in the forecasted inc...

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Q: Alpha Company needs 20,000 units of a certain part to

Alpha Company needs 20,000 units of a certain part to use in its production cycle. The following information is available: Cost to Alpha to make the part: Direct materials . . . . . . . . . . . . . ....

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Q: Julian Manufacturing, Inc., wishes to determine the profitability of its

Julian Manufacturing, Inc., wishes to determine the profitability of its products and asks the cost accountant to make a comparative analysis of sales, cost of sales, and distribution costs of each pr...

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Q: Lynne Products Company uses a process cost system and applies actual factory

Lynne Products Company uses a process cost system and applies actual factory overhead to work in process at the end of the month. The following data came from the records for the month of March: Direc...

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Q: Using the information presented in E10-1 Prepare comparative income statements

Using the information presented in E10-1 Prepare comparative income statements for March (a) under absorption costing and (b) Under variable costing. Information presented in E10-1 Lynne Products Comp...

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Q: The chief executive officer (CEO) of Button Corporation attended a

The chief executive officer (CEO) of Button Corporation attended a conference in which one of the sessions was devoted to variable costing. The CEO was impressed by the presentation and has asked that...

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Q: The following production data came from the records of LeShaq Athletic Enterprises

The following production data came from the records of LeShaq Athletic Enterprises for the year ended December 31, 2011: Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....

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Q: A company had income of $50,000, using variable

A company had income of $50,000, using variable costing for a given period. Beginning and ending inventories for the period were 18,000 units and 13,000 units, respectively. If the fixed overhead appl...

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Q: Go to the Web site for Delta Air Lines, which is

Go to the Web site for Delta Air Lines, which is linked to the text Web site at www.cengage.com/accounting/vanderbeck. Click on ‘‘Specials,’’ then ‘‘Web Fares’’ and do the following: 1. Find a fare de...

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Q: The board of directors of Garden City Gaskets, Inc., set

The board of directors of Garden City Gaskets, Inc., set the profit goal for the calendar year 2011 at $2,200,000. It also established a bonus plan in which the top five officers of the company will s...

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Q: Mallory Manufacturing Company has a maximum productive capacity of 210,000

Mallory Manufacturing Company has a maximum productive capacity of 210,000 units per year. Normal capacity is 180,000 units per year. Standard variable manufacturing costs are $10 per unit. Fixed fact...

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Q: What is the difference between absorption costing and variable costing?

What is the difference between absorption costing and variable costing?

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Q: What effect will applying variable costing have on the income statement and

What effect will applying variable costing have on the income statement and the balance sheet?

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Q: The sales department of S. Miller Manufacturing Company has forecast sales

The sales department of S. Miller Manufacturing Company has forecast sales for its single product to be 20,000 units for the month of June, with three-quarters of the sales expected in the East region...

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Q: How would you describe the method used to treat the cost of

How would you describe the method used to treat the cost of abnormal processing losses?

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Q: What computations must be made if materials added in a department increase

What computations must be made if materials added in a department increase the number of units being processed in that department?

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Q: The sales department of P. Gillen Manufacturing Company has forecast sales

The sales department of P. Gillen Manufacturing Company has forecast sales in March to be 20,000 units. Additional information follows: Finished goods inventory, March 1 . . . . . . . . . . . . . . ....

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Q: Branson Manufacturing, Inc., produces a single type of small motor

Branson Manufacturing, Inc., produces a single type of small motor. The bookkeeper who does not have an in-depth understanding of accounting principles prepared the following performance report with t...

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Q: Use the information in Figure 7-12 of the chapter.

Use the information in Figure 7-12 of the chapter. Required: Prepare flexible budgets for the production and sale of 29,000 units and 31,000, respectively.

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Q: Presented below are the monthly factory overhead cost budget (at normal

Presented below are the monthly factory overhead cost budget (at normal capacity of 5,000 units or 20,000 direct labor hours) and the production and cost data for a month. The predetermined overhead r...

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Q: Mountaineer Manufacturing Company uses a job order cost system and standard costs

Mountaineer Manufacturing Company uses a job order cost system and standard costs. It manufactures one product, whose standard cost follows: Materials, 20 yards@$0.90 per yard . . . . . . . . . . . ....

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Q: The sales department of Optimo Company has forecast sales for May 2011

The sales department of Optimo Company has forecast sales for May 2011 to be 40,000 units. Additional information follows: Finished goods inventory, May 1 . . . . . . . . . . . . . . . . . . . . . . ....

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Q: Cruise Tire Company’s budgeted unit sales for the year 2011 were:

Cruise Tire Company’s budgeted unit sales for the year 2011 were: Passenger car tires . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....

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Q: Budgeted selling and administrative expenses for Cruise Tire Company in P7-

Budgeted selling and administrative expenses for Cruise Tire Company in P7-2 for the year ended December 31, 2011, were as follows: Advertising expense . . . . . . . . . . . . . . . . . . . . . . . ....

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Q: Which budget must be prepared before the others? Why?

Which budget must be prepared before the others? Why?

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Q: Why is it important to have front-line managers participate in

Why is it important to have front-line managers participate in the budgeting process?

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Q: What is the difference between the average cost method and the first

What is the difference between the average cost method and the first-in, first-out (FIFO) cost method?

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Q: What are the advantages and disadvantages of each of the following for

What are the advantages and disadvantages of each of the following for a company that has greatly fluctuating sales during the year? a. A stable production policy b. A stable inventory policy

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Q: S. Prosser Manufacturing Company forecast October sales to be 45,

S. Prosser Manufacturing Company forecast October sales to be 45,000 units. Additional information follows: Finished goods inventory, October 1 . . . . . . . . . . . . . . . . . . . . . . . . 5,000 u...

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Q: Why is a flexible budget better than a master budget for comparing

Why is a flexible budget better than a master budget for comparing actual results to budgeted expectations?

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Q: In comparing actual sales revenue to flexible budget sales revenue, would

In comparing actual sales revenue to flexible budget sales revenue, would it be possible to have a favorable variance and still not have met revenue expectations?

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Q: How would you define the following? a. Theoretical capacity

How would you define the following? a. Theoretical capacity b. Practical capacity c. Normal capacity

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Q: Is it possible for a factory to operate at more than 100

Is it possible for a factory to operate at more than 100% of normal capacity?

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Q: How is the standard cost per unit for factory overhead determined?

How is the standard cost per unit for factory overhead determined?

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Q: What are six principles of good budgeting?

What are six principles of good budgeting?

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Q: What is a continuous budget, and why is it useful?

What is a continuous budget, and why is it useful?

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Q: Give three examples each of operating budgets and financial budgets.

Give three examples each of operating budgets and financial budgets.

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Q: What advantage does the FIFO cost method have over the average cost

What advantage does the FIFO cost method have over the average cost method relative to providing information for cost control?

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Q: Prepare a cost of goods sold budget for the Summit Manufacturing Company

Prepare a cost of goods sold budget for the Summit Manufacturing Company for the year ended December 31, 2011, from the following estimates. Inventories of production units: Direct materials purchased...

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Q: Gyro Company has the following totals from its operating budgets:

Gyro Company has the following totals from its operating budgets: Selling and administrative expenses budget . . . . . . . . . . . . . . . . . . . $ 244,500 Cost of goods sold budget . . . . . . . . ....

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Q: Why might the total number of units completed during a month plus

Why might the total number of units completed during a month plus the number of units in process at the end of a month be less than the total number of units in process at the beginning of the month p...

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Q: Using the following per-unit and total amounts, prepare a

Using the following per-unit and total amounts, prepare a flexible budget at the 14,000-, 15,000-, and 16,000-unit levels of production and sales for Celestial Products, Inc.: Selling price per unit ....

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Q: Strand Manufacturing, Inc., has the following flexible budget formulas and

Strand Manufacturing, Inc., has the following flexible budget formulas and amounts: Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 25 per...

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Q: How is the cost of units normally lost in manufacturing absorbed by

How is the cost of units normally lost in manufacturing absorbed by the unit cost for the period?

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Q: How would you define each of the following? a.

How would you define each of the following? a. joint products b. by-products c. joint costs d. split-off point

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Q: Solar Panels, Inc., has the following items and amounts as

Solar Panels, Inc., has the following items and amounts as part of its master budget at the 10,000-unit level of sales and production: Sales revenue . . . . . . . . . . . . . . . . . . . . . . . . . ....

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Q: How would you describe accounting for by-products for which no

How would you describe accounting for by-products for which no further processing is required?

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Q: The normal capacity of a manufacturing plant is 5,000 units

The normal capacity of a manufacturing plant is 5,000 units per month. Fixed overhead at this volume is $2,500, and variable overhead is $7,500. Additional data follow: Month 1 Month 2 Actual...

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Q: The normal capacity of a factory is 8,000 units per

The normal capacity of a factory is 8,000 units per month. Cost and production data follow: Standard application rate for fixed overhead . . . . . . . . . . . . . . . . $0.50 per unit Standard applic...

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Q: Go to the text Web site at www.cengage.com

Go to the text Web site at www.cengage.com/accounting/vanderbeck and click on the link to ‘‘kaizen,’’ from Wikipedia, the free encyclopedia. After reading the entry, answer the following questions: 1....

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Q: Does the calculation of unit cost in a department subsequent to the

Does the calculation of unit cost in a department subsequent to the first department take into consideration the costs transferred in from the previous departments?

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Q: What are the two basic systems of costaccounting, and under what

What are the two basic systems of costaccounting, and under what conditions mayeach be used advantageously?

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Q: Cooper Company’s joint cost of producing 1,000 units of Product

Cooper Company’s joint cost of producing 1,000 units of Product A, 500 units of Product B, and 500 units of Product C is $200,000. The unit sales values of the three products at the split-off point ar...

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Q: South-Central Publishing Company prepares income statements segmented by divisions,

South-Central Publishing Company prepares income statements segmented by divisions, but the chief operating officer is not certain about how the company is actually performing. Financial data for the...

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Q: What is the primary difference between the two cost accounting systems regarding

What is the primary difference between the two cost accounting systems regarding the accumulation of costs and the calculation of unit costs?

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Q: Lexington Lumber Co. processes rough timber to obtain three grades of

Lexington Lumber Co. processes rough timber to obtain three grades of finished lumber, A, B, and C. The company allocates costs to the joint products on the basis of market value. During the month of...

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Q: Swedish Navy Company manufactures wristwatches on an assembly line. The work

Swedish Navy Company manufactures wristwatches on an assembly line. The work in process inventory as of March 1 consisted of 1,000 watches that were complete as to materials and 75% complete as to lab...

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Q: How do the two cost accounting systems differ in accounting for each

How do the two cost accounting systems differ in accounting for each of the following items? a. Materials b. Labor c. Factory overhead

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Q: The following data appeared in the accounting records of Royale Manufacturing Company

The following data appeared in the accounting records of Royale Manufacturing Company, which uses an average cost production system: Started in process . . . . . . . . . . . . . . . . . . . 12,000 u...

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Q: Rancho Santa Fe Manufacturing, Inc., produces and sells a product

Rancho Santa Fe Manufacturing, Inc., produces and sells a product with a price of $100 per unit. The following cost data have been prepared for its estimated upper and lower limits of activity: Requi...

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Q: The Nut House, Inc., sells three types of nuts:

The Nut House, Inc., sells three types of nuts: almonds, cashews, and walnuts. Ten thousand cans of nuts were sold in 2011, and the amount of walnuts sold were twice as much as the number of cans of c...

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Q: Colbert Company has 1,000 units in process in Forming at

Colbert Company has 1,000 units in process in Forming at the beginning of the month with a transferred cost of $21,200 from Blanking. During the month, 5,000 units with a total cost of $100,000 are re...

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Q: Why are there objections to using absorption costing when segment reports of

Why are there objections to using absorption costing when segment reports of profitability are being prepared?

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Q: U.S. Grant Company has two production departments. Blending

U.S. Grant Company has two production departments. Blending had 1,000 units in process at the beginning of the period, two fifths complete. During the period 7,800 units were received from Mixing, 8,2...

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Q: Eradicate, Inc., produces and sells a line of insect repellants

Eradicate, Inc., produces and sells a line of insect repellants that are sold primarily in the summer months. Recently, the chief operating officer has become interested in possibly manufacturing a re...

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Q: Assuming that all materials are added at the beginning of the process

Assuming that all materials are added at the beginning of the process and the labor and factory overhead are applied evenly during the process, compute the figures to be inserted in the blank spaces o...

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Q: What steps are required in constructing a break-even chart?

What steps are required in constructing a break-even chart?

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Q: The Coca-Cola Company’s manufacturing operations are ideal for process costing

The Coca-Cola Company’s manufacturing operations are ideal for process costing because it and its bottlers produce long runs of identical beverages in a continuous flow production process. Go to the c...

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Q: North Arlington Company has two production departments. The nature of the

North Arlington Company has two production departments. The nature of the process is such that no units remain in process in Finishing at the end of the period. During the period, 10,000 units with a...

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Q: In E5-7, prepare a statement of cost of goods

In E5-7, prepare a statement of cost of goods manufactured for the period. In E5-7 North Arlington Company has two production departments. The nature of the process is such that no units remain in pr...

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Q: Assume each of the following conditions concerning the data given:

Assume each of the following conditions concerning the data given: 1. All materials are added at the beginning of the process. 2. All materials are added at the end of the process. 3. Half of the mat...

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Q: What would be the effect on the unit cost of finished goods

What would be the effect on the unit cost of finished goods if an estimate of the stage of completion of work in process was too high?

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Q: Marion Corporation has determined the following selling price and manufacturing cost per

Marion Corporation has determined the following selling price and manufacturing cost per unit based on normal production of 72,000 units per year: Selling price per unit . . . . . . . . . . . . . . ....

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Q: Why is it necessary to estimate the stage or degree of completion

Why is it necessary to estimate the stage or degree of completion of work in process at the end of the accounting period under the process cost system?

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Q: Spaulding Manufacturing Company has determined the cost of manufacturing a unit of

Spaulding Manufacturing Company has determined the cost of manufacturing a unit of product as follows, based on normal production of 100,000 units per year: Direct materials . . . . . . . . . . . . ....

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Q: What are the advantages and disadvantages of using variable costing?

What are the advantages and disadvantages of using variable costing?

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Q: Using the data given for Cases 1–3 and the FIFO

Using the data given for Cases 1–3 and the FIFO cost method, compute the separate equivalent units of production, one for materials and one for labor and overhead, under each of the following assumpti...

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Q: Using the data in P5-5: 1. Draft

Using the data in P5-5: 1. Draft the necessary entries to record the manufacturing costs incurred during the month of July. 2. Prepare a statement of cost of goods manufactured for the month ended Jul...

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Q: Ichiro Manufacturing Co. uses the process cost system. The following

Ichiro Manufacturing Co. uses the process cost system. The following information for the month of December was obtained from the company’s books and from the production reports submi...

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Q: Buscemi Products, Inc., desires an after-tax income of

Buscemi Products, Inc., desires an after-tax income of $500,000. It has fixed costs of $2,500,000, a unit sales price of $300, and unit variable costs of $150, and is in the 40% tax bracket. Require...

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Q: What is the primary objective in accumulating costs by departments?

What is the primary objective in accumulating costs by departments?

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Q: What is the importance of make-or-buy studies for

What is the importance of make-or-buy studies for a company?

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Q: Analyze the information presented in the following general ledger account of Mantle

Analyze the information presented in the following general ledger account of Mantle Manufacturing Co., which has three departments: Shaping, Forming, and Finishing: Additional facts: a. 2,000 units w...

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Q: Fifteen workers are assigned to a group project. The productionstandard calls

Fifteen workers are assigned to a group project. The productionstandard calls for 500 units to be completed each hour to meet acustomer’s set deadline for the products. If the requir...

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Q: What information is reflected on a production report?

What information is reflected on a production report?

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Q: Camacho Chemical Company uses an average cost processing system. All materials

Camacho Chemical Company uses an average cost processing system. All materials are added at the start of the production process. Labor and overhead are added evenly at the same rate throughout the pro...

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Q: Foamy, Inc., manufactures shaving cream and uses an average cost

Foamy, Inc., manufactures shaving cream and uses an average cost system. In November, production is 14,800 equivalent units for materials and 13,300 units for labor and overhead. During the month, mat...

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Q: What is the difference between the contribution margin ratio and the margin

What is the difference between the contribution margin ratio and the margin of safety ratio?

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Q: If the prior department’s transfers from two different periods have different unit

If the prior department’s transfers from two different periods have different unit costs each month, how are they treated for purposes of the cost of production summary for the department to which the...

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Q: Using the data, determine: 1. The cost of

Using the data, determine: 1. The cost of goods received from Shaping during the month. 2. The production costs incurred in Forming during the month. 3. The cost of goods completed and transferred to...

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Q: 1. For E5-10, prepare a cost of production

1. For E5-10, prepare a cost of production summary for the month for Blending. 2. Prepare a journal entry to transfer the completed units from Blending to Finished Goods. In E5-10 Cost in Mixing . ....

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Q: The production of a new product required Mirage Manufacturing Company to lease

The production of a new product required Mirage Manufacturing Company to lease additional plant facilities. Based on studies, the following data have been made available: Estimated annual salesâ...

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Q: Limerick Enterprises, Inc., is considering building a manufacturing plant in

Limerick Enterprises, Inc., is considering building a manufacturing plant in Dublin. Predicting sales of 100,000 units, Limerick estimates the following expenses: An Irish firm that specializes in ma...

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Q: Define differential analysis, differential revenue, differential cost, and differential

Define differential analysis, differential revenue, differential cost, and differential income.

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Q: Digital Software, Inc., has two product lines. The income

Digital Software, Inc., has two product lines. The income statement for the year ended December 31 shows the following: The products, Num 1 and Num 2, are sold in two territories, North and South, as...

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Q: Roberts Corporation uses a process cost system. The records for the

Roberts Corporation uses a process cost system. The records for the month of May show the following information: Required Prepare a cost of production summary for each department.

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Q: Explain the differences between financial accounting and cost accounting. Why arethese

Explain the differences between financial accounting and cost accounting. Why arethese differences important?

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Q: “It’s not the job of accounting to determine strategy. It

“It’s not the job of accounting to determine strategy. It is only used to measure results.”Discuss.

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Q: Would you support a proposal to develop a set of “generally

Would you support a proposal to develop a set of “generally accepted” accountingstandards for measuring executive performance that would be used to determine compensation?Why or why not?

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Q: Airlines are well known for using complex pricing structures. For example

Airlines are well known for using complex pricing structures. For example, it is often (butnot always) less expensive to buy a ticket in advance than it is on the day of the flight.However, if the air...

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Q: Nabisco (a unit of Kraft Foods) makes a variety of

Nabisco (a unit of Kraft Foods) makes a variety of cookies (OreosTM, for example)just like Carmen’s Cookies. In what ways are the cost accounting issues the same? Inwhat ways are they different?

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Q: What potential conflicts might arise between marketing managers and the controller’sstaff?

What potential conflicts might arise between marketing managers and the controller’sstaff? How might these potential conflicts be resolved with a minimum of interference from the chief executive offic...

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Q: Refer to the Business Application discussion of supply chain costs. A

Refer to the Business Application discussion of supply chain costs. A colleague says, “We don’t have to worry about other firms in the supply chain. If every firm in the chain minimizes its own cost,...

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Q: Refer to the Business Application discussion of options backdating. If stock

Refer to the Business Application discussion of options backdating. If stock optionsand other forms of performance-based compensation result in some managers engagingin unethical or illegal behavior,...

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Q: Why does a cost accountant need to be familiar with new developments

Why does a cost accountant need to be familiar with new developments in informationtechnology?

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Q: Will studying cost accounting increase the chances that Carmen’s Cookies will succeed

Will studying cost accounting increase the chances that Carmen’s Cookies will succeed? How? Will it guarantee success? Explain.

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Q: Apple, Inc. incurs many types of costs in its operations

Apple, Inc. incurs many types of costs in its operations. Required For each cost in the following table, identify the stage in the value chain where this cost is incurred: Cost ___ Programmer costs...

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Q: Place the letter of the appropriate accounting cost in Column 2 in

Place the letter of the appropriate accounting cost in Column 2 in the blank next toeach decision category in Column 1. Column 1 ___ Providingcost information for financial reporting ___ Identifying t...

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Q: Coastal Cabinets produces cabinets for new home builders. You have been

Coastal Cabinets produces cabinets for new home builders. You have been called in to settle adispute between Coastal Cabinets and Executive Homes, a builder of custom homes. Executive Homes buys 20,00...

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Q: As an analyst at Delta Airlines, you are asked to help

As an analyst at Delta Airlines, you are asked to help the operations staff. Operations has identified a new method of loading baggage that is expected to result in a 30 percent reductionin labor time...

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Q: Betty’s Fashions operates retail stores in both downtown and suburban locations.

Betty’s Fashions operates retail stores in both downtown and suburban locations. The companyhas two responsibility centers: the City Division, which contains stores in downtown locations, and the Mall...

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Q: State University Business School (SUBS) offers several degrees, including

State University Business School (SUBS) offers several degrees, including Bachelor of BusinessAdministration (BBA). The new dean believes in using cost accounting information tomake decisions and is r...

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Q: Refer to the information in Exercise 1-23. The dean

Refer to the information in Exercise 1-23. The dean of the Business School is considering expanding the BBA program by offering an evening program in a nearby city. The program would be the same size...

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Q: Refer to Exhibit 1.5, which shows budgeted versus actual

Refer to Exhibit 1.5, which shows budgeted versus actual costs. Assume that Carmen’s Cookies is preparing a budget for the month ending June 30. Management prepares the budget by sta...

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Q: For each cost accounting development listed below, identify one value chain

For each cost accounting development listed below, identify one value chain component where it might be used and described how it could be used in that component. a. Activity-based costing b. Benchmar...

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Q: The chapter identified five financial management titles with responsibilities.

The chapter identified five financial management titles with responsibilities. Required Match the financial management title in the first column with the major responsibility in the second column of...

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Q: Continental Condiments is a large food products firm in Pennsylvania. Its

Continental Condiments is a large food products firm in Pennsylvania. Its sales staff has a strong incentive plan tied to meeting quarterly budgets. On June 25, Maria Tuzzi, a divisional controller, l...

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Q: Refer to the information in Exercise 1-24. Jon Blake

Refer to the information in Exercise 1-24. Jon Blake, the cost analyst working in the CFO’s office at the Business School, learns that the building to be rented for the evening program is owned by a c...

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Q: Distinguish between the value chain, the supply chain, and the

Distinguish between the value chain, the supply chain, and the distribution chain.

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Q: Dewi Hartono is an assistant controller at Giant Engineering, which contracts

Dewi Hartono is an assistant controller at Giant Engineering, which contracts with the Defense Department to build and maintain roads on military bases. Dewi recently determined that the company was i...

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Q: KC Services provides landscaping services in Edison. Kate Chen, the

KC Services provides landscaping services in Edison. Kate Chen, the owner, is concerned about the recent losses the company has incurred and is considering dropping its lawn services, which she feels...

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Q: Tom’s Tax Services is a small accounting firm that offers tax services

Tom’s Tax Services is a small accounting firm that offers tax services to small businesses and individuals. A local store owner has approached Tom about doing his taxes but is concer...

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Q: Refer to Exhibit 1.5. Assume that Carmen’s Cookies is

Refer to Exhibit 1.5. Assume that Carmen’s Cookies is preparing a budget for the month ending September 30. Management prepares the budget by starting with the actual results for Apr...

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Q: Refer to Exhibit 1.5, which shows budgeted versus actual

Refer to Exhibit 1.5, which shows budgeted versus actual costs. Assume that Carmen’s Cookies is preparing a budget for the month ending November 30. Management prepares the budget fo...

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Q: Quince Products is a small company in southern California that makes jams

Quince Products is a small company in southern California that makes jams and preserves. Recently, a sales rep from one of the company’s suppliers suggested that Quince could increas...

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Q: Who are the customers of cost accounting?

Who are the customers of cost accounting?

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Q: The managers of Quince Products (Problem 1-39) decide

The managers of Quince Products (Problem 1-39) decide they will hire a management accountant to help them analyze the decision to expand their product line. They solicit bids from various accountants...

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Q: Miller Cereals is a small milling company that makes a single brand

Miller Cereals is a small milling company that makes a single brand of cereal. Recently, a business school intern recommended that the company introduce a second cereal in order to “...

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Q: Before Miller Cereals can introduce the new cereal, the board of

Before Miller Cereals can introduce the new cereal, the board of directors has to give their approval. The marketing manager really wants to introduce the new product and believes (honestly) that it w...

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Q: The following story is true except that all names have been changed

The following story is true except that all names have been changed and the time period has been compressed: Charles Austin graduated from a prestigious business school and took a job in a public acco...

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Q: How can cost accounting information together with a classification of activities intothose

How can cost accounting information together with a classification of activities intothose that are value-added and those that are nonvalue-added help managers improvean organization’s performance?

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Q: Identify three key financial managers in an organization and their major responsibilities

Identify three key financial managers in an organization and their major responsibilities.

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Q: Does the passage of Sarbanes-Oxley mean that codes of ethics

Does the passage of Sarbanes-Oxley mean that codes of ethics are no longer necessary?

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Q: A manager once asked, “How would you calculate the cost

A manager once asked, “How would you calculate the cost of a checking account?” What will be your first question to the manager?

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Q: You are considering lending a car to a friend so she can

You are considering lending a car to a friend so she can drive to Aspen. What costswould you ask her to reimburse? How would your answer change, if at all, if youdecided to go along? Identify the poss...

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Q: What is the difference in meaning between the terms cost and expense

What is the difference in meaning between the terms cost and expense?

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Q: As a manager making a decision, which is likely more important

As a manager making a decision, which is likely more important: gross margin or contribution margin? Why?

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Q: The Dollar Store’s cost structure is dominated by variable costs with a

The Dollar Store’s cost structure is dominated by variable costs with a contribution margin ratio of .30 and fixed costs of $30,000. Every dollar of sales contributes 30 cents toward...

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Q: Foxx Company’s cost structure is dominated by variable costs with a contribution

Foxx Company’s cost structure is dominated by variable costs with a contribution margin ratio of .25 and fixed costs of $100,000. Every dollar of sales contributes 25 cents toward fixed costs and prof...

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Q: Rainbow Tours gives walking tours of Springfield. Rainbow charges $40

Rainbow Tours gives walking tours of Springfield. Rainbow charges $40 per person for the tour and incurs $16 in variable costs for labor, drinks, and maps. The monthly fixed costs for Rainbow Tours ar...

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Q: Refer to the data for Cambridge, Inc., in Exercise 3

Refer to the data for Cambridge, Inc., in Exercise 3-25. In Exercise 3-25 Cambridge, Inc., is considering the introduction of a new calculator with the following price and cost characteristics: Sales...

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Q: Refer to the data for Balance, Inc., in Exercise 3

Refer to the data for Balance, Inc., in Exercise 3-27. In Exercise 3-27 Balance, Inc., is considering the introduction of a new energy snack with the following price and cost characteristics: Sales p...

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Q: Crest Industries sells a single model of satellite radio receivers for use

Crest Industries sells a single model of satellite radio receivers for use in the home. The radios have the following price and cost characteristics: Sales price . . . . . . . . . . . . . . . $ 160 pe...

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Q: Rio Coffee Shoppe sells two coffee drinks, a regular coffee and

Rio Coffee Shoppe sells two coffee drinks, a regular coffee and a latte. The two drinks have the following prices and cost characteristics: The monthly fixed costs at Rio are $6,720. Based on experi...

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Q: What is operating leverage? Why is knowledge of a firm’s operating

What is operating leverage? Why is knowledge of a firm’s operating leverage important to its managers?

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Q: What is the margin of safety? Why is this important for

What is the margin of safety? Why is this important for managers to know?

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Q: Write out the equation for the target volume (in units)

Write out the equation for the target volume (in units) profit equation when the income tax rate is t.

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Q: What do the terms step costs and semivariable costs mean?

What do the terms step costs and semivariable costs mean?

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Q: How do income taxes affect the break-even equation? Why

How do income taxes affect the break-even equation? Why?

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Q: Why is it common to assume a fixed sales mix before finding

Why is it common to assume a fixed sales mix before finding the break-even volume with multiple products?

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Q: What are the components of total costs in the profit equation?

What are the components of total costs in the profit equation?

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Q: How does the total contribution margin differ from the gross margin that

How does the total contribution margin differ from the gross margin that is often shown on companies’ financial statements?

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Q: Compare cost-volume-profit (CVP) analysis with profit

Compare cost-volume-profit (CVP) analysis with profit-volume analysis. How do they differ?

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Q: Fixed costs are often defined as “fixed over the short run

Fixed costs are often defined as “fixed over the short run.” Does this mean that they are not fixed over the long run? Why or why not?

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Q: Freeflight Airlines is presently operating at 70 percent of capacity. Management

Freeflight Airlines is presently operating at 70 percent of capacity. Management of the airline is considering dropping Freeflight’s routes between Europe and the United States. If t...

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Q: CompDesk, Inc., makes a single model of an ergonomic desk

CompDesk, Inc., makes a single model of an ergonomic desk (with chair) for computer usage. The desk is manufactured in building 1, and the chair is manufactured in building 2. Monthly capacities and p...

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Q: Playful Pens, Inc., makes a single model of a pen

Playful Pens, Inc., makes a single model of a pen. The cartridge for the pen (which contains the ink) is manufactured on one machine. The cartridge holder (which you hold when you hold the pen) is man...

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Q: Sherene Nili manages a company that produces wedding gowns. She produces

Sherene Nili manages a company that produces wedding gowns. She produces both a custom product that is made to order and a standard product that is sold in bridal salons. Her accountant prepared the f...

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Q: What do the terms variable costs and fixed costs mean?

What do the terms variable costs and fixed costs mean?

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Q: Sam, Martina, Aretha, Roxi, and Tomas (SMART

Sam, Martina, Aretha, Roxi, and Tomas (SMART) operate a management consulting firm. The firm has just received an inquiry from a prospective client about its prices for educational seminars to teach i...

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Q: M. Anthony, LLP, produces music in a studio in

M. Anthony, LLP, produces music in a studio in London. The cost of producing one typical song follows: Average Cost per Song: Labor, including musicians and technicians . . . . . . . . . . . . . . . $...

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Q: King City Specialty Bikes (KCSB) produces high-end bicycles

King City Specialty Bikes (KCSB) produces high-end bicycles. The costs to manufacture and market the bicycles at the company’s volume of 2,000 units per month are shown in the follow...

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Q: Carson Corporation produces and sells three products, Alpha, Beta,

Carson Corporation produces and sells three products, Alpha, Beta, and Gamma, in a local market and in a regional market. At the end of the first quarter of the current year, the following income stat...

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Q: Power Music owns five music stores, where it sells music,

Power Music owns five music stores, where it sells music, instruments, and supplies. In addition, it rents instruments. At the end of last year, the new accounts showed that although the business as a...

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Q: You have been asked to assist the management of Ironwood Corporation in

You have been asked to assist the management of Ironwood Corporation in arriving at certain decisions. Ironwood has its home office in Michigan and leases factory buildings in Wisconsin, Minnesota, an...

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Q: The Bubble Company produces a variety of bottles from recycled plastic.

The Bubble Company produces a variety of bottles from recycled plastic. The company has one particular machine on which it can produce either of two types of water bottles, 1-liter bottles or 1/2-lite...

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Q: Slavin Corporation manufactures two products, Alpha and Delta. Each product

Slavin Corporation manufactures two products, Alpha and Delta. Each product requires time on a single machine. The machine has a monthly capacity of 500 hours. Total market demand for the two products...

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Q: Layton Machining Company (LMC) manufactures two versions of a basic

Layton Machining Company (LMC) manufactures two versions of a basic machine tool. One version is a standard model and one is a custom model, which requires some additional work and slightly higher-gra...

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Q: To win a predatory pricing case, law enforcement officials traditionally have

To win a predatory pricing case, law enforcement officials traditionally have had to prove that a company has sold products or services for less than their average variable cost. Companies with relati...

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Q: “Materials and labor are always direct costs, and supply costs

“Materials and labor are always direct costs, and supply costs are always indirect.” What is your opinion of this statement?

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Q: The Liquid Chemical Company manufactures and sells a range of high-

The Liquid Chemical Company manufactures and sells a range of high-grade products. Many of these products require careful packaging. The company has a special patented lining made that it uses in spec...

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Q: Are sunk costs ever differential costs?

Are sunk costs ever differential costs?

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Q: What costs are included in the full cost of a product?

What costs are included in the full cost of a product? Is a product’s full cost always the appropriate cost for decision makers to use?

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Q: What are life-cycle product costing and pricing?

What are life-cycle product costing and pricing?

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Q: What do the terms target cost and target price mean? Explain

What do the terms target cost and target price mean? Explain how they are developed.

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Q: What is predatory pricing? Why is it illegal in many jurisdictions

What is predatory pricing? Why is it illegal in many jurisdictions?

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Q: What is price discrimination? How could a cost accountant help determine

What is price discrimination? How could a cost accountant help determine if differences in prices were evidence of price discrimination?

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Q: If we want to maximize profit, why do we use unit

If we want to maximize profit, why do we use unit contribution margins in our analysis instead of unit gross margins?

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Q: Why are production constraints important in determining the optimal product mix?

Why are production constraints important in determining the optimal product mix?

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Q: What are some nonfinancial factors in decisions to drop a product line

What are some nonfinancial factors in decisions to drop a product line?

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Q: The cost per seat-mile for a major U.S

The cost per seat-mile for a major U.S. airline is 13.7¢. Therefore, to estimate the cost of flying a passenger from Detroit to Los Angeles, we should multiply 1,980 miles by 13.7¢. Do you agree?

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Q: On what three main factors does the theory of constraints focus?

On what three main factors does the theory of constraints focus?

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Q: As a marketing manager for an airline, would you sell a

As a marketing manager for an airline, would you sell a seat to a passenger who walked up to the gate at the last minute at the variable (marginal) cost? Why or why not? Do the costs from the accounti...

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Q: One of your acquaintances notes, “This whole subject of differential

One of your acquaintances notes, “This whole subject of differential costing is easy; variable costs are the only costs that are relevant.” How would you respond?

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Q: A manager in your organization just received a special order at a

A manager in your organization just received a special order at a price that is “below cost.” The manager points to the document and says, “These are the kinds of orders that will get you in trouble....

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Q: Many airline frequent-flier programs upgrade elite (high volume)

Many airline frequent-flier programs upgrade elite (high volume) flyers one, three, or five days in advance from economy to first class. What are the differential costs of doing this? What are the opp...

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Q: If you are considering driving to a weekend resort for a quick

If you are considering driving to a weekend resort for a quick break from school, what are the differential costs of operating your car for that drive?

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Q: If you are considering buying a second car, what are the

If you are considering buying a second car, what are the differential costs of that decision? Are they the same as in Question 4-26? Why or why not? In Question 4-26 If you are considering driving to...

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Q: Under what circumstances would fixed costs be relevant when management is making

Under what circumstances would fixed costs be relevant when management is making decisions in a multiproduct setting?

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Q: Maria’s Food Service provides meals that nonprofit organizations distribute to handicapped and

Maria’s Food Service provides meals that nonprofit organizations distribute to handicapped and elderly people. Here is her forecasted income statement for April, when she expects to...

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Q: Carlsbad Enterprises has a capacity to produce 400,000 computer cases

Carlsbad Enterprises has a capacity to produce 400,000 computer cases per year. The company is currently producing and selling 320,000 cases per year at a selling price of $80 per case. The cost of pr...

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Q: In evaluating product profitability, we can ignore marketing costs because they

In evaluating product profitability, we can ignore marketing costs because they are not considered product costs. Do you agree?

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Q: Assume that Cold Rock sells ice cream for $4.80

Assume that Cold Rock sells ice cream for $4.80 per gallon. The cost of each gallon follows: Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....

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Q: Mother’s Bottlers, Inc., is a small bottling company that bottles

Mother’s Bottlers, Inc., is a small bottling company that bottles and sells cold teas for $5 per unit. The cost of each unit follows: Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . ....

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Q: Andreasen Corporation manufactures thermostats for office buildings. The following is the

Andreasen Corporation manufactures thermostats for office buildings. The following is the cost of each unit: Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....

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Q: Mission Electronics manufactures and sells basic DVD players under various generic store

Mission Electronics manufactures and sells basic DVD players under various generic store brand names. The cost of one of their models follows: Materials . . . . . . . . . . . . . . . . . . . . . . . ....

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Q: Sid’s Skins makes a variety of covers for electronic organizers and portable

Sid’s Skins makes a variety of covers for electronic organizers and portable music players. The company’s designers have discovered a market for a new clear plastic covering with college logos for a p...

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Q: Dino’s, Inc., makes a variety of T-shirts with

Dino’s, Inc., makes a variety of T-shirts with logos. The company has discovered a new market for sweatshirts with logos. Market research indicates that a sweatshirt like this would sell well in the m...

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Q: Terracotta, Inc., makes toy soldiers. Company management believes that

Terracotta, Inc., makes toy soldiers. Company management believes that a new model would sell well at a price of $65. The company estimates unit materials costs to be $16 for the model, and overhead c...

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Q: Mobility Partners makes wheelchairs and other assistive devices. For years it

Mobility Partners makes wheelchairs and other assistive devices. For years it has made the rear wheel assembly for its wheelchairs. A local bicycle manufacturing firm, Trailblazers, Inc., offered to s...

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Q: Mel’s Meals 2 Go purchases cookies that it includes in the 10

Mel’s Meals 2 Go purchases cookies that it includes in the 10,000 box lunches it prepares and sells annually. Mel’s kitchen and adjoining meeting room operate at 70 percent of capacity. Mel’s purchase...

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Q: Refer to the facts in Exercise 4-42. Mel suddenly

Refer to the facts in Exercise 4-42. Mel suddenly finds an opportunity to sell boxed dinners. The new opportunity would require the use of the 30 percent unused capacity. The contribution margin from...

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Q: You and two friends drive your car to Texas for spring break

You and two friends drive your car to Texas for spring break. A third friend asks if you can drop her off in Oklahoma. How would you allocate the cost of the trip among the four of you?

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Q: Atlantic Soup Company is presently operating at 75 percent of capacity.

Atlantic Soup Company is presently operating at 75 percent of capacity. Worried about the company’s performance, the president is considering dropping its clam chowder line. If clam...

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Q: What is dumping? What role would a cost accountant play in

What is dumping? What role would a cost accountant play in determining whether dumping has occurred?

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Q: A company has learned that a particular input product required for its

A company has learned that a particular input product required for its production of several products is in limited supply. What approach should management take to maximize profits in the presence of...

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Q: Consider the Business Application item, “Cost Analysis and the Choice

Consider the Business Application item, “Cost Analysis and the Choice of Office Space for a Small Business”. In the decision to relocate to the virtual office, what are the differential costs? What co...

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Q: Consider the Business Application item, referred to in Question 4-

Consider the Business Application item, referred to in Question 4-17. Suppose the company had signed a lease for five years and had two years remaining on the contract. Would the remaining lease payme...

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Q: A company has several units of old-model telephones that it

A company has several units of old-model telephones that it is selling for $10 per unit. The units cost $25 to produce. Is the company engaging in predatory pricing? Explain.

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Q: You buy an airline ticket to New York City to see a

You buy an airline ticket to New York City to see a play. You buy the ticket on the day you fly and pay $100. The person sitting next to you, who bought a ticket two months earlier, paid $200. Are the...

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Q: Consider the Business Application item, “Cost-Volume-Profit

Consider the Business Application item, “Cost-Volume-Profit Analysis and Airline Pricing” in Chapter 3. Based on the article alone, was go! engaging in predatory pricing? Why or why not?

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Q: Management notes that the contribution from one product is higher than the

Management notes that the contribution from one product is higher than the contribution from a second product. Hence, it concludes that the company should concentrate on production of the first produc...

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Q: In the theory of constraints, what are ways to improve performance

In the theory of constraints, what are ways to improve performance at the bottleneck?

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Q: The friend in question 2-16 decides that she does not

The friend in question 2-16 decides that she does not want to go to Oklahoma after all. How will the costs of your trip change? Was your choice of allocation in question 2-16 incorrect? Why? Informati...

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Q: According to the theory of constraints, what are the ways to

According to the theory of constraints, what are the ways to increase profits?

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Q: Fixed costs are often defined as “fixed over the short run

Fixed costs are often defined as “fixed over the short run.” Does this mean that they are not fixed over the long run? Why or why not?

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Q: What is the difference between a sunk cost and a differential cost

What is the difference between a sunk cost and a differential cost?

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Q: What is the difference between short-run and long-run

What is the difference between short-run and long-run decisions? Give one example of each.

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Q: When is cost-plus pricing most likely to be used?

When is cost-plus pricing most likely to be used?

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Q: Assume that General Dynamics, which manufactures high-technology instruments for

Assume that General Dynamics, which manufactures high-technology instruments for spacecraft, is considering the sale of a navigational unit to a government agency in India that wishes to launch its ow...

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Q: Assume that Whee, Cheatham, and Howe is an auditing firm

Assume that Whee, Cheatham, and Howe is an auditing firm that has found that its summer interns are subject to a 90 percent learning curve for one of its important tasks, proofreading financial statem...

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Q: Refer to the example in Appendix B. The numbers in Exhibit

Refer to the example in Appendix B. The numbers in Exhibit 5.21 for the fifth, sixth, and seventh units were given. In Appendix B Engineers have found the following mathematical relationship for the...

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Q: The accounting department of a large limousine company is analyzing the costs

The accounting department of a large limousine company is analyzing the costs of its services. The cost data and level of activity for the past 16 months are presented below: In addition to the abov...

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Q: Obtain 13 years of data from the published financial statements of a

Obtain 13 years of data from the published financial statements of a company. You will be able to find the data on the Internet. Also, Moody’s, Standard & Poor’s, and Value-Line are good sources of fi...

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Q: Consider a digital music service such as those provided by Amazon or

Consider a digital music service such as those provided by Amazon or Apple. What are some of the major cost categories? Are they mostly fixed or mostly variable?

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Q: Using the same data source as in Problem 5-44,

Using the same data source as in Problem 5-44, collect a total of 20 years of data. In Problem 5-44 Obtain 13 years of data from the published financial statements of a company. You will be able to f...

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Q: Cubicle Solutions sells productivity software such as word processors, spreadsheets,

Cubicle Solutions sells productivity software such as word processors, spreadsheets, and personal information managers. Cubicle prides itself on customer support and maintains a large call center wher...

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Q: Academy Products manufactures a variety of custom components for use in aircraft

Academy Products manufactures a variety of custom components for use in aircraft navigation and communications systems. The controller has asked for your help in estimating fixed and variable overhead...

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Q: Assume that Painless Dental Clinics, Inc., offers three basic dental

Assume that Painless Dental Clinics, Inc., offers three basic dental services. Here are its prices and costs: Variable costs include the labor costs of the dental hygienists and dentists. Fixed cost...

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Q: Lima Company manufactured 30,000 units of product last month and

Lima Company manufactured 30,000 units of product last month and identified the following costs associated with the manufacturing activity: Variable costs: Direct materials used. . . . . . . . . . . ....

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Q: How can one compensate for the effects of price instability when preparing

How can one compensate for the effects of price instability when preparing cost estimates using high-low or regression techniques?

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Q: For each of the following costs incurred in a manufacturing firm,

For each of the following costs incurred in a manufacturing firm, indicate whether the costs are fixed (F) or variable (V) and whether they are period costs (P) or product costs (M) under full absorpt...

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Q: When using past data to predict a cost that has fixed and

When using past data to predict a cost that has fixed and variable components, it is possible to have an equation with a negative intercept. Does this mean that at a zero production level, the company...

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Q: Eagle Company makes the MusicFinder, a sophisticated satellite radio. Eagle

Eagle Company makes the MusicFinder, a sophisticated satellite radio. Eagle has experienced a steady growth in sales for the past five years. However, Ms. Luray, Eagle’s CEO, believes that to maintain...

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Q: After doing an account analysis and giving the results to your boss

After doing an account analysis and giving the results to your boss, you discover an error in the data for 3 of the 24 months covered by your analysis. In 6 of the 24 months, your assistant had droppe...

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Q: Why might an experienced executive prefer account analysis to statistical cost estimation

Why might an experienced executive prefer account analysis to statistical cost estimation methods?

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Q: For each of the following statements, indicate whether it is true

For each of the following statements, indicate whether it is true, false, or uncertain. Explain why. Give examples in your answer. a. A cost is something used up to produce revenues in a particular ac...

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Q: Some people claim that the scattergraph and the regression methods go hand

Some people claim that the scattergraph and the regression methods go hand in hand. Why?

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Q: A decision maker is interested in obtaining a cost estimate based on

A decision maker is interested in obtaining a cost estimate based on a regression equation. There are no problems with changes in prices, costs, technology, or relationships between activity and cost....

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Q: Consider the Business Application item “Using Statistical Analysis to Improve Profitability

Consider the Business Application item “Using Statistical Analysis to Improve Profitability.” Pick a favorite sports team or recurring cultural event (musical concert, opera, play, rock concert, etc)....

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Q: Alameda Tile sells products to many people remodeling their homes and thinks

Alameda Tile sells products to many people remodeling their homes and thinks that they could profitably offer courses on tile installation, which might also increase the demand for their products. The...

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Q: A friend comes to you with the following problem. “I

A friend comes to you with the following problem. “I provided my boss a cost equation using regression analysis. He was unhappy with the results. He told me to do more work and not return until I had...

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Q: The dean of the Midstate University Business School is trying to understand

The dean of the Midstate University Business School is trying to understand the costs of the school’s two degree programs: Bachelors (BBA) and Masters (MBA). She has asked you for recommendations on h...

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Q: What are the characteristics of the following three costing systems:

What are the characteristics of the following three costing systems: (a) Job costing, (b) Process costing, and (c) Operation costing?

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Q: Custom Homebuilders (CH) designs and constructs high-end homes

Custom Homebuilders (CH) designs and constructs high-end homes on large lots owned by customers. CH has developed several formulas, which it uses to quote jobs. These include costs for materials, labo...

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Q: Why do most companies use normal or standard costing? After all

Why do most companies use normal or standard costing? After all, actual costing gives the actual cost, so the firm could just wait until it knows what the cost will be.

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Q: In doing cost analysis, you realize that there could be errors

In doing cost analysis, you realize that there could be errors in the accounting records. For example, maintenance costs were recorded as zero in December. However, you know that maintenance was perfo...

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Q: Sundial, Inc., produces two models of sunglasses: AU and

Sundial, Inc., produces two models of sunglasses: AU and NZ. The sunglasses have the following characteristics: The total fixed costs per year for the company are $2,208,000. Required a. What is th...

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Q: : McDonald’s, the fast-food restaurant, is known for

McDonald’s, the fast-food restaurant, is known for high employee turnover, high quality, and low costs. Using your knowledge of the learning phenomenon, how does McDonald’s get high quality and low c...

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Q: What are the common methods of cost estimation?

What are the common methods of cost estimation?

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Q: Which method of cost estimation is not usually based primarily on company

Which method of cost estimation is not usually based primarily on company accounting records?

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Q: Refer to Exercise 2-42. In Exercise 2

Refer to Exercise 2-42. In Exercise 2-42 Karen Corporation has compiled the following information from the accounting system for the one product it sells: Sales price . . . . . . . . . . . . . . . ....

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Q: What is the difference between simple and multiple regression?

What is the difference between simple and multiple regression?

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Q: What is the difference between R2 and adjusted R2?

What is the difference between R2 and adjusted R2?

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Q: For each of the following costs incurred in a manufacturing firm,

For each of the following costs incurred in a manufacturing firm, indicate whether the costs are most likely fixed (F) or variable (V) and whether they are most likely period costs (P) or product cost...

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Q: Van Goe produces paints. On January 1, it had no

Van Goe produces paints. On January 1, it had no work-in-process inventory. It starts production of 300,000 gallons of paint in January and completes 240,000 gallons. The costs of the resources used b...

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Q: Why might two companies in the same industry have different cost systems

Why might two companies in the same industry have different cost systems?

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Q: Opech, Inc., produces oil and ships it in a pipeline

Opech, Inc., produces oil and ships it in a pipeline. On May 1, it had no work-in-process inventory. It started production of 300 million barrels of oil in May and shipped 270 million barrels in the p...

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Q: Oholics, Ltd., produces chocolate that it sells to candy makers

Oholics, Ltd., produces chocolate that it sells to candy makers. On April 1, it had no work-in-process inventory. It started production of 20,000 pounds of chocolate in April and completed production...

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Q: What is the difference between outlay cost and opportunity cost?

What is the difference between outlay cost and opportunity cost?

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Q: Clovis Supply sells two models of saddles to retail outfitters—basic

Clovis Supply sells two models of saddles to retail outfitters—basic and custom. Basic saddles sell for $1,000 each and custom saddles sell for $1,500. The variable cost of a basic saddle is $600 and...

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Q: Give at least three applications of the learning phenomenon that were not

Give at least three applications of the learning phenomenon that were not mentioned in the text.

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Q: Rex Santos, a cost accountant, prepares a product profitability report

Rex Santos, a cost accountant, prepares a product profitability report for Jane Gates, the production manager. Much to Rex’s surprise, almost one-third of the company’s products are not profitable. He...

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Q: Tiger Furnishings produces two models of cabinets for home theater components,

Tiger Furnishings produces two models of cabinets for home theater components, the Basic and the Dominator. Data on operations and costs for March follow: Required Compute the predetermined overhead...

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Q: Refer to the data in Exercise 6-34. Compute the

Refer to the data in Exercise 6-34. Compute the predetermined overhead rate assuming that Tiger Furnishings uses direct labor costs to allocate overhead costs. In Exercise 6-34 Tiger Furnishings prod...

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Q: Refer to the data in Exercise 6-34. Compute the

Refer to the data in Exercise 6-34. Compute the predetermined overhead rate assuming that Tiger Furnishings uses machine-hours to allocate overhead costs. In Exercise 6-34 Tiger Furnishings produces...

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Q: Refer to the data in Exercise 6-34. Draw the

Refer to the data in Exercise 6-34. Draw the cost flow diagram assuming that Tiger Furnishings uses direct labor costs to allocate overhead costs. In Exercise 6-34 Tiger Furnishings produces two mode...

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Q: Howrley-David, Inc., manufactures two models of motorcycles:

Howrley-David, Inc., manufactures two models of motorcycles: the Fatboy and the Screamer. Both models are assembled in the same plant and require the same assembling operations. The difference between...

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Q: The Office Mart store in South Beach experienced the following events during

The Office Mart store in South Beach experienced the following events during the current year: 1. Incurred $400,000 in marketing costs. 2. Purchased $1,200,000 of merchandise. 3. Paid $40,000 for tran...

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Q: S. Lee Enterprises produces two models of lawn tractor: SL1

S. Lee Enterprises produces two models of lawn tractor: SL1 and SL2. The models are both produced in the company’s Louisville factory and go through identical assembly operations. Th...

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Q: Organic Grounds produces two brands of coffee: Star and Bucks.

Organic Grounds produces two brands of coffee: Star and Bucks. The two coffees are produced in one factory using the same production process. The only difference between the two coffees is the cost of...

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Q: For each of the following costs incurred in a manufacturing operation,

For each of the following costs incurred in a manufacturing operation, indicate whether they are included in prime costs (P), conversion costs (C), or both (B): a. Property taxes on the factory. b. Di...

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Q: Refer to the data in Exercise 6-34. Compute the

Refer to the data in Exercise 6-34. Compute the individual product costs per unit assuming that Tiger Furnishings uses direct labor costs to allocate overhead to the products. In Exercise 6-34 Tiger...

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Q: Larcker Manufacturing’s cost accountant has provided you with the following information for

Larcker Manufacturing’s cost accountant has provided you with the following information for January operations: Direct materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $21 per...

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Q: Assume that Limitless Labs, Inc., offers three basic drug-

Assume that Limitless Labs, Inc., offers three basic drug-testing services for professional athletes. Here are its prices and costs: Variable costs include the labor costs of the medical technicians...

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Q: Star Buck, a coffee shop manager, has two major product

Star Buck, a coffee shop manager, has two major product lines—drinks and pastries. If Star allocates common costs on any objective basis discussed in this chapter, the drinks are profitable, but the p...

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Q: Refer to the data in Exercise 6-34. Compute the

Refer to the data in Exercise 6-34. Compute the individual product costs per unit assuming that Tiger Furnishings uses machine-hours to allocate overhead to the products. In Exercise 6-34 Tiger Furni...

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Q: Are learning curves likely to affect materials costs per unit?

Are learning curves likely to affect materials costs per unit?

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Q: Refer to the data in Exercise 6-34. The president

Refer to the data in Exercise 6-34. The president of Tiger Furnishings is confused about the differences in costs that result from using direct labor costs and machine-hours. In Exercise 6-34 Tiger F...

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Q: Mets Products produces baseball caps and T-shirts. Most of

Mets Products produces baseball caps and T-shirts. Most of the production is done by machine. Data on operations and costs for October follow: Management asks the firm’s cost accou...

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Q: What are the three categories of product cost in a manufacturing operation

What are the three categories of product cost in a manufacturing operation? Describe each element briefly.

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Q: Owl-Eye Radiologists (OR) does various types of diagnostic

Owl-Eye Radiologists (OR) does various types of diagnostic imaging. Radiologists perform tests using sophisticated equipment. OR’s management wants to compute the costs of performing...

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Q: I don’t understand this. Last year [year 1], we

I don’t understand this. Last year [year 1], we decided to drop our highest-end Red model and only produce the Yellow and Green models, because the cost system indicated we were losi...

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Q: Brunswick Parts is a small manufacturing firm located in eastern Canada.

Brunswick Parts is a small manufacturing firm located in eastern Canada. The company, founded in 1947, produces metal parts for many of the larger manufacturing firms located in both Canada and the Un...

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Q: O’Leary Corporation manufactures special purpose portable structures (huts, mobile offices

O’Leary Corporation manufactures special purpose portable structures (huts, mobile offices, and so on) for use at construction sites. It only builds to order (each unit is built to c...

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Q: How are product costing and cost allocation related?

How are product costing and cost allocation related?

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Q: Why are cost flow diagrams useful in describing product costing systems?

Why are cost flow diagrams useful in describing product costing systems?

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Q: Assume that the following events occurred at a division of Generic Electric

Assume that the following events occurred at a division of Generic Electric for March of the current year: 1. Purchased $45 million in direct materials. 2. Incurred direct labor costs of $24 million....

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Q: Fill in the missing items for the following inventories:

Fill in the missing items for the following inventories:

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Q: Fill in the missing items for the following inventories:

Fill in the missing items for the following inventories:

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Q: Fill in the missing items for the following inventories:

Fill in the missing items for the following inventories:

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Q: ABC Consultants works for only two clients: a large, for

ABC Consultants works for only two clients: a large, for-profit corporation and a small environmental not-for-profit agency. The fee charged for work is based on cost. In deciding how to allocate over...

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Q: Enviro Corporation manufactures a special liquid cleaner at its Green plant.

Enviro Corporation manufactures a special liquid cleaner at its Green plant. Operating data for June follow: Materials . . . . . . . . . . . . . . . . . . . . $714,000 Labor . . . . . . . . . . . . ....

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Q: Why is control of materials important from a managerial planning perspective?

Why is control of materials important from a managerial planning perspective?

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Q: Pogue’s Pops produces a popular beverage. Operating data for October follow

Pogue’s Pops produces a popular beverage. Operating data for October follow: Materials . . . . . . . . . . . . . . . . . . . $ 650,000 Labor . . . . . . . . . . . . . . . . . . . . . . . . . 110,000 M...

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Q: The typical cost-volume-profit graph assumes that profi ts

The typical cost-volume-profit graph assumes that profi ts increase continually as volume increases. What are some of the factors that might prevent the increasing profits that are indicated when line...

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Q: Big City Bank processes the checks its customers write at Riverdale Operations

Big City Bank processes the checks its customers write at Riverdale Operations Center (ROC). ROC processed 2,800,000 checks in September. It takes only seconds to process a check, so none are left unp...

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Q: Kim & Smith Refiners starts business on March 1. The following

Kim & Smith Refiners starts business on March 1. The following operations data are available for March for the one lubricant it produces: _________________________________Gallons Beginning inventory ....

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Q: Cray-Z Consultants provides management accounting advice to not-for

Cray-Z Consultants provides management accounting advice to not-for-profit firms. It employs three levels of consultants, based on experience and education: partner, senior, and associate. When Cray-Z...

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Q: What is the purpose of having two manufacturing overhead accounts, the

What is the purpose of having two manufacturing overhead accounts, the Manufacturing Overhead Control and Applied Manufacturing Overhead?

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Q: The following data apply to the provision of psychological testing services:

The following data apply to the provision of psychological testing services: Sales price per unit (1 unit = 1 test plus feedback to client) ...................... $ 600 Fixed costs (per month): Sellin...

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Q: Old Tyme Soda produces one flavor of a popular local soft drink

Old Tyme Soda produces one flavor of a popular local soft drink. It had no work in process on October 31 in its only inventory account. During November, Old Tyme started 10,000 barrels. Work in proces...

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Q: Ideally, what does an allocation base reflect between the overhead cost

Ideally, what does an allocation base reflect between the overhead cost and the activity (production of a product, for example)?

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Q: What is continuous flow processing? Give at least three examples of

What is continuous flow processing? Give at least three examples of products that might use continuous flow processing.

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Q: Identify a particular support function in a business school (the library

Identify a particular support function in a business school (the library, for example). Discuss possible allocation bases that might be used to allocate costs in the function to programs (degrees) or...

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Q: Place the number of the appropriate definition in the blank next to

Place the number of the appropriate definition in the blank next to each concept. Concept ____ Period cost ____ Indirect cost ____ Fixed cost ____ Opportunity cost ____ Outlay cost ____ Direct cost _...

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Q: Refer to Exercise 2-44. In Exercise 2

Refer to Exercise 2-44. In Exercise 2-44 Larcker Manufacturing’s cost accountant has provided you with the following information for January operations: Direct materials . . . . . . . . . . . . . . ....

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Q: The following transactions occurred in October at Pawnee Workshops, a custom

The following transactions occurred in October at Pawnee Workshops, a custom manufacturer of furniture: 1. Purchased $16,000 of materials. 2. Issued $800 of supplies from the materials inventory. 3. P...

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Q: Is it possible for a company to have a two-stage

Is it possible for a company to have a two-stage allocation system but use, for example, direct labor-hours to allocate costs from all pools in the second stage? Will the resulting product costs be th...

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Q: What are the three criteria for the design of cost management systems

What are the three criteria for the design of cost management systems?

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Q: Describe the predetermined overhead rate. What is the role of the

Describe the predetermined overhead rate. What is the role of the predetermined overhead rate in product costing?

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Q: Sydney Corporation estimated that machine-hours for the year would be

Sydney Corporation estimated that machine-hours for the year would be 20,000 hours and overhead (all fixed) would be $80,000. Sydney applies its overhead on the basis of machine-hours. During the year...

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Q: Write out the profit equation and describe each term.

Write out the profit equation and describe each term.

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Q: Valley Corporation estimated that direct labor for the year would be 58

Valley Corporation estimated that direct labor for the year would be 58,500 hours. Valley’s overhead (all fixed) is applied on the basis of direct labor-hours. The company estimates its overhead costs...

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Q: The accounting records for Frankie’s Fixtures report the following production costs for

The accounting records for Frankie’s Fixtures report the following production costs for the past year: Direct materials . . . . . . . . . . . . . . . . . . . . . $420,000 Direct labor . . . . . . . ....

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Q: The following T-accounts represent September activity: /

The following T-accounts represent September activity: Required Compute the missing amounts indicated by the letters (a) through (i).

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Q: Terracotta, Inc., provides you with the following data for their

Terracotta, Inc., provides you with the following data for their single product: Sales price per unit ......................................................................................... $ 25 Fix...

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Q: Simple regression results from the data of Adriana Corporation (Exercise 5

Simple regression results from the data of Adriana Corporation (Exercise 5-30) are as follows: Equation: Overhead = $217,610 + ($88.61 × Labor-hours) Statistical data Correlation coefficient . . . . ....

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Q: What is each component of the basic cost flow model? Describe

What is each component of the basic cost flow model? Describe each component.

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Q: The following T-accounts represent November activity: /

The following T-accounts represent November activity: Additional Data • Materials of $113,600 were purchased during the month, and the balance in the Materials Inventory account in...

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Q: Kansas Company uses a job costing accounting system for its production costs

Kansas Company uses a job costing accounting system for its production costs. The company uses a predetermined overhead rate based on direct labor-hours to apply overhead to individual jobs. The compa...

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Q: The following transactions occurred in June at Fast Wheels, Inc.,

The following transactions occurred in June at Fast Wheels, Inc., a custom bicycle manufacturer: 1. Purchased $20,000 of materials. 2. Issued $1,000 of supplies from the materials inventory. 3. Purcha...

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Q: UCD Company uses a job costing accounting system for its production costs

UCD Company uses a job costing accounting system for its production costs. A predetermined overhead rate based on direct labor-hours is used to apply overhead to individual jobs. An estimate of overhe...

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Q: A new computer virus (AcctBGone) destroyed most of the company

A new computer virus (AcctBGone) destroyed most of the company records at Backups RntUs. The computer experts at the company could recover only a few fragments of the company’s facto...

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Q: Youth Athletic Services (YAS) provides adult supervision for organized youth

Youth Athletic Services (YAS) provides adult supervision for organized youth athletics. It has a president, William Mayes, and five employees. He and one of the other five employees manage all marketi...

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Q: What are some important assumptions commonly made in CVP analysis. Do

What are some important assumptions commonly made in CVP analysis. Do these assumptions impose serious limitations on the analysis? Why or why not?

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Q: For the month of January, Bay Accountants worked 2,000

For the month of January, Bay Accountants worked 2,000 hours for Lake Lumber, 600 hours for Marty’s Marina, and 1,000 hours for the State Prison System. Bay bills clients at $160 an hour; its labor co...

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Q: On September 1, two jobs were in process at Pete’s Patios

On September 1, two jobs were in process at Pete’s Patios. Details of the jobs follow: Materials Inventory on September 1 totaled $11,040, and $1,392 worth of materials was purchas...

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Q: The following data are from the accounting records of Fremont Products for

The following data are from the accounting records of Fremont Products for year 2: Units produced and sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42,500 Total revenues and costs Sal...

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Q: Brighton Services repairs locomotive engines. It employs 100 full-time

Brighton Services repairs locomotive engines. It employs 100 full-time workers at $20 per hour. Despite operating at capacity, last year’s performance was a great disappointment to t...

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Q: Apple, Inc. is developing a new product (the iWhatever

Apple, Inc. is developing a new product (the iWhatever). Managers at Apple are interested in estimating the impact of learning on the cost of producing the iWhatever. They plan to use data from previo...

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Q: Prepare a scattergraph based on the overhead and machine-hour data

Prepare a scattergraph based on the overhead and machine-hour data in Exercise 5-30. In Exercise 5-30 Adriana Corporation manufactures football equipment. In planning for next year, the managers want...

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Q: The following transactions occurred in January at Tarnsdale Fabricators, a manufacturer

The following transactions occurred in January at Tarnsdale Fabricators, a manufacturer of custom tools: 1. Purchased $17,000 of materials. 2. Issued $16,800 in direct materials to the production depa...

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Q: Partially completed T-accounts and additional information for Cardinals, Inc

Partially completed T-accounts and additional information for Cardinals, Inc., for the month of November appear on the following page: Additional information for November follows: •...

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Q: Selected information from the Blake Corporation accounting records for June follows:

Selected information from the Blake Corporation accounting records for June follows: Additional information for July follows: • Labor wage rate was $35 per hour. •...

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Q: Partially completed T-accounts and additional information for Pine Ridge Corporation

Partially completed T-accounts and additional information for Pine Ridge Corporation for the month of February follow: Additional information for February follows: • Labor wage rat...

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Q: Tappan, Inc., manufactures one product and accounts for costs using

Tappan, Inc., manufactures one product and accounts for costs using a job cost system. You have obtained the following information from the corporation’s books and records for the year ended December...

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Q: Kim’s Asphalt does driveway and parking lot resurfacing work for large commercial

Kim’s Asphalt does driveway and parking lot resurfacing work for large commercial clients as well as small residential clients. An inventory of materials and equipment is on hand at...

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Q: What is the difference between product costs and period costs?

What is the difference between product costs and period costs?

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Q: It is your first day at a new job and you talk

It is your first day at a new job and you talk about the themes of cost system design. One of your new colleagues asks, “If different cost information is used for different purposes, does that mean we...

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Q: Old Port Shipyards does work for both the U.S.

Old Port Shipyards does work for both the U.S. Navy and private shipping companies. Old Port’s major business is renovating ships, which it does at one of two company dry docks refer...

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Q: The following balances are from the accounts of Hill Components:

The following balances are from the accounts of Hill Components: Direct materials used during the year amount to $59,800, and the cost of goods sold for the year was $68,900. Required Find the foll...

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Q: Mark Corporation estimates its manufacturing overhead to be $90,000

Mark Corporation estimates its manufacturing overhead to be $90,000 and its direct labor costs to be $200,000 for year 1. The actual direct labor costs were $50,000 for Job 301, $75,000 for Job 302, a...

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Q: “Cost allocation is arbitrary, so there is nothing gained by

“Cost allocation is arbitrary, so there is nothing gained by it. We should report only the costs that we know are direct.” Do you agree? Why?

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Q: Refer to the information in Exercise 7-25. Prepare an

Refer to the information in Exercise 7-25. Prepare an entry to allocate the under- or overapplied overhead. Overhead applied in each of the inventory accounts is as follows: Work-in-process inventory...

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Q: Aspen Company estimates its manufacturing overhead to be $625,000

Aspen Company estimates its manufacturing overhead to be $625,000 and its direct labor costs to be $500,000 for year 2. Aspen worked on three jobs for the year. Job 2-1, which was sold during year 2,...

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Q: Refer to the information in Exercise 7-27. Prepare an

Refer to the information in Exercise 7-27. Prepare an entry to allocate over- or underapplied overhead to: a. Work in Process. b. Finished Goods. c. Cost of Goods Sold. In Exercise 7-27 Aspen Company...

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Q: Prepare a scattergraph based on the overhead and labor-hour data

Prepare a scattergraph based on the overhead and labor-hour data in Exercise 5-30. In Exercise 5-30 Adriana Corporation manufactures football equipment. In planning for next year, the managers want t...

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Q: Mary’s Landscaping uses a job order cost system. The following debits

Mary’s Landscaping uses a job order cost system. The following debits (credits) appeared in Work-in-Process Inventory for August: Mary’s applies overhead to produ...

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Q: Turco Products uses a job order cost system. The following debits

Turco Products uses a job order cost system. The following debits (credits) appeared in Work-in-Process Inventory for September: Turco applies overhead to production at a predetermined rate of 120 p...

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Q: Tony’s Textiles uses a predetermined factory overhead rate based on machine-

Tony’s Textiles uses a predetermined factory overhead rate based on machine-hours. For May, Tony’s budgeted overhead was $210,000 based on a budgeted volume of 35,000 machine-hours. Actual overhead am...

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Q: Carmen Beverages reports the following information for July: Units produced

Carmen Beverages reports the following information for July: Units produced and sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,800 Per unit revenue and costs: Sales revenue . . . . ....

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Q: At the beginning of the month, Arthur’s Olde Consulting Corporation had

At the beginning of the month, Arthur’s Olde Consulting Corporation had two jobs in process that had the following costs assigned from previous months: During the month, Jobs SY-40...

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Q: Ross Enterprises maintains a fleet of agricultural equipment for rental to local

Ross Enterprises maintains a fleet of agricultural equipment for rental to local farmers. Ross maintains all its equipment in a company-owned facility. Data on maintenance costs and operating hours of...

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Q: IYF Corporation manufactures miscellaneous parts for building construction and maintenance. IYF

IYF Corporation manufactures miscellaneous parts for building construction and maintenance. IYF uses a normal job costing system. The system applies manufacturing overhead on the basis of direct labor...

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Q: When designing a cost system, what points should you consider before

When designing a cost system, what points should you consider before starting the design?

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Q: For August, Royal Consulting and Mediation Practice (RCMP) worked

For August, Royal Consulting and Mediation Practice (RCMP) worked 900 hours for Alberta Company and 2,100 hours for Ontario Corporation. RCMP bills clients at the rate of $400 per hour; labor cost for...

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Q: Allocation Busters (AB) is a dispute mediation firm offering services

Allocation Busters (AB) is a dispute mediation firm offering services to firms in disputes about cost allocations with government agencies. For March, AB worked 440 hours for Massive Airframes and 660...

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Q: Chuck’s Brokerage Service (CBS) is a discount financial services firm

Chuck’s Brokerage Service (CBS) is a discount financial services firm offering clients investment advice, trading services, and a variety of mutual funds for investment. Chuck has co...

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Q: TechMaster is an information technology (IT) consulting company offering services

TechMaster is an information technology (IT) consulting company offering services to small firms. TechMaster bills clients for its various services based on the hours its professionals spend. In Augus...

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Q: What are the costs of a product using normal costing?

What are the costs of a product using normal costing?

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Q: “Worrying about the choice of an overhead allocation base is a

“Worrying about the choice of an overhead allocation base is a waste of time. In the end, all the overhead is charged to production.” Do you agree? Why?

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Q: Greg’s Diner has the following information for year 2, when several

Greg’s Diner has the following information for year 2, when several new employees were added to the waitstaff: Sales revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $...

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Q: Currently, generally accepted accounting principles (GAAP) in the United

Currently, generally accepted accounting principles (GAAP) in the United States require firms to expense research and development (R&D) costs as period costs. Therefore, when the resulting product is...

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Q: Interview the manager of a construction company (for example, a

Interview the manager of a construction company (for example, a company that does house construction, remodeling, landscaping, or street or highway construction) about how the company bids on prospect...

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Q: Would a dentist, an architect, a landscaper, and a

Would a dentist, an architect, a landscaper, and a lawyer use job costing or process costing? Explain.

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Q: Why might the operating profit calculated by CVP analysis differ from the

Why might the operating profit calculated by CVP analysis differ from the net income reported in financial statements for external reporting?

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Q: When is the basic cost flow model used? Give an example

When is the basic cost flow model used? Give an example.

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Q: Is a criminal trial a “job” for costing purposes?

Is a criminal trial a “job” for costing purposes?

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Q: In one of its divisions, an aircraft components manufacturer produces experimental

In one of its divisions, an aircraft components manufacturer produces experimental navigational equipment for spacecraft and for private transportation companies. Although the products are essentially...

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Q: Consider Question 7-15. What are some of the allocation

Consider Question 7-15. What are some of the allocation bases you considered? Why did you choose the one you used? Question 7-15 Assume that you have been asked to paint the inside walls of an apartm...

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Q: What are characteristics of companies that are likely to use a job

What are characteristics of companies that are likely to use a job cost system?

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Q: Direct labor-hours and direct labor dollars are the most common

Direct labor-hours and direct labor dollars are the most common allocation bases used in the United States (indeed, throughout the world). Why do you suppose they are used more than others?

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Q: Paul’s Limo Service has the following information for June:

Paul’s Limo Service has the following information for June: Required a. Using the traditional income statement format, prepare a value income statement. b. What value would there b...

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Q: Where2 Services is a small service firm that advises high school students

Where2 Services is a small service firm that advises high school students on college opportunities. Joseph Kapp, the founder and president, has collected the following information for March: Require...

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Q: The following data are available for Jupiter Consultants for the year just

The following data are available for Jupiter Consultants for the year just ended: Gross margin ................................... $4,050,000 Operating profit .................................. 1,525,...

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Q: Lead! Inc. offers executive coaching services to small business owners

Lead! Inc. offers executive coaching services to small business owners. Lead!’s operating profits average 20 percent of revenues and its marketing and administrative costs average 25 percent of the co...

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Q: The following balances are from the accounts of Todd Machining Company:

The following balances are from the accounts of Todd Machining Company: Direct materials purchased during the year amount to $598,000, and the cost of goods sold for the year was $2,172,400. Requir...

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Q: Simple regression results from the data of Adriana Corporation are as follows

Simple regression results from the data of Adriana Corporation are as follows: Equation: Overhead = $206,469 + ($45.83 × Machine-hours) Statistical data Correlation coefficient . . . . . . . . . . . ....

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Q: Three entrepreneurs were looking to start a new brewpub near Sacramento,

Three entrepreneurs were looking to start a new brewpub near Sacramento, California, called Roseville Brewing Company (RBC). Brewpubs provide two products to customers—food from the...

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Q: Is “cost-of-goods sold” an expense?

Is “cost-of-goods sold” an expense?

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Q: Argentina Partners is concerned about the possible effects of inflation on its

Argentina Partners is concerned about the possible effects of inflation on its operations. Presently, the company sells 60,000 units for $30 per unit. The variable production costs are $15, and fixed...

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Q: The controller at Emporia Precision Parts asks for your help in sorting

The controller at Emporia Precision Parts asks for your help in sorting out some cost information. She is called to a meeting, but hands you the following information for June: Prime costs, June . . ....

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Q: “The assumptions of CVP analysis are so simplistic that no firm

“The assumptions of CVP analysis are so simplistic that no firm would make a decision based on CVP alone. Therefore, there is no reason to learn CVP analysis.” Comment.

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Q: Sell Block prepares three types of simple tax returns: individual,

Sell Block prepares three types of simple tax returns: individual, partnerships, and (small) corporations. The tax returns have the following characteristics: The total fixed costs per year for the...

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Q: Why does the accountant use a linear representation of cost and revenue

Why does the accountant use a linear representation of cost and revenue behavior in CVP analysis? How is this justified?

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Q: Pioneer Parts, a manufacturer of windows for commercial buildings, reports

Pioneer Parts, a manufacturer of windows for commercial buildings, reports the following account information for last year (all costs are in thousands of dollars): Information on January 1 (Beginning)...

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Q: Butte Components produces a variety of hardware products, primarily for the

Butte Components produces a variety of hardware products, primarily for the do-it-yourself (DIY) market. As part of your job interview as a summer intern at Butte, the cost accountant provides you wit...

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Q: Multiple regression results from the data of Adriana Corporation (Exercise 5

Multiple regression results from the data of Adriana Corporation (Exercise 5-30) are as follows: Equation: Overhead = $124,570 + ($31.93 × Labor-hours) + ($41.10 × Machine-hours) Statistical data Corr...

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Q: Chuck Moore supervises two consulting jobs for the firm of Price and

Chuck Moore supervises two consulting jobs for the firm of Price and Waters, LLP, which is a consulting firm that helps organizations become more efficient. One of the consulting jobs is for the U.S....

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Q: The administrative offices and manufacturing plant of Oakdale Tool & Die share

The administrative offices and manufacturing plant of Oakdale Tool & Die share the same building. The following information (in $000s) appears in the accounting records for last year: Administrative...

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Q: The business school dean has asked the accounting club to help with

The business school dean has asked the accounting club to help with a product costing analysis for the school. How would we define the products? What questions would we ask the dean before we accept t...

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Q: Coastal Computer operates two retail outlets in Oakview, one on Main

Coastal Computer operates two retail outlets in Oakview, one on Main Street and the other in Lakeland Mall. The stores share the use of a central accounting department. The cost of the accounting depa...

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Q: Wayne Casting, Inc., produces a product made from a metal

Wayne Casting, Inc., produces a product made from a metal alloy. Wayne buys the alloy from two different suppliers, Chillicothe Metals and Ames Supply, in approximately equal amounts because of supply...

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Q: The library at Pacific Business School (PBS) serves both undergraduate

The library at Pacific Business School (PBS) serves both undergraduate and graduate programs. The dean of PBS is interested in evaluating the profitability of the degree programs and has asked the hea...

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Q: After a computer failure, you are trying to reconstruct some financial

After a computer failure, you are trying to reconstruct some financial results for the year just ended. While you know that backups are available, it will take too long to get the information you want...

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Q: Mission Foods produces two flavors of tacos, chicken and fish,

Mission Foods produces two flavors of tacos, chicken and fish, with the following characteristics: Required The total fixed costs for the company are $117,000. a. What is the anticipated level of pr...

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Q: “I am going to work for a hospital, which is

“I am going to work for a hospital, which is a not-for-profi t organization. Because there are no profits, I will not be able to apply any CVP analysis in my work.” Do you agree with this statement? W...

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Q: Is “cost-of-goods” a product cost or

Is “cost-of-goods” a product cost or a period cost?

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Q: Just before class starts, you realize that you have mistakenly recycled

Just before class starts, you realize that you have mistakenly recycled the second page of your cost accounting homework assignment. Fortunately, you still have the first page of the printout from you...

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Q: The City of Imperial Falls contracts with Evergreen Waste Collection to provide

The City of Imperial Falls contracts with Evergreen Waste Collection to provide solid waste collection to households and businesses. Until recently, Evergreen had an exclusive franchise to provide thi...

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Q: San Ysidro Company manufactures hiking equipment. The company’s administrative and manufacturing

San Ysidro Company manufactures hiking equipment. The company’s administrative and manufacturing operations share the company’s one building. Eighty percent of the...

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Q: Mary’s Mugs produces and sells various types of ceramic mugs. The

Mary’s Mugs produces and sells various types of ceramic mugs. The business began operations on January 1, year 1, and its costs incurred during the year include these: Variable costs (based on mugs pr...

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Q: What criteria are important in determining the choice of an allocation base

What criteria are important in determining the choice of an allocation base?

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Q: Global Partners is a manufacturing company that produces parts both for inventory

Global Partners is a manufacturing company that produces parts both for inventory and to custom specifications. Parts produced for inventory are sold at prices determined in the market. Custom parts a...

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Q: Cortez Company is planning to introduce a new product that will sell

Cortez Company is planning to introduce a new product that will sell for $96 a unit. The following manufacturing cost estimates have been made on 20,000 units to be produced the first year: Direct mat...

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Q: BS&T Partners has developed a new hubcap with the model

BS&T Partners has developed a new hubcap with the model name Spinnin’ Wheel. Production and sales started August 3. As of August 2, there were no direct materials in inventory. Data for the month of A...

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Q: The following data refers to one month. Fill in the blanks

The following data refers to one month. Fill in the blanks.

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Q: Scholes Systems supplies a particular type of office chair to large retailers

Scholes Systems supplies a particular type of office chair to large retailers such as Target, Costco, and Office Max. Scholes is concerned about the possible effects of inflation on its operations. Pr...

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Q: Durant Manufacturers has performed extensive studies on its costs and production and

Durant Manufacturers has performed extensive studies on its costs and production and estimates the following annual costs based on 150,000 units (produced and sold): _________________________Total An...

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Q: Consider a class in a business school where volume is measured by

Consider a class in a business school where volume is measured by the number of students in the class. Would you say the operating leverage is high or low? Why?

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Q: Suburban Bus Lines operates as a not-for-profit organization

Suburban Bus Lines operates as a not-for-profit organization providing local transit service. As a not-for-profit, it refers to an excess of revenues over costs as a “surplus” and an excess of costs o...

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Q: Sam’s Sushi serves only a fixed-price lunch. The price

Sam’s Sushi serves only a fixed-price lunch. The price of $10 and the variable cost of $4 per meal remain constant regardless of volume. Sam can increase lunch volume by opening and...

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Q: Cesar’s Bottlers bottles soft drinks in a factory that can operate either

Cesar’s Bottlers bottles soft drinks in a factory that can operate either one shift, two shifts, or three shifts per day. Each shift is eight hours long. The factory is closed on wee...

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Q: What are the similarities between the Direct Materials Inventory account of the

What are the similarities between the Direct Materials Inventory account of the manufacturer and the Merchandise Inventory account of the merchandiser? Are there any differences between the two accoun...

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Q: A consulting firm’s accounting records show the following costs for year 1

A consulting firm’s accounting records show the following costs for year 1: Direct materials supplies . . . . . . . . . . . . . . $ 540,000 Direct labor . . . . . . . . . . . . . . . . . . . . . . . ....

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Q: Odd Wallow Drinks is considering adding a new line of fruit juices

Odd Wallow Drinks is considering adding a new line of fruit juices to its merchandise products. This line of juices has the following prices and costs: Selling price per case (24 bottles) of juice . ....

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Q: Frightproof Commuter Airlines is considering adding a new flight to its current

Frightproof Commuter Airlines is considering adding a new flight to its current schedule from Metro to Hicksville. This route has the following prices and costs: Selling price per passenger per flight...

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Q: Accounting records for NIC Enterprises (NICE) for September show the

Accounting records for NIC Enterprises (NICE) for September show the following (each entry is the total of the actual entries for the account for the month): Note a: This entry does not include any...

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Q: How does the accountant know what to record for direct materials for

How does the accountant know what to record for direct materials for a job or a client? For direct labor cost?

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Q: A manager of a retailing firm says that he can lower his

A manager of a retailing firm says that he can lower his operating leverage by renting his stores rather than buying. Would you recommend this? Explain.

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Q: A January 1, 2009, news report on msn.com

A January 1, 2009, news report on msn.com included the following sentence: “A report put out by brokerage house CLSA about Jet Airways said that the fall in ATF [fuel] prices has brought down the load...

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Q: What is the difference between gross margin and contribution margin.

What is the difference between gross margin and contribution margin.

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Q: Identify each of the following profit equation components on the graph presented

Identify each of the following profit equation components on the graph presented below: a. The total cost line. b. The total revenue line. c. The total variable costs area. d. Variable cost per unit...

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Q: A local restaurant, Fred’s Fish Fry, is estimating nonfood kitchen

A local restaurant, Fred’s Fish Fry, is estimating nonfood kitchen costs (labor, supervision, utilities, etc.) based on food cost. Data were gathered for the past 24 months and analyzed using a spread...

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Q: Lomas Electronics manufactures a portable testing device for use in oil exploration

Lomas Electronics manufactures a portable testing device for use in oil exploration. The product’s price and cost characteristics are: Selling price per unit . . . . . . . . . . . . . . $ 260 Variable...

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Q: Identify the letter of each profit equation component on the graph that

Identify the letter of each profit equation component on the graph that follows.

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Q: Assume that you have been asked to paint the inside walls of

Assume that you have been asked to paint the inside walls of an apartment. State specifically how you would estimate the cost of that job. Include payment for your own labor.

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Q: Anu’s Amusement Center has collected the following data for operations for the

Anu’s Amusement Center has collected the following data for operations for the year: Total revenues . . . . . . . . . . . . . . . . . $1,600,000 Total fixed costs . . . . . . . . . . . . . . . . . $ 4...

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Q: The cost accountant for Angie’s Apparel has compiled the following information for

The cost accountant for Angie’s Apparel has compiled the following information for last month’s operations: Administrative costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 14,000...

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Q: The manager of Kima’s Food Mart estimates operating costs for the year

The manager of Kima’s Food Mart estimates operating costs for the year will include $900,000 in fixed costs. Required a. Find the break-even point in sales dollars with a contribution margin ratio of...

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Q: Mark Ting desperately wants his proposed new product, DNA-diamond

Mark Ting desperately wants his proposed new product, DNA-diamond, to be accepted by top management. DNA-diamond is a piece of jewelry that contains the DNA of a boy or girl friend, spouse, or other l...

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Q: Cambridge, Inc., is considering the introduction of a new calculator

Cambridge, Inc., is considering the introduction of a new calculator with the following price and cost characteristics: Sales price . . . . . . . . . . . . . . . . . . . . $ 27 per unit Variable costs...

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Q: Oak Island Amusements Center provides the following data on the costs of

Oak Island Amusements Center provides the following data on the costs of maintenance and the number of visitors for the last three years: Number of Visitors _____________Maintenance per Year: (thousan...

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Q: Refer to the data for Cambridge, Inc. in Exercise 3

Refer to the data for Cambridge, Inc. in Exercise 3-25. Assume that the projected number of units sold for the year is 7,000. Consider requirements (b ), (c) , and (d ) independently of each other. I...

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Q: Balance, Inc., is considering the introduction of a new energy

Balance, Inc., is considering the introduction of a new energy snack with the following price and cost characteristics: Sales price . . . . . . . . . . . . . . . $ 1.00 per unit Variable costs . . . ....

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Q: Refer to the data for Balance, Inc., in Exercise 3

Refer to the data for Balance, Inc., in Exercise 3-27. Assume that the company plans to sell 600,000 units per month. Consider requirements (b), (c), and (d) independently of each other. In Exercise...

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Q: LM Enterprises produces a single part for sale. The part sells

LM Enterprises produces a single part for sale. The part sells for $12 per unit. Fixed costs are $1,700,000 annually. Production and sales of 540,000 units annually results in profit before taxes of $...

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Q: Brodie Company’s advertising manager wants to know whether the company’s advertising program

Brodie Company’s advertising manager wants to know whether the company’s advertising program is successful. The manager used a spreadsheet program to estimate the relation between advertising expendit...

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Q: Cost allocation bases are ideally based on a cause-and-

Cost allocation bases are ideally based on a cause-and-effect basis, but they are used to allocate fixed overhead. Is this inconsistent?

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Q: Provide a business example illustrating opportunity costs.

Provide a business example illustrating opportunity costs.

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Q: Your company is preparing an estimate of its production costs for the

Your company is preparing an estimate of its production costs for the coming period. The controller estimates that direct materials costs are $45 per unit and that direct labor costs are $21 per hour....

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Q: Why are accurate cost estimates important?

Why are accurate cost estimates important?

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Q: The Business School at Eastern College is collecting data as a first

The Business School at Eastern College is collecting data as a first step in the preparation of next year’s budget. One cost that is being looked at closely is administrative staff a...

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Q: Your company provides a variety of delivery services. Management wants to

Your company provides a variety of delivery services. Management wants to know the volume of a particular delivery that would generate $10,000 per month in operating profits before taxes. The company...

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Q: Lerner, Inc., is accumulating data to prepare its annual profit

Lerner, Inc., is accumulating data to prepare its annual profit plan for the coming year. The behavior pattern of the maintenance costs must be determined. The accounting staff has suggested using reg...

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Q: The following information on maintenance and repair costs and revenues for the

The following information on maintenance and repair costs and revenues for the last two years is available from the accounting records at Arnie’s Arcade & Video Palace. Arnie has...

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Q: How is job costing in service organizations (for example, consulting

How is job costing in service organizations (for example, consulting firms) different from job costing in manufacturing organizations?

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Q: Refer to the example in Appendix B. Assume that the company

Refer to the example in Appendix B. Assume that the company now finds that the learning rate is 90 percent, instead of 80 percent. The 90 percent learning rate coefficient is −0.1520...

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Q: Pick a unit of a hospital (for example, intensive care

Pick a unit of a hospital (for example, intensive care or maternity). Name one example of a direct materials cost, one example of a direct labor cost, and one example of an indirect cost.

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Q: Krylon Company purchases eight special tools annually from CO., Inc.

Krylon Company purchases eight special tools annually from CO., Inc. The price of these tools has increased each year, reaching $100,000 per unit last year. Because the purchase price has increased si...

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Q: Hill Street Electronics has provided the following information for last year:

Hill Street Electronics has provided the following information for last year: Sales revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 8,000,000 Store rent . . . . . . . ....

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Q: Why does it matter what allocation base is used to determine the

Why does it matter what allocation base is used to determine the predetermined rate?

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Q: Action Games has developed a new computer game that it plans to

Action Games has developed a new computer game that it plans to sell for $32. The variable costs associated with each game (for materials, shipping, and packaging) amount to $7. The fixed costs associ...

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Q: Luke Corporation produces a variety of products, each within their own

Luke Corporation produces a variety of products, each within their own division. Last year, the managers at Luke developed and began marketing a new chewing gum, Bubbs, to sell in vending machines. Th...

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Q: Under what conditions is the engineering estimates technique preferred to other estimation

Under what conditions is the engineering estimates technique preferred to other estimation techniques?

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Q: If one wishes simply to prepare a cost estimate using regression analysis

If one wishes simply to prepare a cost estimate using regression analysis and enters data into a program to compute regression estimates, what problems might be encountered?

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Q: Why is it important to incorporate learning into cost estimates?

Why is it important to incorporate learning into cost estimates?

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Q: When using cost estimation methods based on past data, what are

When using cost estimation methods based on past data, what are the trade-offs between gathering more data and gathering less?

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Q: The following costs are labeled fixed or variable according to a typical

The following costs are labeled fixed or variable according to a typical designation in accounting. Under which circumstances would any of these costs behave in a manner opposite to that listed? a. Di...

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Q: When preparing cost estimates for account analysis purposes, should the costs

When preparing cost estimates for account analysis purposes, should the costs be extracted from the historical accounting records?

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Q: Mega Contractors sells to government agencies using a cost-plus contract

Mega Contractors sells to government agencies using a cost-plus contract and to private firms using fixed price contracts. What choices does Mega have in the design of its job costing system that affe...

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Q: Brighton, Inc., manufactures kitchen tiles. The company recently expanded

Brighton, Inc., manufactures kitchen tiles. The company recently expanded, and the controller believes that it will need to borrow cash to continue operations. It began negotiating for a one-month ban...

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Q: We have discussed two methods for process costing, weighted average and

We have discussed two methods for process costing, weighted average and FIFO. Your colleague recommends last-in, first-out (LIFO) process costing to the controller as a new system. The controller is c...

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Q: Chocolate Bars, Inc. (CBI), manufactures creamy deluxe chocolate

Chocolate Bars, Inc. (CBI), manufactures creamy deluxe chocolate candy bars. The firm has developed three distinct products: Almond Dream, Krispy Krackle, and Creamy Crunch. CBI is profitable, but man...

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Q: Refer to Problem 9-51. Jean Sharpe decides to gather

Refer to Problem 9-51. Jean Sharpe decides to gather additional data to identify the cause of overhead costs and figure out which products are most profitable. She notices that $30,000 of the overhead...

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Q: The following exchange occurred just after the finance staff at Diversified Electronics

The following exchange occurred just after the finance staff at Diversified Electronics rejected a capital investment proposal. David Parker (Product Development): I just don’t under...

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Q: What are the advantages of divisional income as a business unit performance

What are the advantages of divisional income as a business unit performance measure? What are the disadvantages?

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Q: How is divisional income like income computed for the firm? How

How is divisional income like income computed for the firm? How is it different?

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Q: Give an example in which the use of ROI measures might lead

Give an example in which the use of ROI measures might lead the manager to make a decision that is not in the firm’s interests.

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Q: How does residual income differ from ROI?

How does residual income differ from ROI?

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Q: What impact does the use of gross book value or net book

What impact does the use of gross book value or net book value in the investment base have on the computation of ROI?

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Q: What problems might there be if the same methods used to compute

What problems might there be if the same methods used to compute firm income are used to compute divisional income? Does your answer depend on the type of business a firm is in?

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Q: The chapter identified some problems with ROI-type measures and suggested

The chapter identified some problems with ROI-type measures and suggested that residual income reduces some of them. Why do you think that ROI is a more common performance measure in practice than res...

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Q: A friend owns and operates a consulting firm that works for a

A friend owns and operates a consulting firm that works for a single client under one consulting agreement. The consulting firm bills the client monthly for charges incurred. She asks you whether you...

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Q: “Failure to invest in projects is not a problem when you

“Failure to invest in projects is not a problem when you use ROI. If there is a good project, corporate headquarters will just tell the division manager to invest.” What are the difficulties with this...

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Q: How would you respond to the following comment? “Residual income

How would you respond to the following comment? “Residual income and economic value added are identical.”

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Q: “I think that EVA is the best performance measure. I

“I think that EVA is the best performance measure. I am going to recommend that we evaluate all managers, of plants, divisions, subsidiaries, up to the chief executive officer (CEO), using it.” Do you...

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Q: Management of Division A is evaluated based on residual income measures.

Management of Division A is evaluated based on residual income measures. The division can either rent or buy a certain asset. Might the performance evaluation technique have an impact on the rent-or-b...

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Q: “Every one of our company’s divisions has a return on investment

“Every one of our company’s divisions has a return on investment in excess of our cost of capital. Our company must be a blockbuster.” Comment on this statement.

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Q: “Residual income solves some of the problems with ROI, but

“Residual income solves some of the problems with ROI, but because it is an absolute number, it is difficult to compare divisions. We should use residual income divided by assets and then we would hav...

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Q: Eastern Merchants shows the following information for its two divisions for year

Eastern Merchants shows the following information for its two divisions for year 1: Required Compute divisional operating income for the two divisions. Ignore taxes. How well have these divisions pe...

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Q: Refer to Exercise 14-20. The results for year 2

Refer to Exercise 14-20. The results for year 2 have just been posted: In Exercise 14-20 Eastern Merchants shows the following information for its two divisions for year 1: Required Compute divisi...

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Q: A division is considering the acquisition of a new asset that will

A division is considering the acquisition of a new asset that will cost $720,000 and have a cash flow of $252,000 per year for each of the four years of its life. Depreciation is computed on a straigh...

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Q: The following data are available for two divisions of Solomons Company:

The following data are available for two divisions of Solomons Company: The cost of capital for the company is 8 percent. Ignore taxes. Required a. If Solomons measures performance using ROI, which...

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Q: Under which of the following conditions will the first-in,

Under which of the following conditions will the first-in, first-out (FIFO) method of process costing produce the same cost of goods manufactured as the weighted-average method? a. When goods produced...

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Q: Ocean Division currently earns $780,000 and has divisional assets

Ocean Division currently earns $780,000 and has divisional assets of $3.9 million. The division manager is considering the acquisition of a new asset that will add to profit. The investment has a cost...

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Q: Refer to the information in Exercises 14-25 and 14-

Refer to the information in Exercises 14-25 and 14-26. In Exercises 14-25 and 14-26 Ocean Division currently earns $780,000 and has divisional assets of $3.9 million. The division manager is consider...

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Q: Noonan Division has total assets (net of accumulated depreciation) of

Noonan Division has total assets (net of accumulated depreciation) of $3,300,000 at the beginning of year 1. One of the assets is a machine that has a net book value of $300,000. Expected divisional i...

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Q: Refer to the facts in Exercise 14-28, but assume

Refer to the facts in Exercise 14-28, but assume that Noonan has been leasing the machine for $60,000 annually. Assume also that the machine generates income of $42,000 annually after the lease paymen...

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Q: The Caribbean Division of Mega-Entertainment Corporation just started operations.

The Caribbean Division of Mega-Entertainment Corporation just started operations. It purchased depreciable assets costing $30 million and having a four-year expected life, after which the assets can b...

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Q: Refer to the data in Exercise 14-30. Assume that

Refer to the data in Exercise 14-30. Assume that the division uses beginning-of-year asset values in the denominator for computing ROI. In Exercise 14-30 The Caribbean Division of Mega-Entertainment...

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Q: Refer to the information in Exercise 14-30. In computing

Refer to the information in Exercise 14-30. In computing ROI, this division uses end-of-year asset values. Assume that all cash flows increase 10 percent at the end of each year. This has the followin...

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Q: Upper Division of Lower Company acquired an asset with a cost of

Upper Division of Lower Company acquired an asset with a cost of $600,000 and a four-year life. The cash flows from the asset, considering the effects of inflation, were scheduled as follows: Year __...

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Q: Back Mountain Industries (BMI) has two divisions: East and

Back Mountain Industries (BMI) has two divisions: East and West. BMI has a cost-of-capital of 15%. Selected financial information (in thousands of dollars) for the first year of business follows: a...

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Q: Refer to the data in Exercise 14-34.

Refer to the data in Exercise 14-34. In Exercise 14-34 Back Mountain Industries (BMI) has two divisions: East and West. BMI has a cost-of-capital of 15%. Selected financial information (in thousands...

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Q: By mistake, the production supervisor transposed the digits on the production

By mistake, the production supervisor transposed the digits on the production report and reported a higher percentage of completion for each inventory component. Assume that there was no beginning inv...

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Q: Refer to the data in Exercise 14-34.

Refer to the data in Exercise 14-34. In Exercise 14-34 Back Mountain Industries (BMI) has two divisions: East and West. BMI has a cost-of-capital of 15%. Selected financial information (in thousands...

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Q: Oscar Clemente (Problem 14–37) is still assessing the

Oscar Clemente (Problem 14–37) is still assessing the problem of whether to acquire LSI’s assembly machine. He learns that the new machine could be acquired next year, but if he waits until then, it w...

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Q: Refer to the facts in Problem 14–37. Assume that

Refer to the facts in Problem 14–37. Assume that Pitt’s performance measurement and bonus plans are based on residual income instead of ROI. Pitt uses a cost of capital of 12 percent in computing resi...

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Q: Refer to the facts in Problem 14–39. Assume that

Refer to the facts in Problem 14–39. Assume that Pitt’s performance measurement and bonus plans are based on residual income instead of ROI. Pitt uses a cost of capital of 12 percent in computing resi...

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Q: Division managers at Asher Company are granted a wide range of decision

Division managers at Asher Company are granted a wide range of decision authority. With the exception of managing cash, which is done at corporate headquarters, divisions are responsible for sales, pr...

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Q: Several years ago, Seville Company acquired Salvador Components. Prior to

Several years ago, Seville Company acquired Salvador Components. Prior to the acquisition, Salvador manufactured and sold automotive components to third-party customers. Since becoming a division of S...

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Q: Suwon Pharmaceuticals invests heavily in research and development (R&D

Suwon Pharmaceuticals invests heavily in research and development (R&D), although it must currently treat its R&D expenditures as expenses for financial accounting purposes. To encourage investment in...

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Q: Biddle Company uses EVA to evaluate the performance of division managers.

Biddle Company uses EVA to evaluate the performance of division managers. For the Wallace Division, after-tax divisional income was $400,000 in year 3. The company adjusts the after-tax income for adv...

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Q: I thought evaluating performance would be easier than this. I have

I thought evaluating performance would be easier than this. I have three vice presidents, operating the same business in three different countries. I need to be able to compare them in order to prepar...

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Q: What are the advantages of using an ROI-type measure rather

What are the advantages of using an ROI-type measure rather than the absolute value of division profits as a performance evaluation technique for business units?

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Q: In computing the cost per equivalent unit, the weighted-average

In computing the cost per equivalent unit, the weighted-average method considers: a. Current costs only. b. Current costs plus costs in beginning WIP inventory. c. Current costs plus the cost of endin...

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Q: How does EVA differ from residual income?

How does EVA differ from residual income?

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Q: What are the dangers of using only business unit measures to evaluate

What are the dangers of using only business unit measures to evaluate the performance of business unit managers?

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Q: A company prepares the master budget by taking each division manager’s estimate

A company prepares the master budget by taking each division manager’s estimate of revenues and costs for the coming period and entering the data into the budget without adjustment. At the end of the...

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Q: “If every division manager maximizes divisional income, we will maximize

“If every division manager maximizes divisional income, we will maximize firm income. Therefore, divisional income is the best performance measure.” Comment.

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Q: By using economic value-added, we avoid managers focusing on

By using economic value-added, we avoid managers focusing on short-term gains like they would with accounting income. Do you agree with this statement?

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Q: What are the advantages of using an ROI-type measure rather

What are the advantages of using an ROI-type measure rather than the absolute value of division profits as a performance evaluation technique for business units?

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Q: How does EVA differ from residual income?

How does EVA differ from residual income?

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Q: What are the dangers of using only business unit measures to evaluate

What are the dangers of using only business unit measures to evaluate the performance of business unit managers?

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Q: A company prepares the master budget by taking each division manager’s estimate

A company prepares the master budget by taking each division manager’s estimate of revenues and costs for the coming period and entering the data into the budget without adjustment. At the end of the...

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Q: “If every division manager maximizes divisional income, we will maximize

“If every division manager maximizes divisional income, we will maximize firm income. Therefore, divisional income is the best performance measure.” Comment.

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Q: When using the weighted-average method of process costing, total

When using the weighted-average method of process costing, total equivalent units produced for a given period equal: a. The number of units started and completed during the period plus the number of u...

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Q: By using economic value-added, we avoid managers focusing on

By using economic value-added, we avoid managers focusing on short-term gains like they would with accounting income. Do you agree with this statement?

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Q: Assume that all of the information is the same as in Integrative

Assume that all of the information is the same as in Integrative Case 15-43, but instead of receiving only one outside bid, Logistics receives two. The new bid is from World Services for $195 per hund...

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Q: What are the limitations of market-based transfer prices? What

What are the limitations of market-based transfer prices? What are the limitations of cost-based transfer prices?

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Q: When would you advise a firm to use direct intervention to set

When would you advise a firm to use direct intervention to set transfer prices? What are the disadvantages of such a practice?

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Q: When would you advise a firm to use prices other than market

When would you advise a firm to use prices other than market prices for interdivisional transfers?

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Q: What is the basis for choosing between actual and standard costs for

What is the basis for choosing between actual and standard costs for cost-based transfer pricing?

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Q: What are the advantages and disadvantages of a negotiated transfer price system

What are the advantages and disadvantages of a negotiated transfer price system?

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Q: What is the general transfer pricing rule? What is the transfer

What is the general transfer pricing rule? What is the transfer price that results from this rule when: a. There is a perfect market for the product? b. The selling division is operating below capacit...

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Q: What should an effective transfer pricing system accomplish in a decentralized organization

What should an effective transfer pricing system accomplish in a decentralized organization?

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Q: Alpha Division and Beta Division are both profit centers. Alpha has

Alpha Division and Beta Division are both profit centers. Alpha has no external markets for its one product, an electrical component. Beta uses the component but cannot purchase it from any other sour...

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Q: Would process costing work well for a service firm? Why or

Would process costing work well for a service firm? Why or why not?

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Q: How does the choice of a transfer price affect the operating profits

How does the choice of a transfer price affect the operating profits of both segments involved in an intracompany transfer? Why is the choice of a transfer price important if the total profits of the...

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Q: When setting a transfer price for goods that are sold across international

When setting a transfer price for goods that are sold across international boundaries, what factors should management consider?

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Q: In what ways is transfer pricing like cost allocation? In what

In what ways is transfer pricing like cost allocation? In what ways is it different?

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Q: Best Practices, Inc., is a management consulting fi rm.

Best Practices, Inc., is a management consulting fi rm. Its Corporate Division advises private firms on the adoption and use of cost management systems. Government Division consults with state and loc...

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Q: Mississippi Company has two decentralized divisions, Illinois and Iowa. Illinois

Mississippi Company has two decentralized divisions, Illinois and Iowa. Illinois always has purchased certain units from Iowa at $60 per unit. Because Iowa plans to raise the price to $80 per unit, Il...

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Q: A company permits its decentralized units to “lease” space to

A company permits its decentralized units to “lease” space to one another. Uptown Division has leased some of its idle warehouse space to Downtown Division for $60 per square foot per month. Recently,...

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Q: Division A offers its product to outside markets for $60.

Division A offers its product to outside markets for $60. It incurs variable costs of $22 per unit and fixed costs of $75,000 per month based on monthly production of 4,000 units. Division B can acqui...

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Q: Seattle Transit Ltd. operates a local mass transit system. The

Seattle Transit Ltd. operates a local mass transit system. The transit authority is a state governmental agency. It has an agreement with the state government to provide rides to senior citizens for 5...

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Q: Carmen Seville and Don Turco jointly own Bright Green Temp Services (

Carmen Seville and Don Turco jointly own Bright Green Temp Services (BGTS). Carmen owns 60 percent and Don owns 40 percent. The company provides temporary clerical services at a rate of $40 per hour....

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Q: Trans Atlantic Metals has two operating divisions. Its forging operation in

Trans Atlantic Metals has two operating divisions. Its forging operation in Finland forges raw metal, cuts it, and then ships it to the United States where the company’s Gear Division uses the metal t...

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Q: Clean Corporation manufactures liquid window cleaner. The following information concerns its

Clean Corporation manufactures liquid window cleaner. The following information concerns its work in process: • Beginning inventory, 12,000 partially complete gallons. • Transferred out, 63,000 gallon...

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Q: Refer to the data in Exercise 15–17. Suppose that

Refer to the data in Exercise 15–17. Suppose that Government Division will charge the client interested in implementing an activity-based costing system by the hour based on cost plus a fixed fee, whe...

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Q: Mountain Industries operates a Manufacturing Division and an Assembly Division. Both

Mountain Industries operates a Manufacturing Division and an Assembly Division. Both divisions are evaluated as profit centers. Assembly buys components from Manufacturing and assembles them for sale....

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Q: Refer to the information in Exercise 15-25. Suppose Manufacturing

Refer to the information in Exercise 15-25. Suppose Manufacturing is located in Country A with a tax rate of 60% and Assembly in Country B with a tax rate of 40%. All other facts remain the same. In...

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Q: Leapin’ Larry’s Pre-Owned Cars has two divisions, Operations and

Leapin’ Larry’s Pre-Owned Cars has two divisions, Operations and Financing. Operations is responsible for selling Larry’s inventory as quickly as possible and purchasing cars for future sale. Financin...

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Q: Perth Corporation has two operating divisions, a casino and a hotel

Perth Corporation has two operating divisions, a casino and a hotel. The two divisions meet the requirements for segment disclosures. Before transactions between the two divisions are considered, reve...

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Q: Athena Company has two divisions. Spartan Division, which has an

Athena Company has two divisions. Spartan Division, which has an investment base of $8,400,000, produces and sells 450,000 units of a product at a market price of $28 per unit. Its variable costs tota...

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Q: Refer to the data in Problem 15-29. Division managers

Refer to the data in Problem 15-29. Division managers are evaluated using residual income using a 15 percent cost of capital. In Problem 15-29 Athena Company has two divisions. Spartan Division, whic...

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Q: Skane Shipping Ltd. (SSL) operates a fleet of container

Skane Shipping Ltd. (SSL) operates a fleet of container ships in international trade between Sweden and Singapore. All of the shipping income (that is, that related to SSL’s ships) is deemed to be ear...

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Q: Cochise Corporation’s Southern Division is operating at capacity. It has been

Cochise Corporation’s Southern Division is operating at capacity. It has been asked by Northern Division to supply it a thermal switch, which Southern sells to its regular customers for $60 each. Nort...

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Q: Oriole, Inc. is a large consumer products company, which

Oriole, Inc. is a large consumer products company, which manufactures health and beauty products sold at grocery and drug stores throughout the country. One division, PS, does both manufacturing and s...

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Q: Refer to the data in Exercise 8-16. Assume that

Refer to the data in Exercise 8-16. Assume that beginning inventory is 50 percent complete with respect to materials and 30 percent complete with respect to conversion costs. In Exercise 8-16. Clean...

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Q: Western States Supply, Inc. (WSS), consists of three

Western States Supply, Inc. (WSS), consists of three divisions—California, Northwest, and Southwest—that operate as if they were independent companies. Each division has its own sales force and produc...

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Q: Gage Corporation has two operating divisions in a semiautonomous organizational structure.

Gage Corporation has two operating divisions in a semiautonomous organizational structure. Adams Division, located in the United States, produces a specialized electrical component that is an input to...

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Q: Mathes Corporation manufactures paper products. The company operates a landfill,

Mathes Corporation manufactures paper products. The company operates a landfill, which it uses to dispose of nonhazardous trash. The trash is hauled from the two nearby manufacturing facilities in tru...

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Q: Refer to the data in Problem 15-39. At the

Refer to the data in Problem 15-39. At the end of the year, the following data are available on actual operations at the landfill. Volume of trash . . . . . . . . . . . . . . . . . . . . . . 1,250 to...

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Q: CHS is a large multidivision fi rm. One division, Health

CHS is a large multidivision fi rm. One division, Health Services, is well known inside CHS for its efficient information technology (IT). A smaller division, Optics, has approached Health Services wi...

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Q: Refer to Problem 15-41. Suppose Health Services could sell

Refer to Problem 15-41. Suppose Health Services could sell time on the machine to other companies in the area on a per-hour basis. Further, it can sell all the time available for $30 per hour. In Pro...

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Q: “We can’t drop our prices below $210 per hundred pounds

“We can’t drop our prices below $210 per hundred pounds,” exclaimed Greg Berman, manager of Forwarders, a division of Custom Freight Systems. &aci...

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Q: In the late 1980s, General Electric Company (GE), whose

In the late 1980s, General Electric Company (GE), whose CEO at the time was Jack Welch, acquired Kidder Peabody, an investment banking firm founded in 1824. In 1991, Kidder hired a bond trader named J...

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Q: SPG Company manufactures and sells metal products that are used in many

SPG Company manufactures and sells metal products that are used in many manufacturing operations. The management at SPG believes strongly in decentralized decision making and using performance evaluat...

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Q: Hall O’ Fame Products is a nationwide sporting goods manufacturer. The

Hall O’ Fame Products is a nationwide sporting goods manufacturer. The company operates with a widely based manufacturing and distribution system that has led to a highly decentraliz...

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Q: Missouri Corporation shows the following information concerning the work in process at

Missouri Corporation shows the following information concerning the work in process at its plant: • Beginning inventory was partially complete (materials are 100 percent complete; conversion costs are...

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Q: Paulista Corporation’s division managers have been expressing growing dissatisfaction with the methods

Paulista Corporation’s division managers have been expressing growing dissatisfaction with the methods the organization uses to measure division performance. Division operations are evaluated every qu...

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Q: Your company has a travel policy that reimburses employees for the “

Your company has a travel policy that reimburses employees for the “ordinary and necessary” costs of business travel. Employees often mix a business trip with pleas...

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Q: An article in The Wall Street Journal indicated that dressmaker Fallo Me

An article in The Wall Street Journal indicated that dressmaker Fallo Me (name changed) backdated invoices to record revenue in the quarter before sales were actually made. As long as sales remained s...

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Q: Overview River Beverages is a food and soft drink company with

Overview River Beverages is a food and soft drink company with worldwide operations. The company is organized into five regional divisions with each vice president reporting directly to the CEO, Cindy...

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Q: When the fraud at PepsiCo occurred, the company had five somewhat

When the fraud at PepsiCo occurred, the company had five somewhat diverse groups of divisions: food products, such as Frito-Lay, Inc.; transportation, such as northAmerican Van Lines, Inc.; sporting g...

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Q: The board of directors of the Cortez Beach Yacht Club (CBYC

The board of directors of the Cortez Beach Yacht Club (CBYC) is developing plans to acquire more equipment for lessons and rentals and to expand club facilities. The board plans to purchase about $50,...

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Q: Hamilton Corp. manufactures a component used in a popular gaming console

Hamilton Corp. manufactures a component used in a popular gaming console. Demand has been strong and the executive staff at Hamilton is planning for next year. On October 1, they call you into a budge...

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Q: The Casings Plant of Wyoming Machines makes plastics shells for the company’s

The Casings Plant of Wyoming Machines makes plastics shells for the company’s calculators. (Each calculator requires one shell.) For each of the next two years, Wyoming expects to sell 160,000 calcula...

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Q: Westile Company buys plain ceramic tiles and prints different designs on them

Westile Company buys plain ceramic tiles and prints different designs on them for souvenir and gift stores. It buys the tiles from a small company in Europe, so at all times it keeps on hand a stock e...

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Q: White Products wishes to purchase goods in one month for sale in

White Products wishes to purchase goods in one month for sale in the next. On March 31, the company has 8,000 portable music players in stock, although sales for the next month (April) are estimated t...

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Q: What are the characteristics of industries most likely to use process costing

What are the characteristics of industries most likely to use process costing?

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Q: Refer to the data in Exercise 8-18.

Refer to the data in Exercise 8-18. In Exercise 8-18. Missouri Corporation shows the following information concerning the work in process at its plant: • Beginning inventory was partially complete (m...

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Q: Ashland Corporation, a merchandising fi rm, is preparing its cash

Ashland Corporation, a merchandising fi rm, is preparing its cash budget for October. The following information is available concerning its inventories: Inventories at beginning of October . . . . ....

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Q: Duluth Company is preparing its cash budget for December. The following

Duluth Company is preparing its cash budget for December. The following information is available concerning its accounts receivable: Estimated credit sales for December . . . . . . . . . . . . . . ....

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Q: Nassau Products is preparing a cash budget for April. The following

Nassau Products is preparing a cash budget for April. The following information on accounts receivable collections is available from past collection experience: Percent of current month’s sales collec...

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Q: Scare-2-B-U (S2BU) specializes in

Scare-2-B-U (S2BU) specializes in costumes for all occasions. The average price of each of its costumes is $240. For each occasion, S2BU receives a 20 percent deposit two months before the occasion, 5...

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Q: Varmit-B-Gone is a pest control service that operates

Varmit-B-Gone is a pest control service that operates in a suburban neighborhood. The company attempts to make service calls at least once a month to all homes that subscribe to its service. It makes...

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Q: Refer to the data in Exercise 13-31. Varmit-

Refer to the data in Exercise 13-31. Varmit-B-Gone estimates that the number of subscribers in September should fall 10 percent below August levels, and the number of service calls per subscriber shou...

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Q: Rhodes, Inc., is a fast-growing start-up

Rhodes, Inc., is a fast-growing start-up firm that manufactures bicycles. The following income statement is available for July: Sales revenue (200 units @ $500 per unit) . . . . $100,000 Less Manufact...

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Q: Carreras Café is a Spanish restaurant in a college town. The

Carreras Café is a Spanish restaurant in a college town. The owner expects that the number of meals served in June will be 40 percent below those served in May, because so many students leave for the...

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Q: BK Consulting is a management consulting fi rm. Other than the

BK Consulting is a management consulting fi rm. Other than the senior leadership (who manage the firm, but do not actively consult), the managers and staff are billed to clients on an hourly basis. Th...

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Q: The controller of Northwest Hardware has just received two forecasts for sales

The controller of Northwest Hardware has just received two forecasts for sales in the Montana District for the coming year. Based on an econometric analysis of consumer spending and economic trends, a...

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Q: Bears, Inc., adds materials at the beginning of the process

Bears, Inc., adds materials at the beginning of the process in Department MO. The following information on physical units for Department MO for the month of July is available: Work in process, July 1...

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Q: Elizabeth Jablonski is the director of Research and Development for Galaxy Electronics

Elizabeth Jablonski is the director of Research and Development for Galaxy Electronics. Last week, she submitted the following funding request as part of the annual budget process. Project __________...

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Q: Sanjana’s Sweet Shoppe operates on the boardwalk of a New England coastal

Sanjana’s Sweet Shoppe operates on the boardwalk of a New England coastal town. The store only opens for the summer season and the business is heavily dependent on the weather and th...

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Q: Bay Area Limos operates transportation services to Bay City airport. The

Bay Area Limos operates transportation services to Bay City airport. The price of service is fixed at a flat rate for each trip and most costs of providing the service are fixed for each trip. Betty S...

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Q: Refer to the data in Problem 13-40. Estimate the

Refer to the data in Problem 13-40. Estimate the cash from operations expected in year 2. In Problem 13-40 The following information is available for year 1 for Dancer Components: Sales revenue (300,...

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Q: Refer to the data in Problem 13-42. Estimate the

Refer to the data in Problem 13-42. Estimate the cash from operations expected in year 2. In Problem 13-42 Cameron Parts has the following data from year 1 operations, which are to be used for develo...

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Q: Lotus Fixtures, Inc. (LFI), manufactures steel fittings.

Lotus Fixtures, Inc. (LFI), manufactures steel fittings. Each fitting requires both steel and an alloy that allows the fitting to be used under extreme conditions. The following data apply to the prod...

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Q: Capstone Corporation has just received its sales expense report for January,

Capstone Corporation has just received its sales expense report for January, which follows. Item _____________________Amount Sales commissions . . . . . . . . . . . . . . . . . $121,500 Sales staff sa...

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Q: Delhi, Inc., seeks your assistance in developing cash and other

Delhi, Inc., seeks your assistance in developing cash and other budget information for August, September, and October. At July 31, the company had cash of $22,000, accounts receivable of $1,748,000, i...

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Q: The following information pertains to the Davenport plant for the month of

The following information pertains to the Davenport plant for the month of May (all materials are added at the beginning of the process): Required Compute the cost per equivalent unit for materials...

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Q: Refer to the data in Exercise 8-22.

Refer to the data in Exercise 8-22. In Exercise 8-22. The following information pertains to the Davenport plant for the month of May (all materials are added at the beginning of the process): Requi...

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Q: Materials are added at the beginning of the production process at Santiago

Materials are added at the beginning of the production process at Santiago Company, which uses a FIFO process costing system. The following information on the physical flow of units is available for t...

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Q: Refer to the data in Exercise 8-24. Cost

Refer to the data in Exercise 8-24. Cost data for April show the following: Beginning WIP inventory Direct materials costs . . . . . . . . . . . . . . $ 24,300 Conversion costs . . . . . . . . . . ....

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Q: The Matsui Lubricants plant uses the weighted-average method to account

The Matsui Lubricants plant uses the weighted-average method to account for its work-in process inventories. The accounting records show the following information for a particular day: Beginning WIP...

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Q: Refer to the data in Exercise 8-26. Compute the

Refer to the data in Exercise 8-26. Compute the cost of goods transferred out and the ending inventory using the weighted-average method. In Exercises 8-26 The Matsui Lubricants plant uses the weight...

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Q: Using the data in Exercise 8-26, compute the cost

Using the data in Exercise 8-26, compute the cost per equivalent unit for direct materials and for conversion costs using the FIFO method. In Exercises 8-26 The Matsui Lubricants plant uses the weigh...

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Q: A manufacturing company has records of its activity during the month in

A manufacturing company has records of its activity during the month in work-in-process inventory and of its ending work-in-process inventory; however, the record of its beginning inventory has been l...

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Q: Refer to the data in Exercises 8-26 and 8-

Refer to the data in Exercises 8-26 and 8-28. Compute the cost of goods transferred out and the ending inventory using the FIFO method. In Exercises 8-26 and 8-28 The Matsui Lubricants plant uses the...

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Q: Pacific Ink had beginning work-in-process inventory of $

Pacific Ink had beginning work-in-process inventory of $744,960 on October 1. Of this amount, $304,920 was the cost of direct materials and $440,040 was the cost of conversion. The 48,000 units in the...

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Q: Refer to the data in Exercise 8-30. Compute the

Refer to the data in Exercise 8-30. Compute the costs of goods transferred out and the ending inventory using the weighted-average method. In Exercise 8-30 Pacific Ink had beginning work-in-process i...

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Q: Refer to the data in Exercise 8-30. Compute the

Refer to the data in Exercise 8-30. Compute the cost per equivalent unit for direct materials and for conversion costs using the FIFO method. In Exercise 8-30 Pacific Ink had beginning work-in-proces...

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Q: Refer to the data in Exercise 8-30. Compute the

Refer to the data in Exercise 8-30. Compute the cost of goods transferred out and the cost of ending inventory using the FIFO method. Is the ending inventory higher or lower under the weighted-average...

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Q: Assume that El Paso Corporation provides you with the following information for

Assume that El Paso Corporation provides you with the following information for one of its department’s operations for September (no new material is added in Department B): WIP inventory—Department B...

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Q: Refer to the information in Exercise 8-34.

Refer to the information in Exercise 8-34. In Exercise 8-34 Assume that El Paso Corporation provides you with the following information for one of its department’s operations for September (no new ma...

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Q: Calgary Corporation produces a liquid solvent in two departments: Mixing and

Calgary Corporation produces a liquid solvent in two departments: Mixing and Finishing. Assume that Calgary Corporation provides you with the following information for Finishing operations for Novembe...

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Q: Refer to the information in Exercise 8-36.

Refer to the information in Exercise 8-36. In Exercise 8-36 Calgary Corporation produces a liquid solvent in two departments: Mixing and Finishing. Assume that Calgary Corporation provides you with t...

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Q: Brokia Electronics manufactures three cell phone models, which differ only in

Brokia Electronics manufactures three cell phone models, which differ only in the components included: Basic, Photo, and UrLife. Production takes place in two departments, Assembly and Special Packagi...

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Q: If costs increase from one period to another, will costs that

If costs increase from one period to another, will costs that are transferred out of one department under FIFO costing be higher or lower than costs transferred out using weighted-average costing? Why...

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Q: Ferdon Watches, Inc., makes four models of watches, Gag

Ferdon Watches, Inc., makes four models of watches, Gag-Gift, Commuter, Sport, and Retirement. Ferdon manufactures the watches in four departments: Assembly, Polishing, Special Finishing, and Packagin...

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Q: Select the best answer for each of the following independent multiple-

Select the best answer for each of the following independent multiple-choice questions. a. Adams Company’s production cycle starts in Department A. The following information is avai...

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Q: The following pertains to the Cereal Division of McKenzie Corporation. Conversion

The following pertains to the Cereal Division of McKenzie Corporation. Conversion costs for this division were 80 percent complete as to beginning work-in-process inventory and 50 percent complete as...

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Q: Douglas Toys is a manufacturer that uses the weighted-average process

Douglas Toys is a manufacturer that uses the weighted-average process costing method to account for costs of production. It produces a plastic toy in three separate departments: Molding, Assembling, a...

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Q: Refer to the facts in Problem 8-42.

Refer to the facts in Problem 8-42. In Problem 8-42 Douglas Toys is a manufacturer that uses the weighted-average process costing method to account for costs of production. It produces a plastic toy...

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Q: Cost allocation allocates only a given amount of costs to products.

Cost allocation allocates only a given amount of costs to products. The total allocated is the same; therefore the choice of the system does not matter. True or false? Explain.

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Q: In its Department R, Recyclers, Inc., processes donated scrap

In its Department R, Recyclers, Inc., processes donated scrap cloth into towels for sale in local thrift shops. It sells the products at cost. The direct materials costs are zero, but the operation re...

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Q: Why are cost drivers based on direct labor widely used?

Why are cost drivers based on direct labor widely used?

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Q: Saline Solutions uses process costing to account for production of its unique

Saline Solutions uses process costing to account for production of its unique compound BG at its River Plant. The River Plant has two departments: R and S. Raw materials are added at two points in the...

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Q: Refer to the information in Problem 8-47. Department R

Refer to the information in Problem 8-47. Department R uses FIFO process costing to account for production. In January, beginning work-in-process inventory consisted of 50,000 units, 80 percent comple...

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Q: What is the distinction between equivalent units under the FIFO method and

What is the distinction between equivalent units under the FIFO method and equivalent units under the weighted-average method?

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Q: For each of the following independent cases, use FIFO costing to

For each of the following independent cases, use FIFO costing to determine the information requested. a. The ending inventory included $87,000 for conversion costs. During the period, 42,000 equivalen...

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Q: For each of the following independent cases, determine the units or

For each of the following independent cases, determine the units or equivalent units requested (assuming weighted-average costing). a. The WIP Inventory account had a beginning balance of $11,400 for...

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Q: “Activity-based costing is the same as department costing.”

“Activity-based costing is the same as department costing.” Is this true, false, or uncertain? Explain.

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Q: Miller Outdoor Equipment (MOE) makes four models of tents.

Miller Outdoor Equipment (MOE) makes four models of tents. The model names are Rookie, Novice, Hiker, and Expert. MOE manufactures the tents in two departments: Stitching and Customizing. All four mod...

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Q: Pacific Siding Incorporated produces synthetic wood siding used in the construction of

Pacific Siding Incorporated produces synthetic wood siding used in the construction of residential and commercial buildings. Pacific Siding’s fiscal year ends on March 31, and the we...

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Q: Vermont Company uses continuous processing to produce stuffed bears and FIFO process

Vermont Company uses continuous processing to produce stuffed bears and FIFO process costing to account for its production costs. It uses FIFO because costs are quite unstable due to the volatile pric...

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Q: Bouwens Corporation manufactures a solvent used in airplane maintenance shops. Bouwens

Bouwens Corporation manufactures a solvent used in airplane maintenance shops. Bouwens sells the solvent to both U.S. military services and commercial airlines. The solvent is produced in a single pla...

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Q: “It is clear after reading this chapter that activity-based

“It is clear after reading this chapter that activity-based costing is the best system. Whenever someone asks, I’ll recommend its adoption.” Do you agree? Explain.

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Q: “One of the lessons learned from activity-based costing is

“One of the lessons learned from activity-based costing is that all costs are really a function of volume of output.” Is this true, false, or uncertain? Explain.

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Q: “Activity-based costing breaks down the indirect costs into several

“Activity-based costing breaks down the indirect costs into several activities that cause costs (cost drivers). These should be the same for each department in an organization.” Is this true, false, o...

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Q: It has been said that a prior department’s costs behave similarly to

It has been said that a prior department’s costs behave similarly to direct materials costs. Under what conditions are the costs similar? Why account for them separately?

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Q: You have been asked to determine whether a company uses an activity

You have been asked to determine whether a company uses an activity-based cost system. What information would you look for to answer the question?

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Q: “Activity-based costing is just another inventory valuation method.

“Activity-based costing is just another inventory valuation method. It isn’t relevant for making operating decisions.” Do you agree with this statement? Explain.

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Q: Howard Rockness was worried. His company, Rockness Bottling, showed

Howard Rockness was worried. His company, Rockness Bottling, showed declining profits over the past several years despite an increase in revenues. With profits declining and revenues increasing, Rockn...

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Q: The product costs reported using either plantwide or department allocation are the

The product costs reported using either plantwide or department allocation are the same. The only difference is in the number of cost drivers used. True or false? Explain.

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Q: Why do companies commonly use direct labor-hours or direct labor

Why do companies commonly use direct labor-hours or direct labor cost but not the number of units to allocate overhead?

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Q: What are the costs of moving to an activity-based cost

What are the costs of moving to an activity-based cost system? What are the benefits?

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Q: What are the basic steps in computing costs using activity-based

What are the basic steps in computing costs using activity-based costing?

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Q: What type of organization is most likely to benefit from using activity

What type of organization is most likely to benefit from using activity-based costing for product costing? Why?

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Q: In what ways is implementing an activity-based costing system in

In what ways is implementing an activity-based costing system in a manufacturing firm’s personnel department the same as implementing it in the plant? In what ways is it different?

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Q: “Activity-based costing does a better job of allocating both

“Activity-based costing does a better job of allocating both direct and indirect cost than traditional methods do.” Is this statement true, false, or uncertain? Explain.

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Q: The more important individual unit costs are used for decisions, the

The more important individual unit costs are used for decisions, the more likely it is that process costing will be preferred to job costing. Do you agree?

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Q: “Activity-based costing could not be applied in a business

“Activity-based costing could not be applied in a business school.” Do you agree? Explain.

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Q: Jim, the vice president of marketing, says the company should

Jim, the vice president of marketing, says the company should not adopt activity-based costing because it will result in the costs of some of the products going up but the market will not allow for ra...

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Q: “We all know that cost allocation can distort decision making.

“We all know that cost allocation can distort decision making. We should stop doing this and just report direct costs.” Do you agree? Explain.

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Q: Select an administrative function commonly found in a fi rm. Examples

Select an administrative function commonly found in a fi rm. Examples include personnel, accounts payable, purchasing, and so on. Outline an activity-based costing system for the function, including m...

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Q: A manager tells you that her company’s cost accounting system divides overhead

A manager tells you that her company’s cost accounting system divides overhead into two pools: (1) Inspect material and (2) Assemble product. The inspect material pool is allocated on the basis of dir...

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Q: Munoz Sporting Equipment manufactures baseball bats and tennis rackets. Department B

Munoz Sporting Equipment manufactures baseball bats and tennis rackets. Department B produces the baseball bats, and Department T produces the tennis rackets. Munoz currently uses plantwide allocation...

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Q: Main Street Ice Cream Company uses a plantwide allocation method to allocate

Main Street Ice Cream Company uses a plantwide allocation method to allocate overhead based on direct labor-hours at a rate of $3 per labor-hour. Strawberry and vanilla flavors are produced in Departm...

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Q: The Personnel Department at Drumm Corporation is centralized and provides services to

The Personnel Department at Drumm Corporation is centralized and provides services to the two operating units: Illinois and Ohio. The Illinois unit is the original unit of Drumm and is well establishe...

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Q: Refer to exercise 9-24. Kurt, the manager of

Refer to exercise 9-24. Kurt, the manager of the Ohio unit, is unhappy with the results of the controller’s study. He asks the controller to develop separate rates for fixed and vari...

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Q: After reviewing the new activity-based costing system that Janis McGee

After reviewing the new activity-based costing system that Janis McGee has implemented at Joplin Industries’s Port Arthur manufacturing facility, Kris Kristoff, the production superv...

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Q: Give examples of cost drivers commonly used to allocate overhead costs to

Give examples of cost drivers commonly used to allocate overhead costs to products and services.

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Q: Cathy, the manager of Cathy’s Catering, Inc., uses activity

Cathy, the manager of Cathy’s Catering, Inc., uses activity-based costing to compute the costs of her catered parties. Each party is limited to 20 guests and requires four people to...

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Q: Rodent Corporation produces two types of computer mice, wired and wireless

Rodent Corporation produces two types of computer mice, wired and wireless. The wired mice are designed as low-cost, reliable input devices. The company only recently began producing the higher-qualit...

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Q: Doaktown Products manufactures fishing equipment for recreational uses. The Miramichi plant

Doaktown Products manufactures fishing equipment for recreational uses. The Miramichi plant produces the company’s two versions of a special reel used for river fishing. The two mode...

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Q: We-Clean, Inc., is a home-cleaning service

We-Clean, Inc., is a home-cleaning service. It originally specialized in serving small residential clients but recently started contracting for work in large apartment and office buildings. Julie Lodg...

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Q: Isadore’s Implements, Inc., manufactures pens and mechanical pencils often used

Isadore’s Implements, Inc., manufactures pens and mechanical pencils often used for gifts. Overhead costs are currently allocated using direct labor-hours, but the controller has rec...

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Q: Wendy Chen established Windy City Coaching (WCC) to provide teen

Wendy Chen established Windy City Coaching (WCC) to provide teen counseling and executive coaching services to its clients. WCC charges a $300 fee per hour for each service. The revenues and costs for...

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Q: Delta Parts, Inc., recently switched to activity-based costing

Delta Parts, Inc., recently switched to activity-based costing from the department allocation method. The Fabrication Department manager has estimated the following cost drivers and rates: Direct ma...

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Q: Carolina Fashions, a shirt manufacturer, recently switched to activity-

Carolina Fashions, a shirt manufacturer, recently switched to activity-based costing from the department product costing method. The manager of Building S, which manufactures the shirts, has identifie...

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Q: The Personnel Department at LastCall Enterprises handles many administrative tasks for the

The Personnel Department at LastCall Enterprises handles many administrative tasks for the two divisions that make up LastCall: LaidBack and StressedOut. LaidBack division manages the companyâ&#...

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Q: John’s Custom Computer Shop (JCCS) assembles computers for both individual

John’s Custom Computer Shop (JCCS) assembles computers for both individual and corporate customers. The company is organized into two divisions: Personal and Business. Once a compute...

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Q: The management of a liquid cleaning product company is trying to decide

The management of a liquid cleaning product company is trying to decide whether to install a job or process costing system. The manufacturing vice president has stated that job costing gives the best...

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Q: EZ-Seat, Inc., manufactures two types of reclining chairs

EZ-Seat, Inc., manufactures two types of reclining chairs, Standard and Ergo. Ergo provides support for the body through a complex set of sensors and requires great care in manufacturing to avoid dama...

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Q: Bob’s Baskets, Inc., manufactures and sells two types of baskets

Bob’s Baskets, Inc., manufactures and sells two types of baskets, deluxe and standard. Last year, Bob’s Baskets had the following costs and revenues: Bobâ&#...

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Q: Refer to Problem 9-38. Assume that you have prepared

Refer to Problem 9-38. Assume that you have prepared financial statements that show the operating profit for each of the two baskets manufactured by Bob’s Baskets. Further assume tha...

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Q: College Supply Company (CSC) makes three types of drinking glasses

College Supply Company (CSC) makes three types of drinking glasses: short, medium, and tall. It presently applies overhead using a predetermined rate based on direct labor-hours. A group of company em...

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Q: Utica Manufacturing (UM) was recently acquired by MegaMachines, Inc

Utica Manufacturing (UM) was recently acquired by MegaMachines, Inc. (MM), and organized as a separate division within the company. Most manufacturing plants at MM use an ABC system, but UM has always...

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Q: Cain Components manufactures and distributes various plumbing products used in homes and

Cain Components manufactures and distributes various plumbing products used in homes and other buildings. Over time, the production staff has noticed that products they considered easy to make were di...

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Q: Refer to Problem 9-45. The intern decides to look

Refer to Problem 9-45. The intern decides to look more closely at the manufacturing activity and determines that it can be broken down into two activities: production and engineering. Production cover...

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Q: Cawker Products has two manufacturing facilities—Lucas plant and Russell plant

Cawker Products has two manufacturing facilities—Lucas plant and Russell plant—that produce the same product. Until recently, the production process in both plants has been the same. Last year, the Ru...

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Q: ACE Industries is a manufacturer of machined parts located in the midwestern

ACE Industries is a manufacturer of machined parts located in the midwestern United States. Its primary customers are suppliers to the automobile industry, although it has diversified its customer bas...

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Q: California Circuits Company (3C) manufactures a variety of components.

California Circuits Company (3C) manufactures a variety of components. Its Valley plant specializes in two electronic components used in circuit boards. These components serve the same function and pe...

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Q: TL Division of Giant Bank has assets of $14.4

TL Division of Giant Bank has assets of $14.4 billion. During the past year, the division had profits of $1.8 billion. Giant Bank has a cost of capital of 6 percent. Ignore taxes. Required a. Compute...

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Q: Refer to the data in Exercise 14-25. The division

Refer to the data in Exercise 14-25. The division manager learns that he has the option to lease the asset on a year-to-year lease for $148,000 per year. All depreciation and other tax benefits would...

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Q: Assume that the number of units transferred out of a department is

Assume that the number of units transferred out of a department is unknown. What is the formula to solve for units transferred out using the basic cost flow model?

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Q: How does management accounting differ from financial accounting?

How does management accounting differ from financial accounting?

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Q: What are three different types of inventory that manufacturing companies hold?

What are three different types of inventory that manufacturing companies hold?  

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Q: Portal Corporation produces the same power generator in two Illinois plants,

Portal Corporation produces the same power generator in two Illinois plants, a new plant in Peoria and an older plant in Moline. The following data are available for the two plants: All fixed...

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Q: The Stackpole Company retails two products: a standard and a deluxe

The Stackpole Company retails two products: a standard and a deluxe version of a luggage carrier. The budgeted income statement for next period is as follows: Required: 1. Compute the breake...

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Q: The Museum of America is preparing for its annual appreciation dinner for

The Museum of America is preparing for its annual appreciation dinner for contributing members. Last year, 525 members attended the dinner. Tickets for the dinner were $24 per attendee. The profit r...

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Q: Marketing Docs prepares marketing plans for growing businesses. For 2017,

Marketing Docs prepares marketing plans for growing businesses. For 2017, budgeted revenues are $1,500,000 based on 500 marketing plans at an average rate per plan of $3,000. The company would like...

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Q: J.T. Brooks and Company, a manufacturer of quality

J.T. Brooks and Company, a manufacturer of quality handmade walnut bowls, has had a steady growth in sales for the past 5 years. However, increased competition has led Mr. Brooks, the president, to...

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Q: The Derby Shoe Company produces its famous shoe, the Divine Loafer

The Derby Shoe Company produces its famous shoe, the Divine Loafer, that sells for $70 per pair. Operating income for 2017 is as follows: Sales revenue ($70 per pair)………&hellip...

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Q: The HighStep Shoe Company operates a chain of shoe stores that sell

The HighStep Shoe Company operates a chain of shoe stores that sell 10 different styles of inexpensive men’s shoes with identical unit costs and selling prices. A unit is defined as a pair of...

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Q: Refer to requirement 3 of Problem 3-43. In this

Refer to requirement 3 of Problem 3-43. In this problem, assume the role of the owner of HighStep. Required: 1. As owner, which sales compensation plan would you choose if forecasted annual sale...

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Q: Corporate Printing Company currently leases its only copy machine for $1

Corporate Printing Company currently leases its only copy machine for $1,500 a month. The company is considering replacing this leasing agreement with a new contract that is entirely commission based....

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Q: Classical Glasses operates a kiosk at the local mall, selling sunglasses

Classical Glasses operates a kiosk at the local mall, selling sunglasses for $30 each. Classical Glasses currently pays $1,000 a month to rent the space and pays two full-time employees to each work 1...

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Q: Distinguish between inventoriable costs and period costs.

Distinguish between inventoriable costs and period costs.

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Q: Thompson Engine Company manufactures and sells diesel engines for use in small

Thompson Engine Company manufactures and sells diesel engines for use in small farming equipment. For its 2017 budget, Thompson Engine Company estimates the following: Selling price…………………………..$ 7,000...

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Q: Zahner Corporation manufactures housewares products that are sold through a network of

Zahner Corporation manufactures housewares products that are sold through a network of external sales agents. The agents are paid a commission of 20% of revenues. Zahner is considering replacing the s...

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Q: The Ronowski Company has three product lines of belts—A,

The Ronowski Company has three product lines of belts—A, B, and C— with contribution margins of $3, $2, and $1, respectively. The president foresees sales of 200,000 units in the coming period, consis...

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Q: Crystal Clear Products produces two types of water filters. One attaches

Crystal Clear Products produces two types of water filters. One attaches to the faucet and cleans all water that passes through the faucet. The other is a pitcher-cum-filter that only purifies water m...

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Q: Define the following: direct material costs, direct manufacturing-labor

Define the following: direct material costs, direct manufacturing-labor costs, manufacturing overhead costs, prime costs, and conversion costs.

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Q: Define direct costs and indirect costs.

Define direct costs and indirect costs.

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Q: Why do managers consider direct costs to be more accurate than indirect

Why do managers consider direct costs to be more accurate than indirect costs?

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Q: Define variable cost and fixed cost. Give an example of each

Define variable cost and fixed cost. Give an example of each.

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Q: What is a cost driver? Give one example.

What is a cost driver? Give one example.

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Q: Describe how manufacturing-, merchandising-, and service-sector companies differ

Describe how manufacturing-, merchandising-, and service-sector companies differ from one another.

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Q: As a new controller, reply to this comment by a plant

As a new controller, reply to this comment by a plant manager: “As I see it, our accountants may be needed to keep records for shareholders and Uncle Sam, but I don’t want them sticking their noses in...

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Q: Give an example of how a manager can decrease variable costs while

Give an example of how a manager can decrease variable costs while increasing fixed costs.

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Q: Give an example of how a manager can increase variable costs while

Give an example of how a manager can increase variable costs while decreasing fixed costs.

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Q: There is no such thing as a fixed cost. All costs

There is no such thing as a fixed cost. All costs can be ‘unfixed’ given sufficient time.” Do you agree? What is the implication of your answer for CVP analysis?

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Q: Describe the assumptions underlying CVP analysis.

Describe the assumptions underlying CVP analysis.

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Q: Distinguish between operating income and net income.

Distinguish between operating income and net income.

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Q: Describe three methods that managers can use to express CVP relationships.

Describe three methods that managers can use to express CVP relationships.

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Q: Why is it more accurate to describe the subject matter of this

Why is it more accurate to describe the subject matter of this chapter as CVP analysis rather than as breakeven analysis?

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Q: “CVP analysis is both simple and simplistic. If you want

“CVP analysis is both simple and simplistic. If you want realistic analysis to underpin your decisions, look beyond CVP analysis.” Do you agree? Explain.

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Q: Describe sensitivity analysis. How has the advent of the electronic spreadsheet

Describe sensitivity analysis. How has the advent of the electronic spreadsheet affected the use of sensitivity analysis?

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Q: Define cost pool, cost tracing, cost allocation, and cost

Define cost pool, cost tracing, cost allocation, and cost-allocation base.

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Q: Describe the overtime-premium and idle-time categories of indirect

Describe the overtime-premium and idle-time categories of indirect labor.

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Q: Comment on the following statement: “In a normal-costing

Comment on the following statement: “In a normal-costing system, the amounts in the Manufacturing Overhead Control account will always equal the amounts in the Manufacturing Overhead Allocated account...

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Q: Describe three different debit entries to the Work-in-Process

Describe three different debit entries to the Work-in-Process Control T-account under normal costing.

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Q: Describe three alternative ways to dispose of under- or overallocated overhead

Describe three alternative ways to dispose of under- or overallocated overhead costs.

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Q: Why might an advertising agency use job costing for an advertising campaign

Why might an advertising agency use job costing for an advertising campaign by PepsiCo, whereas a bank might use process costing to determine the cost of checking account deposits?

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Q: Describe the seven steps in job costing.

Describe the seven steps in job costing.

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Q: Describe three major source documents used in job-costing systems.

Describe three major source documents used in job-costing systems.

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Q: Give two reasons why most organizations use an annual period rather than

Give two reasons why most organizations use an annual period rather than a weekly or monthly period to compute budgeted indirect-cost rates.

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Q: Distinguish between actual costing and normal costing.

Distinguish between actual costing and normal costing.

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Q: What is broad averaging, and what consequences can it have on

What is broad averaging, and what consequences can it have on costs?

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Q: Describe four signs that help indicate when ABC systems are likely to

Describe four signs that help indicate when ABC systems are likely to provide the most benefits.

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Q: Name the four areas in which standards of ethical conduct exist for

Name the four areas in which standards of ethical conduct exist for management accountants in the United States. What organization sets forth these standards?

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Q: What are the main costs and limitations of implementing ABC systems?

What are the main costs and limitations of implementing ABC systems?

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Q: Increasing the number of indirect-cost pools is guaranteed to sizably

Increasing the number of indirect-cost pools is guaranteed to sizably increase the accuracy of product or service costs.” Do you agree? Why?

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Q: The controller of a retail company has just had a $50

The controller of a retail company has just had a $50,000 request to implement an ABC system quickly turned down. A senior vice president, in rejecting the request, noted, “Given a choice, I will alwa...

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Q: What is costing system refinement? Describe three guidelines for refinement.

What is costing system refinement? Describe three guidelines for refinement.

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Q: Describe four levels of a cost hierarchy.

Describe four levels of a cost hierarchy.

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Q: Why is it important to classify costs into a cost hierarchy?

Why is it important to classify costs into a cost hierarchy?

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Q: What are the key reasons for product cost differences between simple costing

What are the key reasons for product cost differences between simple costing systems and ABC systems?

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Q: Department indirect-cost rates are never activity-cost rates.”

Department indirect-cost rates are never activity-cost rates.” Do you agree? Explain.

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Q: What are the four elements of the budgeting cycle?

What are the four elements of the budgeting cycle?

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Q: How can sensitivity analysis be used to increase the benefits of budgeting

How can sensitivity analysis be used to increase the benefits of budgeting?

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Q: What steps should a management accountant take if established written policies provide

What steps should a management accountant take if established written policies provide insufficient guidance on how to handle an ethical conflict?

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Q: Describe how nonoutput-based cost drivers can be incorporated into budgeting

Describe how nonoutput-based cost drivers can be incorporated into budgeting.

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Q: Explain how the choice of the type of responsibility center (cost

Explain how the choice of the type of responsibility center (cost, revenue, profit, or investment) affects behavior.

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Q: What are some additional considerations that arise when budgeting in multinational companies

What are some additional considerations that arise when budgeting in multinational companies?

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Q: Cash budgets must be prepared before the operating income budget.” Do

Cash budgets must be prepared before the operating income budget.” Do you agree? Explain.

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Q: Strategy, plans, and budgets are unrelated to one another.”

Strategy, plans, and budgets are unrelated to one another.” Do you agree? Explain.

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Q: Production managers and marketing managers are like oil and water. They

Production managers and marketing managers are like oil and water. They just don’t mix.” How can a budget assist in reducing conflicts between these two areas?

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Q: Define rolling budget. Give an example.

Define rolling budget. Give an example.

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Q: Outline the steps in preparing an operating budget.

Outline the steps in preparing an operating budget.

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Q: Describe three reasons for an unfavorable direct manufacturing labor efficiency variance.

Describe three reasons for an unfavorable direct manufacturing labor efficiency variance.

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Q: How does variance analysis help in continuous improvement?

How does variance analysis help in continuous improvement?

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Q: Which of the following is not a primary function of the management

Which of the following is not a primary function of the management accountant? a. Communicates financial results and position to external parties. b. Uses information to develop and implement business...

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Q: Why might an analyst examining variances in the production area look beyond

Why might an analyst examining variances in the production area look beyond that business function for explanations of those variances?

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Q: Comment on the following statement made by a plant manager: “

Comment on the following statement made by a plant manager: “Meetings with my plant accountant are frustrating. All he wants to do is pin the blame on someone for the many variances he reports.”

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Q: When inputs are substitutable, how can the direct materials efficiency variance

When inputs are substitutable, how can the direct materials efficiency variance be decomposed further to obtain useful information?

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Q: Benchmarking against other companies enables a company to identify the lowest-

Benchmarking against other companies enables a company to identify the lowest-cost producer. This amount should become the performance measure for next year.” Do you agree?

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Q: What is the key difference between a static budget and a flexible

What is the key difference between a static budget and a flexible budget?

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Q: Describe the steps in developing a flexible budget.

Describe the steps in developing a flexible budget.

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Q: How might a manager gain insight into the causes of a flexible

How might a manager gain insight into the causes of a flexible-budget variance for direct materials?

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Q: List three causes of a favorable direct materials price variance.

List three causes of a favorable direct materials price variance.

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Q: Define cost object and give three examples.

Define cost object and give three examples.

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Q: Define cost–volume–profit analysis.

Define cost–volume–profit analysis.

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Q: Comprehensive Care Nursing Home is required by statute and regulation to maintain

Comprehensive Care Nursing Home is required by statute and regulation to maintain a minimum 3 to 1 ratio of direct service staff to residents to maintain the licensure associated with the Nursing Home...

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Q: How does a job-costing system differ from a process-

How does a job-costing system differ from a process-costing system?

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Q: Name three factors that will affect the classification of a cost as

Name three factors that will affect the classification of a cost as direct or indirect.

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Q: Define contribution margin, contribution margin per unit, and contribution margin

Define contribution margin, contribution margin per unit, and contribution margin percentage.

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Q: Give examples of two cost objects in companies using job costing.

Give examples of two cost objects in companies using job costing.

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Q: What is the relevant range? What role does the relevant-

What is the relevant range? What role does the relevant-range concept play in explaining how costs behave?

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Q: Describe the five-step decision-making process.

Describe the five-step decision-making process.

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Q: How does an increase in the income tax rate affect the breakeven

How does an increase in the income tax rate affect the breakeven point?

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Q: What three guidelines help management accountants provide the most value to managers

What three guidelines help management accountants provide the most value to managers?

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Q: Knowledge of technical issues such as computer technology is a necessary but

Knowledge of technical issues such as computer technology is a necessary but not sufficient condition to becoming a successful management accountant.” Do you agree? Why?

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Q: What is operating leverage? How is knowing the degree of operating

What is operating leverage? How is knowing the degree of operating leverage helpful to managers?

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Q: Frisco Corporation is analyzing its fixed and variable costs within its current

Frisco Corporation is analyzing its fixed and variable costs within its current relevant range. As its cost driver activity changes within the relevant range, which of the following statements is/are...

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Q: Where does the management accounting function fit into an organization’s structure?

Where does the management accounting function fit into an organization’s structure?

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Q: Define product cost. Describe three different purposes for computing product costs

Define product cost. Describe three different purposes for computing product costs.

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Q: What are three common features of cost accounting and cost management?

What are three common features of cost accounting and cost management?

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Q: How can a company with multiple products compute its breakeven point?

How can a company with multiple products compute its breakeven point?

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Q: In CVP analysis, gross margin is a less-useful concept

In CVP analysis, gross margin is a less-useful concept than contribution margin.” Do you agree? Explain briefly.

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Q: Describe two ways in which a house-construction company may use

Describe two ways in which a house-construction company may use job-cost information.

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Q: When might a company use budgeted costs rather than actual costs to

When might a company use budgeted costs rather than actual costs to compute direct-labor rates?

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Q: Describe briefly why Electronic Data Interchange (EDI) is helpful to

Describe briefly why Electronic Data Interchange (EDI) is helpful to managers.

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Q: Fill in the blanks for each of the following independent cases.

Fill in the blanks for each of the following independent cases.

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Q: ABC systems only apply to manufacturing companies.” Do you agree?

ABC systems only apply to manufacturing companies.” Do you agree? Explain.

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Q: Year 1 financial data for the ABC Company is as follows:

Year 1 financial data for the ABC Company is as follows: Sales $5,000,000  Direct materials 850,000  Direct manufacturing labor 1,700,000  Variable manufacturing overhead 400,000  Fixed m...

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Q: Activity-based costing is the wave of the present and the

Activity-based costing is the wave of the present and the future. All companies should adopt it.” Do you agree? Explain.

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Q: Why should managers worry about product overcosting or undercosting?

Why should managers worry about product overcosting or undercosting?

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Q: What is an activity-based approach to designing a costing system

What is an activity-based approach to designing a costing system?

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Q: Westover Motors is a small car dealership. On average, it

Westover Motors is a small car dealership. On average, it sells a car for $32,000, which it purchases from the manufacturer for $28,000. Each month, Westover Motors pays $53,700 in rent and utilities...

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Q: Define Kaizen budgeting.

Define Kaizen budgeting.

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Q: Define master budget.

Define master budget.

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Q: Budgeted performance is a better criterion than past performance for judging managers

Budgeted performance is a better criterion than past performance for judging managers.” Do you agree? Explain.

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Q: Budgets meet the cost–benefit test. They force managers to

Budgets meet the cost–benefit test. They force managers to act differently.” Do you agree? Explain.

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Q: For each of the following items, identify which of the management

For each of the following items, identify which of the management accounting guidelines applies: cost–benefit approach, behavioral and technical considerations, or different costs for different purpos...

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Q: For each of the following items, identify which of the management

For each of the following items, identify which of the management accounting guidelines applies: cost–benefit approach, behavioral and technical considerations, or different costs for different purpos...

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Q: Management accounting should not fit the straitjacket of financial accounting.” Explain

Management accounting should not fit the straitjacket of financial accounting.” Explain and give an example.

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Q: The following information was extracted from the accounting records of Roosevelt Manufacturing

The following information was extracted from the accounting records of Roosevelt Manufacturing Company: Direct materials purchased 80,000  Direct materials used 76,000  Direct manufacturing labo...

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Q: What are two possible sources of information a company might use to

What are two possible sources of information a company might use to compute the budgeted amount in variance analysis?

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Q: Distinguish between a favorable variance and an unfavorable variance.

Distinguish between a favorable variance and an unfavorable variance.

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Q: Why might managers find a flexible-budget analysis more informative than

Why might managers find a flexible-budget analysis more informative than a static-budget analysis?

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Q: List four reasons for using standard costs.

List four reasons for using standard costs.

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Q: What is the advantage of using computerized source documents to prepare job

What is the advantage of using computerized source documents to prepare job-cost records?

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Q: Describe four decisions for which ABC information is useful.

Describe four decisions for which ABC information is useful.

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Q: The sales forecast is the cornerstone for budgeting.” Why?

The sales forecast is the cornerstone for budgeting.” Why?

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Q: What is the relationship between management by exception and variance analysis?

What is the relationship between management by exception and variance analysis?

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Q: Minnesota Office Products (MOP) produces three different paper products at

Minnesota Office Products (MOP) produces three different paper products at its Vaasa lumber plant: Supreme, Deluxe, and Regular. Each product has its own dedicated production line at the plant. It cur...

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Q: California Tires manufactures two types of tires that it sells as wholesale

California Tires manufactures two types of tires that it sells as wholesale products to various specialty retail auto supply stores. Each tire requires a three-step process. The first step is mixing....

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Q: Market Focus is a marketing research firm that organizes focus groups for

Market Focus is a marketing research firm that organizes focus groups for consumer-product companies. Each focus group has eight individuals who are paid $60 per session to provide comments on new pro...

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Q: Band Box Entertainment (BBE) operates a large store in Atlanta

Band Box Entertainment (BBE) operates a large store in Atlanta, Georgia. The store has both a movie (DVD) section and a music (CD) section. BBE reports revenues for the movie section separately from t...

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Q: The Cooper Furniture Company of Potomac, Maryland, assembles two types

The Cooper Furniture Company of Potomac, Maryland, assembles two types of chairs (Recliners and Rockers). Separate assembly lines are used for each type of chair. Required: Classify each cost item (A...

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Q: Maria Mendez is division controller and James Dalton is division manager of

Maria Mendez is division controller and James Dalton is division manager of the Hestor Shoe Company. Mendez has line responsibility to Dalton, but she also has staff responsibility to the company cont...

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Q: Hannah Gilpin is the controller of Blakemore Auto Glass, a division

Hannah Gilpin is the controller of Blakemore Auto Glass, a division of Eastern Glass and Window. Blakemore replaces and installs windshields. Her division has been under pressure to improve its divisi...

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Q: Gummy Land Candies manufactures jaw-breaker candies in a fully automated

Gummy Land Candies manufactures jaw-breaker candies in a fully automated process. The machine that produces candies was purchased recently and can make 5,000 per month. The machine costs $6,500 and is...

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Q: Torrance Technology Company (TTC) is developing a new touch-

Torrance Technology Company (TTC) is developing a new touch-screen smartphone to compete in the cellular phone industry. The company will sell the phones at wholesale prices to cell phone companies, w...

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Q: How can a management accountant help formulate strategy?

How can a management accountant help formulate strategy?

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Q: The representative cost drivers in the right column of this table are

The representative cost drivers in the right column of this table are randomized so they do not match the list of functions in the left column. Function………………………………………..Representative Cost Driver 1....

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Q: National Training recently started a business providing training events for corporations.

National Training recently started a business providing training events for corporations. In order to better understand the profitability of the business, the owners asked you for an analysis of costs...

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Q: Gayle’s Glassworks makes glass flanges for scientific use. Materials cost $

Gayle’s Glassworks makes glass flanges for scientific use. Materials cost $1 per flange, and the glass blowers are paid a wage rate of $28 per hour. A glass blower blows 10 flanges per hour. Fixed man...

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Q: Each of the following cost items pertains to one of these companies

Each of the following cost items pertains to one of these companies: Best Buy (a merchandising-sector company), KitchenAid (a manufacturing-sector company), and HughesNet (a service-sector company): a...

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Q: Bridget Ashton is getting ready to open a small restaurant. She

Bridget Ashton is getting ready to open a small restaurant. She is on a tight budget and must choose between the following long-distance phone plans: Plan A: Pay 10 cents per minute of long-distance c...

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Q: Consolidated Motors specializes in producing one specialty vehicle. It is called

Consolidated Motors specializes in producing one specialty vehicle. It is called Surfer and is styled to easily fit multiple surfboards in its back area and top-mounted storage racks. Consolidated has...

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Q: Juicy Beauty manufactures and sells a face cream to small specialty stores

Juicy Beauty manufactures and sells a face cream to small specialty stores in the greater Los Angeles area. It presents the monthly operating income statement shown here to George Lopez, a potential i...

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Q: Kindmart is an international retail store. Kindmart’s managers are considering implementing

Kindmart is an international retail store. Kindmart’s managers are considering implementing a new business-to-business (B2B) information system for processing merchandise orders. The current system co...

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Q: Garrett Manufacturing sold 410,000 units of its product for $

Garrett Manufacturing sold 410,000 units of its product for $68 per unit in 2017. Variable cost per unit is $60, and total fixed costs are $1,640,000. Required: 1. Calculate (a) contribution margin a...

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Q: Sunset Travel Agency specializes in flights between Toronto and Jamaica. It

Sunset Travel Agency specializes in flights between Toronto and Jamaica. It books passengers on Hamilton Air. Sunset’s fixed costs are $23,500 per month. Hamilton Air charges passengers $1,500 per rou...

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Q: Describe the business functions in the value chain.

Describe the business functions in the value chain.

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Q: The Deli-Sub Shop owns and operates six stores in and

The Deli-Sub Shop owns and operates six stores in and around Minneapolis. You are given the following corporate budget data for next year: Revenues…………………..$11,000,000 Fixed costs…………………$ 3,000,000 Va...

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Q: CVP exercises. The Doral Company manufactures and sells pens. Currently

CVP exercises. The Doral Company manufactures and sells pens. Currently, 5,000,000 units are sold per year at $0.50 per unit. Fixed costs are $900,000 per year. Variable costs are $0.30 per unit. Cons...

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Q: The Home Style Eats has two restaurants that are open 24 hours

The Home Style Eats has two restaurants that are open 24 hours a day. Fixed costs for the two restaurants together total $430,500 per year. Service varies from a cup of coffee to full meals. The avera...

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Q: Perfect Fit Jeans Co. sells blue jeans wholesale to major retailers

Perfect Fit Jeans Co. sells blue jeans wholesale to major retailers across the country. Each pair of jeans has a selling price of $50 with $35 in variable costs of goods sold. The company has fixed ma...

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Q: Suppose Morrison Corp.’s breakeven point is revenues of $1

Suppose Morrison Corp.’s breakeven point is revenues of $1,100,000. Fixed costs are $660,000. Required: 1. Compute the contribution margin percentage. 2. Compute the selling price if variable costs a...

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Q: Cover Rugs is holding a 2-week carpet sale at Josh’s

Cover Rugs is holding a 2-week carpet sale at Josh’s Club, a local warehouse store. Cover Rugs plans to sell carpets for $950 each. The company will purchase the carpets from a local distributor for $...

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Q: Braided Rugs, Inc., is considering three possible countries for the

Braided Rugs, Inc., is considering three possible countries for the sole manufacturing site of its newest area rug: Italy, Portugal, and Thailand. All area rugs are to be sold to retail outlets in the...

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Q: Chartz 1-2-3 is a top-selling electronic

Chartz 1-2-3 is a top-selling electronic spreadsheet product. Chartz is about to release version 5.0. It divides its customers into two groups: new customers and upgrade customers (those who previousl...

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Q: The Kenosha Company has three product lines of beer mugs—A

The Kenosha Company has three product lines of beer mugs—A, B, and C—with contribution margins of $5, $4, and $3, respectively. The president foresees sales of 175,000 units in the coming period, cons...

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Q: Genesee Music Society is a not-for-profit organization that

Genesee Music Society is a not-for-profit organization that brings guest artists to the community’s greater metropolitan area. The music society just bought a small concert hall in the center of town...

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Q: Explain the term supply chain and its importance to cost management.

Explain the term supply chain and its importance to cost management.

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Q: Welch Men’s Clothing’s revenues and cost data for 2017 are as follows

Welch Men’s Clothing’s revenues and cost data for 2017 are as follows: Mr. Welch, the owner of the store, is unhappy with the operating results. An analysis of oth...

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Q: Applewhite Corporation, a manufacturing company, is analyzing its cost structure

Applewhite Corporation, a manufacturing company, is analyzing its cost structure in a project to achieve some cost savings. Which of the following statements is/are correct? I. The cost of the direct...

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Q: Jack’s Jax has total fixed costs of $25,000.

Jack’s Jax has total fixed costs of $25,000. If the company’s contribution margin is 60%, the income tax rate is 25% and the selling price of a box of Jax is $20, how many boxes of Jax would the compa...

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Q: During the current year, XYZ Company increased its variable SG&

During the current year, XYZ Company increased its variable SG&A expenses while keeping fixed SG&A expenses the same. As a result, XYZ’s: a. Contribution margin and gross margin will be lower. b. Cont...

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Q: Under the contribution income statement, a company’s contribution margin will be

Under the contribution income statement, a company’s contribution margin will be: a. Higher if fixed SG&A costs decrease. b. Higher if variable SG&A costs increase. c. Lower if fixed manufacturing ove...

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Q: A company needs to sell 10,000 units of its only

A company needs to sell 10,000 units of its only product in order to break even. Fixed costs are $110,000, and the per unit selling price and variable costs are $20 and $9, respectively. If total sale...

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Q: Once a company exceeds its breakeven level, operating income can be

Once a company exceeds its breakeven level, operating income can be calculated by multiplying: a. The sales price by unit sales in excess of breakeven units. b. Unit sales by the difference between th...

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Q: Which of the following does not accurately describe the application of job

Which of the following does not accurately describe the application of job-order costing? a. Finished goods that are purchased by customers will directly impact cost of goods sold. b. Indirect manufac...

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Q: Sturdy Manufacturing Co. assembled the following cost data for job order

Sturdy Manufacturing Co. assembled the following cost data for job order #23: Direct manufacturing labor………………………..$80,000 Indirect manufacturing labor……………………….12,000 Equipment depreciation…………………………...

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Q: For which of the following industries would job-order costing most

For which of the following industries would job-order costing most likely not be appropriate? a. Small business printing. b. Cereal production. c. Home construction. d. Aircraft assembly.

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Q: Management accounting deals only with costs.” Do you agree? Explain

Management accounting deals only with costs.” Do you agree? Explain.

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Q: ABC Company uses job-order costing and has assembled the following

ABC Company uses job-order costing and has assembled the following cost data for the production and assembly of item X: Direct manufacturing labor wages…………….$35,000 Direct material used…………………………………....

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Q: Under Stanford Corporation’s job costing system, manufacturing overhead is applied to

Under Stanford Corporation’s job costing system, manufacturing overhead is applied to work in process using a predetermined annual overhead rate. During November, Year 1, Stanford’s transactions inclu...

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Q: Conroe Company is reviewing the data provided by its management accounting system

Conroe Company is reviewing the data provided by its management accounting system. Which of the following statements is/are correct? I. A cost driver is a causal factor that increases the total cost o...

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Q: Nobis Company uses an ABC system. Which of the following statements

Nobis Company uses an ABC system. Which of the following statements is/are correct with respect to ABC? I. Departmental costing systems are a refinement of ABC systems. II. ABC systems are useful in m...

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Q: Which of the following statements is correct regarding the components of the

Which of the following statements is correct regarding the components of the master budget? a. The cash budget is used to create the capital budget. b. Operating budgets are used to create cash budget...

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Q: Which of the following statements is correct regarding the drivers of operating

Which of the following statements is correct regarding the drivers of operating and financial budgets? a. The sales budget will drive the cost of goods sold budget. b. The cost of goods sold budget wi...

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Q: Superior Industries sales budget shows quarterly sales for the next year as

Superior Industries sales budget shows quarterly sales for the next year as follows: Quarter 1–10,000; Quarter 2–8,000; Quarter 3–12,000; Quarter 4–14,000. Company policy is to have a target finished-...

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Q: Elmhurst Corporation is considering changes to its responsibility accounting system. Which

Elmhurst Corporation is considering changes to its responsibility accounting system. Which of the following statements is/are correct for a responsibility accounting system. I. In a cost center, manag...

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Q: Mary Jacobs, the controller of the Jenks Company is working on

Mary Jacobs, the controller of the Jenks Company is working on Jenks’ cash budget for year 2. She has information on each of the following items: I. Wages due to workers accrued as of December 31, yea...

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Q: Metal Shelf Company’s standard cost for raw materials is $4.

Metal Shelf Company’s standard cost for raw materials is $4.00 per pound and it is expected that each metal shelf uses two pounds of material. During October Year 2, 25,000 pounds of materials are pur...

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Q: How can management accountants help improve quality and achieve timely product deliveries

How can management accountants help improve quality and achieve timely product deliveries?

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Q: All of the following statements regarding standards are accurate except:

All of the following statements regarding standards are accurate except: a. Standards allow management to budget at a per-unit level. b. Ideal standards account for a minimal amount of normal spoilage...

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Q: Amalgamated Manipulation Manufacturing’s (AMM) standards anticipate that there will be

Amalgamated Manipulation Manufacturing’s (AMM) standards anticipate that there will be 3 pounds of raw material used for every unit of finished goods produced. AMM began the month of May with 5,000 po...

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Q: Atlantic Company has a manufacturing facility in Brooklyn that manufactures robotic equipment

Atlantic Company has a manufacturing facility in Brooklyn that manufactures robotic equipment for the auto industry. For Year 1, Atlantic collected the following information from its main production l...

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Q: Basix Inc. calculates direct manufacturing labor variances and has the following

Basix Inc. calculates direct manufacturing labor variances and has the following information: Actual hours worked……………….200 Standard hours……………………...250 Actual rate per hour…………………$12 Standard rate pe...

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Q: PostNews.com offers its subscribers several services, such as an

PostNews.com offers its subscribers several services, such as an annotated TV guide and local-area information on weather, restaurants, and movie theaters. Its main revenue sources are fees for banner...

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Q: Consider the following series of independent situations in which a firm is

Consider the following series of independent situations in which a firm is about to make a strategic decision. Decisions a. Julian Phones is about to decide whether to launch production and sale of a...

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Q: Consider the following series of independent situations in which a firm is

Consider the following series of independent situations in which a firm is about to make a strategic decision. Decisions a. A running shoe manufacturer is weighing whether to purchase leather from a...

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Q: George Jimenez is the controller at Balkin Electronics, a manufacturer of

George Jimenez is the controller at Balkin Electronics, a manufacturer of devices for the computer industry. The company may promote him to chief financial officer. Required: 1. In this table, indica...

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Q: Chris Jackson was recently promoted to Controller of Research and Development (

Chris Jackson was recently promoted to Controller of Research and Development (R&D) for BrisCor, a Fortune 500 pharmaceutical company that manufactures prescription drugs and nutritional supplements....

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Q: Linda Butler is the new division controller of the snack-foods

Linda Butler is the new division controller of the snack-foods division of Daniel Foods. Daniel Foods has reported a minimum 15% growth in annual earnings for each of the past 5 years. The snack-foods...

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Q: Explain why unit costs must often be interpreted with caution.

Explain why unit costs must often be interpreted with caution.

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Q: Phoenix Press produces consumer magazines. The house and home division,

Phoenix Press produces consumer magazines. The house and home division, which sells home-improvement and home-decorating magazines, has seen a 20% reduction in operating income over the past 9 months,...

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Q: Contemporary Interiors (CI) manufactures high-quality furniture in factories

Contemporary Interiors (CI) manufactures high-quality furniture in factories in North Carolina for sale to top American retailers. In 1995, CI purchased a lumber operation in Indonesia, and shifted fr...

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Q: Consider the following account balances (in thousands) for the Carolina

Consider the following account balances (in thousands) for the Carolina Corporation: Required: 1. Prepare a schedule for the cost of goods manufactured for 2017. 2. Revenues (in thousands) for 2017...

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Q: The Howell Corporation has the following account balances (in millions):

The Howell Corporation has the following account balances (in millions): Required: Prepare an income statement and a supporting schedule of cost of goods manufactured for the year ended December 31,...

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Q: Required: 1. How would the answer to Problem 2

Required: 1. How would the answer to Problem 2-39 be modified if you were asked for a schedule of cost of goods manufactured and sold instead of a schedule of cost of goods manufactured? Be specific....

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Q: The following items (in millions) pertain to Schaeffer Corporation:

The following items (in millions) pertain to Schaeffer Corporation: Schaeffer’s manufacturing costing system uses a three-part classification of direct materials, direct manufacturin...

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Q: Required: 1. Calculate total prime costs and total conversion

Required: 1. Calculate total prime costs and total conversion costs. 2. Calculate total inventoriable costs and period costs. 3. Design costs and R&D costs are not considered product costs for f...

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Q: David Letterman works in the production department of Northeast Plastics (NEP

David Letterman works in the production department of Northeast Plastics (NEP) as a machine operator. David, a long-time employee of NEP, is paid on an hourly basis at a rate of $24 per hour. David wo...

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Q: Ron Howard recently took over as the controller of Johnson Brothers Manufacturing

Ron Howard recently took over as the controller of Johnson Brothers Manufacturing. Last month, the previous controller left the company with little notice and left the accounting records in disarray....

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Q: Atlanta Office Equipment manufactures and sells metal shelving. It began operations

Atlanta Office Equipment manufactures and sells metal shelving. It began operations on January 1, 2017. Costs incurred for 2017 are as follows (V stands for variable; F stands for fixed): Direct mater...

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Q: Distinguish planning decisions from control decisions.

Distinguish planning decisions from control decisions.

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Q: There are at least 3 different purposes for which we measure product

There are at least 3 different purposes for which we measure product costs. They are (1) pricing and product mix decisions, (2) determining the appropriate charge for a government contract, and (3) fo...

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Q: Paul Howard, the new plant manager of Garden Scapes Manufacturing Plant

Paul Howard, the new plant manager of Garden Scapes Manufacturing Plant Number 7, has just reviewed a draft of his year-end financial statements. Howard receives a year-end bonus of 11.5% of the plant...

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Q: An auditor for the Internal Revenue Service is trying to reconstruct some

An auditor for the Internal Revenue Service is trying to reconstruct some partially destroyed records of two taxpayers. For each of the cases in the accompanying list, find the unknowns designated by...

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Q: The following data are for Marvin Department Store. The account balances

The following data are for Marvin Department Store. The account balances (in thousands) are for 2017. Marketing, distribution, and customer-service costs………..$ 37,000 Merchandise inventory, January 1...

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Q: The following data are for Arizona Retail Outlet Stores. The account

The following data are for Arizona Retail Outlet Stores. The account balances (in thousands) are for 2017. Marketing and advertising costs……………………..$ 55,200 Merchandise inventory, January 1, 2017……………...

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Q: Renka’s Heaters selected data for October 2017 are presented here (in 

Renka’s Heaters selected data for October 2017 are presented here (in millions): Direct materials inventory 10/1/2017………………………………$ 105 Direct materials purchased………………………………………………365 Direct materials...

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Q: Consider the following account balances (in thousands) for the Peterson

Consider the following account balances (in thousands) for the Peterson Company: Required: 1. Prepare a schedule for the cost of goods manufactured for 2017. 2. Revenues for 2017 were $310 million....

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Q: Lifetime Escapes generates average revenue of $7,500 per person

Lifetime Escapes generates average revenue of $7,500 per person on its 5-day package tours to wildlife parks in Kenya. The variable costs per person are as follows: Airfare……………………………$1,600 Hotel acco...

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Q: Spotted Turtle provides daycare for children Mondays through Fridays. Its monthly

Spotted Turtle provides daycare for children Mondays through Fridays. Its monthly variable costs per child are as follows: Lunch and snacks……………………………………………$130 Educational supplies…………………………………………......

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Q: Megaphone Corporation produces a molded plastic casing, M&M101,

Megaphone Corporation produces a molded plastic casing, M&M101, for many cell phones currently on the market. Summary data from its 2017 income statement are as follows: Revenues………………….$5,000,000 Var...

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Q: Dell Computer incurs the following costs: a. Utility costs

Dell Computer incurs the following costs: a. Utility costs for the plant assembling the Latitude computer line of products b. Distribution costs for shipping the Latitude line of products to a retail...

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Q: Johnson & Johnson, a health care company, incurs the following

Johnson & Johnson, a health care 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...

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Q: Burger King, a hamburger fast-food restaurant, incurs the

Burger King, a hamburger 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 the cos...

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Q: Dominion Consulting has issued a report recommending changes for its newest manufacturing

Dominion Consulting has issued a report recommending changes for its newest manufacturing client, Gibson Engine Works. Gibson currently manufactures a single product, which is sold and distributed n...

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Q: Vargas Construction Company provides construction services for major projects. Managers at

Vargas 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 facto...

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Q: Gregor Company makes and sells brooms and mops. It takes the

Gregor Company makes and sells brooms and mops. It 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...

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Q: Gavin Adams is the president of Trusted Pool Service. He takes

Gavin Adams is the president of Trusted Pool 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 con...

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Q: Madison Foods makes frozen dinners that it sells through grocery stores.

Madison Foods makes frozen dinners that it sells through grocery stores. Typical products include turkey, pot roast, fried chicken, and meatloaf. The managers at Madison have recently proposed a lin...

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Q: Sizemore Landscaping is a firm that provides commercial landscaping and grounds maintenance

Sizemore Landscaping is a firm that provides commercial landscaping and grounds maintenance services. Derek Sizemore, the owner, is trying to find new ways to increase revenues. Mr. Sizemore perform...

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Q: La Mia’s Casas builds replicas of residences of famous and infamous people

La Mia’s Casas builds replicas of residences of famous and infamous people. The company is highly automated, and the new accountant owner has decided to use machine hours as the basis for predicting m...

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Q: The April 2010 income statement for Fabio’s Fashions has just been received

The April 2010 income statement for Fabio’s Fashions has just been received by Diana Caffrey, Vice-President of Marketing. The firm uses a variable costing system for internal report...

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Q: Canyon City Co. uses a job order costing system that

Canyon City Co. uses a job order costing system that combines actual direct material and actual direct labor costs with a predetermined overhead charge based on machine hours. Expected overhead and m...

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Q: Describe how the following occurrences should be accounted for based on the

Describe how the following occurrences should be accounted for based on the fact pattern presented: a. Certain amounts of spoilage and waste are normal in the production system and affect all jobs. b....

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Q: Calista London, after spending 20 years working for a large engineering

Calista London, after spending 20 years working for a large engineering firm, has decided to start her own business. She has designed a product to remove jar lids with minimal physical effort. London...

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Q: Salem Corp. contracted for a specialized production machine from Quindo Industries

Salem Corp. contracted for a specialized production machine from Quindo Industries, a tool company. The contract specified a price equal to “production cost plus 15% of production cost.” A sales execu...

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Q: Nottaway Flooring produces custom-made floor tiles. The company’s Raw

Nottaway Flooring produces custom-made floor tiles. The company’s Raw Material Inventory account contains both direct and indirect materials. Until the end of April 2010, the company worked solely on...

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Q: Croftmark Co. began operations on May 1, 2010. Its

Croftmark Co. began operations on May 1, 2010. Its Work in Process Inventory account on May 31 appeared as follows: The company applies overhead on the basis of direct labor cost. Only one job was sti...

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Q: The following costs were incurred in February 2010 by Container Corp.,

The following costs were incurred in February 2010 by Container Corp., which produces customized steel storage bins: The balance in Work in Process Inventory on February 1 was $16,800, which consisted...

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Q: Blaine Corp. makes floats for Mardi Gras in New Orleans.

Blaine Corp. makes floats for Mardi Gras in New Orleans. The company’s fiscal year ends on March 31. On January 1, 2010, the company’s WIP Inventory account appeare...

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Q: On September 25, 2010, a hurricane destroyed the work in

On September 25, 2010, a hurricane destroyed the work in process inventory of Biloxi Corporation. At that time, the company was in the process of manufacturing two custom jobs (B325 and Q428). Althoug...

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Q: You have applied for a cost accounting position with Chelsea Containers.

You have applied for a cost accounting position with Chelsea Containers. The company controller has asked all candidates to take a quiz to demonstrate their knowledge of job order costing. Chelsea&aci...

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Q: Porta Light manufactures a highquality LED flashlight for home/office use

Porta Light manufactures a highquality LED flashlight for home/office use. Data pertaining to the company’s 2010 operations are as follows: Production for the year …………………………………………………45,000 units Sale...

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Q: All jobs at Frankfurt Inc., which uses a job order costing

All jobs at Frankfurt Inc., which uses a job order costing system, go through two departments (Fabrication and Assembly). Overhead is applied to jobs based on machine hours in Fabrication and on labor...

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Q: Edward Nabors owns Enclose, which designs and manufactures perimeter fencing for

Edward Nabors owns Enclose, which designs and manufactures perimeter fencing for large retail and commercial buildings. Each job goes through three stages: design, production, and installation. Three...

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Q: Gigi LeBlanc is an advertising consultant who tracks costs for her jobs

Gigi LeBlanc is an advertising consultant who tracks costs for her jobs using a job order costing system. During September, LeBlanc and her staff worked on and completed jobs for the following compani...

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Q: Lincoln Construction Company builds bridges. In October and November 2010,

Lincoln Construction Company builds bridges. In October and November 2010, the firm worked exclusively on a bridge spanning the Calamus River in northern Nebraska. Lincoln Construction’s Precast Depar...

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Q: Pip Squeaks Inc. is a manufacturer of furnishings for infants and

Pip Squeaks Inc. is a manufacturer of furnishings for infants and children. The company uses a job order cost system. Pip Squeaks’ Work in Process Inventory on April 30, 2010, consis...

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Q: Modern Convenience specializes in making robotic conveyor systems to move materials within

Modern Convenience specializes in making robotic conveyor systems to move materials within a factory. Model #89 accounts for approximately 60 percent of the company’s annual sales. Because the company...

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Q: During July 2010, Pull-Along worked on two production runs

During July 2010, Pull-Along worked on two production runs ( Jobs #918 and #2002) of the same product, a trailer hitch component. Job #918 consisted of 1,200 units of the product, and Job #2002 contai...

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Q: Two types of contracts are commonly used when private firms contract to

Two types of contracts are commonly used when private firms contract to provide services to governmental agencies: cost-plus and fixed-price contracts. The cost-plus contract allows the contracting fi...

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Q: Timbuk2 is a San Francisco company that makes a variety of messenger

Timbuk2 is a San Francisco company that makes a variety of messenger, cyclist, and laptop bags. The company’s Web site (Timbuk2.com) allows customers to design their own size, color, and fabric bags w...

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Q: One of the main rationales for using a job order costing system

One of the main rationales for using a job order costing system is to achieve profitability by charging a price for each job that is proportionate to the related costs. The fundamental underlying conc...

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Q: Because your professor is scheduled to address a national professional meeting at

Because your professor is scheduled to address a national professional meeting at the time your class ordinarily meets, the class has been divided into teams to discuss selected issues. Your team’s as...

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Q: Prudoe Compounds produces a variety of chemicals that are used by auto

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 Compound...

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Q: PlastiCo produces plastic pipe to customer specifications. Losses of less than

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 prod...

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Q: Summer Shade installs awnings on residential and commercial structures. The company

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. • Issu...

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Q: Polaski Inc. uses an actual cost, job order system.

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 $...

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Q: Ialani Corp. uses a job order costing system for the yachts

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 P...

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Q: Stockman Co. began 2010 with three jobs in process:

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 t...

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Q: Production data for the first week in November 2010 for Florida Fabricators

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...

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Q: In a job order costing system, what key documents support the

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

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Q: In using standard costing in a job order costing system, are

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

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Q: How can the variance information provided by standard costing be used to

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

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Q: Grand Island Brake Co. budgeted the following variable and fixed overhead

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 ut...

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Q: If normal spoilage is generally anticipated to occur on all jobs,

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

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Q: Why are normal and abnormal spoilage accounted for differently? Typically,

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

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Q: In choosing a product costing system, what are the two choices

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

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Q: In choosing a product costing system, what are the three valuation

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

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Q: How can information produced by a job order costing system assist managers

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

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Q: In a team of three or four people, choose a company

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. Pr...

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Q: Use the information in Exercise 27 except assume that BeGone uses FIFO

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 pe...

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Q: Use the information in Exercise 15 except assume that Waltham Mfg.

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 equival...

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Q: The following production and cost per EUP data are available for Vendome

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 a...

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Q: During August 2010, Berman Company’s Department Y equivalent unit product costs

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...

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Q: Wisconsin Dairy determined that the total predetermined OH rate for costing purposes

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 in...

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Q: In October 2010, Tibbetts Company had the following production and cost

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 co...

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Q: In November 2010, Angerstein Co. computed its equivalent unit costs

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....

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Q: Found Sound Company mass-produces miniature speakers for personal sound systems

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 …………………………$ 4,133.2...

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Q: Lamb Inc. produces calendars in a two-process, two

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 a...

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Q: Use the information in Exercise 36 and assume that Lamb Inc.

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 cos...

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Q: Baum Co. has two processing departments: Fabrication and Assembly.

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 component...

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Q: Alberton Co. uses a standard costing system to account for its

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. T...

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Q: Najm Company uses a standard costing system to account for its pita

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...

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Q: Batwings makes one-size-fits-most capes. Each

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 sy...

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Q: Pat Koontz makes necklaces from glass beads, metal beads, and

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 mone...

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Q: Green Shade manufactures insulated windows. The firm’s repair and maintenance (

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...

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Q: Oehkle Inc. produces paint in a process in which spoilage occurs

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 o...

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Q: Hebert Industries uses a weighted average process costing system. Management has

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 materia...

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Q: In manufacturing its products, Trevano Corp. adds all direct material

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...

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Q: O’Malley Corp. uses a weighted average process costing system. Material

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 ind...

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Q: For each of the following situations, use the weighted average method

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...

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Q: Assume that Trevano Corp. in Exercise 15 uses the FIFO method

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 eq...

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Q: Assume that O’Malley Corp. in Exercise 16 uses the FIFO method

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 fo...

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Q: Using the information in Exercise 4 and assuming a FIFO method of

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 follo...

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Q: Funtime Inc. makes small toys in a one-department production

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 availa...

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Q: Ynugai Corp. uses a process costing system to assign costs to

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...

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Q: Bon Voyage provides charter cruises in the eastern Caribbean. Tina Louise

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 n...

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Q: On April 30, 2010, Alvira Co. had 21,

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,...

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Q: In October 2010, Rojo Inc.’s production was 53,

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 mate...

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Q: Assume that Rojo Inc. in Exercise 24 had 7,200

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...

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Q: Pylonic Mfg. produces concrete garden border sections. All material is

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 …………………...

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Q: BeGone manufactures spray cans of insect repellent. On August 1,

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...

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Q: Waltham Mfg. makes skateboards and uses a weighted average process costing

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 com...

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Q: Octavia Corp.’s products are manufactured in three separate departments:

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....

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Q: Use the information for Octavia Corp. in Problem 56, except

Use the information for Octavia Corp. in Problem 56, except assume that the company uses FIFO costing. Prepare, in good form, a FIFO cost of production report for the Curing Department for May 2010....

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Q: Always Christmas makes artificial Christmas trees in two departments: Cutting and

Always Christmas makes artificial Christmas trees in two departments: Cutting and Boxing. In the Cutting Department, wire wrapped with green “needles” is placed int...

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Q: Elijah Inc. produces accent stripes for automobiles in 50-inch

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. Produ...

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Q: Joe’s Lawn Care Service primarily mows lawns for residential customers. Management

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...

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Q: KeepIn makes fencing in a two-stage production system. In

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...

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Q: Donbrowski Co. manufactures reflective lenses and uses a standard process costing

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 materia...

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Q: Be-at-Ease Industries manufactures a series of three models

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...

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Q: Turkburg produces frozen turkey patties. In the Forming Department, ground

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...

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Q: Gary’s Tools manufactures one of its products in a two-department

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 weig...

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Q: Strongarm manufactures various lines of bicycles. Because of the high volume

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 cost...

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Q: LaToya Company produces door pulls, which are inspected at the end

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 c...

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Q: Use the LaToya Company data given in Problem 20. However,

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 FI...

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Q: Ro-Day-O Inc. manufactures belt buckles in a

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 an...

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Q: Spangenberg Products manufactures computer cases. All material is added at the

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 beginn...

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Q: The Splash makes large fiberglass swimming pools and uses machine hours and

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...

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Q: Fresh Seasons is a contract manufacturer for Delectable Dressing Company. Fresh

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...

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Q: Delacroix Co. had 800 units of inventory at the beginning of

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 F...

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Q: Itzgood makes a variety of healthy snack foods. The following information

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 dire...

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Q: Use the Fresh Seasons information from Problem 4, except assume that

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 beginn...

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Q: Use the information from Problem 4 for Delacroix Co. a

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 pr...

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Q: What is meant by the phrase units started and completed? Why

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?

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Q: What is meant by the term transferred-out cost? Why

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?

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Q: How is the cost of ending inventory calculated in a process costing

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

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Q: A company has two sequential processing departments. On the cost of

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 p...

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Q: Why does standard costing make process costing more clerically and computationally efficient

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

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Q: Tom Snider is a staff accountant for BigBiz. Snider was recently

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...

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Q: What is a hybrid costing system? In what circumstances are hybrid

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

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Q: (Appendix 2) What is meant by the “method of

(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 as...

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Q: What are the characteristics of a company that would be more likely

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

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Q: How do the weighted average and first-in, first-

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?

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Q: Is one equivalent unit computation sufficient for all cost components? Explain

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

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Q: Which cost component can be found in a downstream department of a

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.

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Q: (Appendix 2) In a process costing system, how are

(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 a...

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Q: What is an “equivalent unit of production,” and why is

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

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Q: Contact a local company that uses a standard cost system. Make

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 prese...

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Q: As a three-person team, choose an activity that is

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 performin...

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Q: Refer to the information in Exercise 22 for Wyoming Wholesale.

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 rec...

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Q: Georgia Shacks produces small outdoor buildings. The company began operations in

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 yea...

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Q: The manager of the Texas Department of Transportation has determined that it

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 o...

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Q: Kemp Manufacturing set 70,000 direct labor hours as the 2010

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...

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Q: Munich Ltd. uses a combined overhead rate of $2.

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 require...

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Q: Li Corporation’s flexible budget formula for total overhead is $360,

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 fo...

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Q: Bobcat Inc.’s total predetermined overhead rate is $50 per

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...

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Q: At year-end 2010, the trial balance of Pennopscott Corp

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 entri...

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Q: McNeal Concrete makes precast concrete steps for use with manufactured housing.

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,...

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Q: Many companies face the prospect of paying workers overtime wages; some

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. Obvious...

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Q: An HMO medical program began reimbursing hospitals according to diagnostic-related

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 hospit...

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Q: Auto Brakes Inc. manufactures brake rotors and has always applied overhead

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...

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Q: Bird’s Eye View manufactures satellite dishes used in residential and commercial installations

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...

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Q: Svenson Technology considers direct labor cost too insignificant to separately account for

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 t...

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Q: Hennessey Company produces 12-ounce cans of mixed pecans and cashews

Hennessey Company produces 12-ounce cans of mixed pecans and cashews. Standard and actual information follows. Standard Quantities and Costs (12-oz. can) Pecans: 6 ounces at $6.00 per pound ………………….$2...

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Q: Coffen Corp. employs engineers and draftspeople. The average hourly rates

Coffen Corp. employs engineers and draftspeople. The average hourly rates are $60 for engineers and $30 for draftspeople. For one project, the standard was set at 400 hours of engineer time and 600 ho...

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Q: Bernie Services has three labor classes: administrative assistants, paralegals,

Bernie Services has three labor classes: administrative assistants, paralegals, and attorneys. Standard wage rates are as follows: administrative assistants, $30 per hour; paralegals, $60 per hour; an...

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Q: One of Sure-Bet Sherbet’s bestselling products is raspberry sherbet,

One of Sure-Bet Sherbet’s bestselling products is raspberry sherbet, which is manufactured in 10-gallon batches. Each batch requires 6 quarts of raspberries. The raspberries are sorted by hand before...

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Q: In November 2010, DayTime Publishing Company’s costs and quantities of paper

In November 2010, DayTime Publishing Company’s costs and quantities of paper consumed in manufacturing its 2011 Executive Planner and Calendar were as follows: Actual unit purchase price …………………………………...

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Q: Cave Company produces a product called Lem. The standard direct material

Cave Company produces a product called Lem. The standard direct material cost to produce one unit of Lem is 4 quarts of raw material at $2.50 per quart. During May 2010, 4,200 quarts of raw material w...

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Q: Ayesha Inc. manufactures a product that requires 5 pounds of material

Ayesha Inc. manufactures a product that requires 5 pounds of material. The purchasing agent has an opportunity to purchase the necessary material at a vendor’s bankruptcy sale at $1....

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Q: A&G makes wrought iron table and chair sets. During

A&G makes wrought iron table and chair sets. During April, the purchasing agent bought 25,600 pounds of scrap iron at $1.94 per pound. During the month, 21,400 pounds of scrap iron were used to produc...

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Q: Heath Construction builds standard prefabricated wooden frames for walls. Each frame

Heath Construction builds standard prefabricated wooden frames for walls. Each frame requires 10 direct labor hours and the standard hourly direct labor rate is $18. During July, the company produced...

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Q: Since opening in 2009, Akron Aviation has built light aircraft engines

Since opening in 2009, Akron Aviation has built light aircraft engines and has gained a reputation for reliable and quality products. Factory overhead is applied to production using direct labor hours...

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Q: Information on Hanley’s direct labor costs for January 2010 is as follows

Information on Hanley’s direct labor costs for January 2010 is as follows: Actual direct labor rate …………………………………………..$7.50 Standard direct labor hours allowed ……………………..11,000 Actual direct labor hou...

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Q: Calista & Lane, CPAs, set the following standard for its

Calista & Lane, CPAs, set the following standard for its inventory audit of Triumph Co.: 350 hours at an average hourly billing rate of $250. The firm actually worked 330 hours during the inventory au...

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Q: For each independent case, fill in the missing figures.

For each independent case, fill in the missing figures.

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Q: In July 2010, Zinger Corp. purchased 20,000 gallons

In July 2010, Zinger Corp. purchased 20,000 gallons of Numerol for $61,000 to use in the production of product #43MR7. During July, Zinger Corp. manufactured 3,900 units of product #43MR7. The followi...

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Q: Madzinga’s Draperies manufactures curtains. Curtain #4571 requires the following:

Madzinga’s Draperies manufactures curtains. Curtain #4571 requires the following: Direct material standard 10 square yards at …………………………$5 per yard Direct labor standard 5 hours at ………………………………………..$1...

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Q: Green Tee produces 100 percent cotton t-shirts, with the

Green Tee produces 100 percent cotton t-shirts, with the following standard direct material and labor quantities and costs: Direct material 2.0 yards……â&#...

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Q: Edina Co. manufactures a product that requires 3.5 machine

Edina Co. manufactures a product that requires 3.5 machine hours per unit. The variable and fixed overhead rates were computed using expected capacity of 144,000 units (produced evenly throughout the...

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Q: Quinan Carpentry Co. makes wooden shelves. A small fire on

Quinan Carpentry Co. makes wooden shelves. A small fire on October 1 partially destroyed the records relating to September’s production. The charred remains of the standard cost card...

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Q: ALOHA Corp., started in January 2004, manufactures Hawaiian muumuus.

ALOHA Corp., started in January 2004, manufactures Hawaiian muumuus. At that time, the following material and labor standards were developed: Material ………………………………….3.0 yards at $4 per yard Labor …………...

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Q: N Joy makes wooden picnic tables, swings, and benches.

N Joy makes wooden picnic tables, swings, and benches. Standard hours for each product are as follows: Picnic table ………………………………………….10 standard direct labor hours Swing ……………………………………………………3 standard...

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Q: Prior to the start of fiscal 2010, managers of MultiTech hosted

Prior to the start of fiscal 2010, managers of MultiTech hosted a Web conference for their shareholders, financial analysts, and members of the financial press. During the conference, the CEO and CFO...

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Q: During December 2010, Amin Corp. manufactured products requiring 8,

During December 2010, Amin Corp. manufactured products requiring 8,000 standard labor hours. The following variance and actual information is available: Labor rate variance ………………………………………..$ 4,500 U...

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Q: Terkelsen Mfg. produces comforter sets with the following standard cost information

Terkelsen Mfg. produces comforter sets with the following standard cost information: • Each comforter set requires 0.5 hours of machine time to produce. • Variable overhead is applied at the rate of $...

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Q: For 2010, Riguilio Inc. set predetermined variable and fixed overhead

For 2010, Riguilio Inc. set predetermined variable and fixed overhead rates, respectively, of $6.50 and $9.35 based on an expected monthly capacity of 4,000 machine hours. Each unit of product require...

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Q: Hellier Contractors paints interiors of residences and commercial structures. The firm’s

Hellier Contractors paints interiors of residences and commercial structures. The firm’s management has established cost standards per 100 square feet of area to be painted. Direct material ($18 per g...

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Q: The following variances existed at year-end 2010 for Muckstadt Production

The following variances existed at year-end 2010 for Muckstadt Production Company: Material price variance …………………………………….$23,400 U Material quantity variance ………………………………….24,900 F Labor rate varianc...

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Q: Namathe Industries manufactures children’s footballs with the following standard costs per unit

Namathe Industries manufactures children’s footballs with the following standard costs per unit: Material: one square foot of leather at ……&ac...

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Q: Ripper Corp. uses a standard cost system for its aircraft component

Ripper Corp. uses a standard cost system for its aircraft component manufacturing operations. Recently, the company’s direct material supplier went out of business, but Ripper’s purchasi...

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Q: The May budget for the Auberage Company shows $1,080

The May budget for the Auberage Company shows $1,080,000 of variable conversion costs, $360,000 of fixed conversion costs, and 72,000 machine hours for the production of 24,000 units of product. Durin...

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Q: Kieffer Company makes men’s suit alterations for a major clothing store chain

Kieffer Company makes men’s suit alterations for a major clothing store chain. No direct materials are used in the alterations process and overhead costs are primarily variable and relate very closely...

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Q: Polermo Inc. produces three-topping, 18-inch frozen

Polermo Inc. produces three-topping, 18-inch frozen pizzas and uses a standard cost system. The three pizza toppings (in addition to cheese) are onions, olives, and mushrooms. To some extent, discreti...

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Q: Tomm’s T’s is a New York–based company that produces and

Tomm’s T’s is a New York–based company that produces and sells t-shirts. The firm uses variable costing for internal purposes and absorption costi...

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Q: Haddas Ltd. makes Healthy Life, a nutritional aid. For

Haddas Ltd. makes Healthy Life, a nutritional aid. For a 50-pound batch, standard material and labor costs are as follows: During June, the following materials and labor were used in producing 600 bat...

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Q: Schmidt Co. has the following standard material and labor quantities and

Schmidt Co. has the following standard material and labor quantities and costs for one unit of Product SWK#468: Material 1.85 pounds @ ……….…………………….$3.50 per pound Labor 0.04 hours @ ……………………………………….....

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Q: Griffon Corp. makes small plastic dog toys with the following material

Griffon Corp. makes small plastic dog toys with the following material and labor standards: During October, 60,000 pounds of material were acquired on account at $4.15 per pound. During October, 50,12...

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Q: Aquatica uses a standard cost system for materials and labor in producing

Aquatica uses a standard cost system for materials and labor in producing small fishing boats. Production requires three materials: fiberglass, paint, and a purchased trim package. The standard costs...

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Q: Surgical Products produces latex surgical gloves. Machines perform the majority of

Surgical Products produces latex surgical gloves. Machines perform the majority of the processing for 1,000 pairs of gloves per hour. Each pair of gloves requires 0.85 square foot of latex, which has...

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Q: How are insignificant variances closed at the end of an accounting period

How are insignificant variances closed at the end of an accounting period? How are significant variances closed at the end of an accounting period? Why is there a difference in treatment?

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Q: What are the three primary uses of a standard cost system?

What are the three primary uses of a standard cost system? In a business that routinely manufactures the same products or performs the same services, why are standards helpful?

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Q: What is management by exception? Why is a standard cost system

What is management by exception? Why is a standard cost system useful when managers control “by exception”?

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Q: Why do managers care about capacity utilization? Are managers controlling costs

Why do managers care about capacity utilization? Are managers controlling costs when they control utilization?

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Q: (Appendix) What variances can be computed for direct material and

(Appendix) What variances can be computed for direct material and direct labor when some materials or labor inputs are substitutes for others? What information does each of these variances provide? A...

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Q: Last June, Lacy Dalton had just been appointed CFO of Garland

Last June, Lacy Dalton had just been appointed CFO of Garland & Wreath when she received some interesting reports about the profitability of the company’s three most important pr...

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Q: What is a standard cost card? What information does it contain

What is a standard cost card? What information does it contain? How does it relate to a bill of materials and an operations flow document?

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Q: How is the material standard developed? Why are the quantities shown

How is the material standard developed? Why are the quantities shown in the bill of materials not always the same quantities shown in the standard cost card?

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Q: A total variance can be calculated for each cost component of a

A total variance can be calculated for each cost component of a product. Into what variances can this total be separated and to what does each relate? (Discuss separately for material and labor.)

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Q: The overhead spending and overhead efficiency variances are said to be controllable

The overhead spending and overhead efficiency variances are said to be controllable, but the volume variance is said to be noncontrollable. Explain.

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Q: How are actual and standard costs recorded in a standard cost system

How are actual and standard costs recorded in a standard cost system?

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Q: What is meant by the term standard hours? Does the term

What is meant by the term standard hours? Does the term refer to inputs or outputs?

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Q: Hard Core had budgeted sales of 190,000 feet of its

Hard Core had budgeted sales of 190,000 feet of its concrete culvert products for June 2010. Each foot of product requires 4 pounds of concrete ($0.10 per pound) and 7.5 pounds of gravel ($0.04 per po...

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Q: The treasurer of Homeyra Corp. needs to estimate cash collections from

The treasurer of Homeyra Corp. needs to estimate cash collections from accounts receivable for September, October, and November 2011. Forty percent of the company’s customers pay in cash and the rest...

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Q: Miriam Irby is president of MI Corp. Irby has decided to

Miriam Irby is president of MI Corp. Irby has decided to take a month’s vacation with her family to South Africa, Zimbabwe, and Angola. Irby has researched the trip and determined that the total cost...

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Q: Total June 2010 sales for Roy’s Catering are expected to be $

Total June 2010 sales for Roy’s Catering are expected to be $450,000. Of each month’s sales, 80 percent is expected to be on credit. The Accounts Receivable balance at May 31 is $119,600, of which $90...

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Q: Sunny Systems manufactures solar panels. The company has a theoretical capacity

Sunny Systems manufactures solar panels. The company has a theoretical capacity of 50,000 units annually. Practical capacity is 80 percent of theoretical capacity, and normal capacity is 80 percent of...

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Q: The October 1, 2010, Accounts Receivable balance for Darin Landscaping

The October 1, 2010, Accounts Receivable balance for Darin Landscaping is $632,500. Of that balance, $480,000 represents remaining accounts receivable from September billings. The normal collection pa...

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Q: Campbell Manufacturing intends to start business on January 1, 2011.

Campbell Manufacturing intends to start business on January 1, 2011. Production plans for the first four months of operations are as follows: January …………………………..20,000 units February ………………………….50,00...

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Q: The following budgeted May 2010 cash information is available for Salado Corp

The following budgeted May 2010 cash information is available for Salado Corp.: Net after-tax income …………………………………..$336,000 Depreciation expense ……………………………………..56,200 Accrued income tax expense …………...

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Q: The following budgeted information about Reeves Co. is available for September

The following budgeted information about Reeves Co. is available for September 2010: Sales for September ………………………………………………………..$2,700,000 Gross profi t on sales ………………………………………………………………….40% Decrease...

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Q: The following cash budget is for the third quarter of 2011.

The following cash budget is for the third quarter of 2011. Solve for the missing numbers on the cash budget, assuming that the accountant has requested a minimum cash balance of $7,000 at the start o...

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Q: Compute the required answer for each of the following independent situations.

Compute the required answer for each of the following independent situations. a. For next year, Penny Suits projects $8,000,000 of sales and total fixed manufacturing costs of $2,000,000. Variable man...

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Q: Last year’s income statement for Cooper Company is as follows:

Last year’s income statement for Cooper Company is as follows: This year, unit sales are expected to increase by 25 percent; material and labor costs are expected to increase by 10 p...

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Q: The operating results in summarized form for a retail computer store for

The operating results in summarized form for a retail computer store for 2010 are: Revenue: Hardware sales ………………………………………………….$ 4,800,000 Software sales ………………………………………………………2,000,000 Maintenance co...

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Q: Alyssa Co. is planning to purchase a new piece of production

Alyssa Co. is planning to purchase a new piece of production equipment. The equipment will increase fixed overhead by $700,000 per year in depreciation but reduce variable expenses per unit by 20 perc...

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Q: Many managers believe that if all amounts in their spending budgets are

Many managers believe that if all amounts in their spending budgets are not spent during a period, they will lose allocations in future periods and that they will receive little or no recognition for...

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Q: Battle Creek Storage Systems budgeted the following factory overhead costs for the

Battle Creek Storage Systems budgeted the following factory overhead costs for the upcoming year to help calculate variable and fixed predetermined overhead rates. Indirect material: $2.50 per unit pr...

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Q: You own a small boat manufacturing company. At a recent manufacturers’

You own a small boat manufacturing company. At a recent manufacturers’ association meeting, you overheard one of the other company owners say that he liked using a continuous budgeting process. Discus...

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Q: Before a budget can be prepared, company management considers “what

Before a budget can be prepared, company management considers “what if ” changes that might occur during the forecast period. Prepare a list of five possible questions about changes that you might wan...

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Q: When engaging in strategic planning, company management often prepares a SWOT

When engaging in strategic planning, company management often prepares a SWOT analysis. a. What is a SWOT analysis and why is it useful in the planning process? b. Choose an organization with which yo...

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Q: People, as well as businesses, need to budget. Assume

People, as well as businesses, need to budget. Assume that you and your spouse are having difficulties living within your combined incomes. Prepare a list of at least 10 recommendations on how to “do...

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Q: High-level executives have often indicated that competitors’ actions are the

High-level executives have often indicated that competitors’ actions are the top external factor affecting their businesses and their business plans. a. Why are competitors’ actions so important to bu...

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Q: Pataky Co.’s sales manager estimates that 2,000,

Pataky Co.’s sales manager estimates that 2,000,000 units of product RI#698 will be sold in 2011. The product’s selling price is expected to decline as the result o...

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Q: Seguin Inc. has the following projected unit sales for the first

Seguin Inc. has the following projected unit sales for the first four months of 2011: January ……………………………………..102,400 February …………………………………….96,000 March ……………………………………….128,000 April ………………………………………...

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Q: Gerrad Manufacturing has projected sales of its product for the next six

Gerrad Manufacturing has projected sales of its product for the next six months as follows: January ………………………………………..300 units February ……………………………………….700 units March …………………………………………1,000 units Apri...

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Q: Gap’O has projected sales of 325,000 hospital gowns in October

Gap’O has projected sales of 325,000 hospital gowns in October. Each gown requires 2.5 yards of fabric. The beginning inventory of fabric and gowns, respectively, are 5,000 yards and 21,000 gowns. Gap...

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Q: The following budget information is available for Sluyter Corp. for May

The following budget information is available for Sluyter Corp. for May 2011: • Sales are expected to be $400,000. All sales are on account, and a provision for bad debts is accrued monthly at 3 perce...

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Q: Idaho Mechanical Systems has two departments: Fabrication and Finishing. Three

Idaho Mechanical Systems has two departments: Fabrication and Finishing. Three workers oversee the 25 machines in Fabrication. Finishing uses 35 crafters to hand-polish output, which is then run throu...

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Q: Find the Web page for a charitable organization that operates internationally as

Find the Web page for a charitable organization that operates internationally as well as domestically. a. Prepare a list of activities in which this organization is currently involved. b. What would b...

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Q: In 2010, Grand Falls Bank (GFB) had $4

In 2010, Grand Falls Bank (GFB) had $4,000,000 in business loans at an average interest rate of 3.5 percent as well as $3,200,000 in consumer loans with an average rate of 8 percent. GFB also has $750...

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Q: Nafari Company’s sales budget has the following unit sales projections for each

Nafari Company’s sales budget has the following unit sales projections for each quarter of calendar year 2011: January–March …………………………………1,080,000 April–June …………………………………………1,360,000 July–September...

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Q: Grenfell Company is preparing a cash budge for 2010 for purchases of

Grenfell Company is preparing a cash budge for 2010 for purchases of Calvos. Budgeted data are as follows: Cost of goods sold for the year 2010 .…………………………..$600,000 Accounts payable, 1/1/10 ………………………...

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Q: In preparing its budget for July, Wade Inc. has the

In preparing its budget for July, Wade Inc. has the following information available: Accounts Receivable at June 30 ……………………………………………………………………………….$750,000 Estimated credit sales for July ………………………………...

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Q: Davide’s Arrangements purchases, wholesales, and retails fresh flowers. Company

Davide’s Arrangements purchases, wholesales, and retails fresh flowers. Company estimates reveal the following for the first three months of the company’s 2011 fisc...

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Q: GJO Corp. manufactures decorative, high-quality nutcrackers. Selling

GJO Corp. manufactures decorative, high-quality nutcrackers. Selling price of a nutcracker is full production cost plus 25 percent (rounded to the nearest dollar). Variable production cost is $55 per...

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Q: The projected October 31, 2011, balance sheet for Blanco Co

The projected October 31, 2011, balance sheet for Blanco Co. follows: ASSETS Cash ..…………………………………………………………………………………………………………..$ 28,000,000 Accounts Receivable (net of Allowance for Uncollectibles of...

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Q: Clarenville Kitchen Products produces and sells upscale mixers and breadmakers. In

Clarenville Kitchen Products produces and sells upscale mixers and breadmakers. In October 2010, Clarenville’s budget department gathered the following data to meet budget requiremen...

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Q: Kalogridis Corp. manufactures industrial dye. The company is preparing its

Kalogridis Corp. manufactures industrial dye. The company is preparing its 2011 master budget and has presented you with the following information: a. The projected December 31, 2010, balance sheet fo...

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Q: Red River Farm Machine makes a wide variety of products, all

Red River Farm Machine makes a wide variety of products, all of which must be processed in the Cutting and Assembly departments. For the year 2010, Red River budgeted total overhead of $993,000, of wh...

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Q: Norton Weymer & Collins, LLP, a local accounting firm,

Norton Weymer & Collins, LLP, a local accounting firm, has a formal budgeting system. The firm has five partners, two managers, four seniors, two secretaries, and two bookkeepers. The budgeting proces...

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Q: Attala Co., a division of Jackson Industries ( JI), offers

Attala Co., a division of Jackson Industries ( JI), offers consulting services to clients for a fee. JI’s corporate management is pleased with the performance of Attala Co. for the f...

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Q: Preparing budgets for a multinational organization is significantly more complex than doing

Preparing budgets for a multinational organization is significantly more complex than doing so for a solely domestic organization. What costs might managers find in budgets for international companies...

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Q: Caleb Corp. has prepared the following unit sales forecast for 2011

Caleb Corp. has prepared the following unit sales forecast for 2011: Estimated ending Finished Goods Inventories are 50,000 units at December 31, 2010; 72,000 units at June 30, 2011; and 120,000 units...

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Q: Narisho Supply is in the process of preparing the budget for the

Narisho Supply is in the process of preparing the budget for the first quarter of 2011. The following projections for unit sales have been made: Each finished unit requires three direct materials: 4 p...

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Q: Atkinson’s Reliable Tools makes two products that use similar raw materials:

Atkinson’s Reliable Tools makes two products that use similar raw materials: #587Q and #253X. Estimated production needs for a unit of each product follow. Estimated sales in units b...

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Q: Corner Brook Furniture Co. makes bookstands and expects sales and collections

Corner Brook Furniture Co. makes bookstands and expects sales and collections for the first three months of 2011 to be as follows: The December 31, 2010, balance sheet revealed the following selected...

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Q: Butler Inc. has projected Cost of Goods Sold (CGS)

Butler Inc. has projected Cost of Goods Sold (CGS) for June 2011 of $1,500,000. Of this amount, $80,000 represents fixed overhead costs. Total variable costs for the company each month average 70 perc...

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Q: Cute and Cuddly Inc. sells teddy bears in walk-by

Cute and Cuddly Inc. sells teddy bears in walk-by kiosks in shopping malls. The company’s balance sheet on March 31, 2010, showed the following balances related to Accounts Receivable and inventories:...

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Q: Stabler Co.’s projected March 31, 2011, balance sheet

Stabler Co.’s projected March 31, 2011, balance sheet follows. Additional information about the company is as follows: • Expected sales for April and May are $240,0...

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Q: UpTop Mining has compiled the following data to analyze utility costs:

UpTop Mining has compiled the following data to analyze utility costs: Use the least squares method to develop a formula for budgeting utility cost.

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Q: How does absorption costing differ from variable costing in cost accumulation and

How does absorption costing differ from variable costing in cost accumulation and income statement presentation?

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Q: Collegiate Management Education (CME) Inc. is a nonprofit organization

Collegiate Management Education (CME) Inc. is a nonprofit organization that sponsors a wide variety of management seminars throughout the Southwest. In addition, it is heavily involved in research int...

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Q: Blackman Corp., a rapidly expanding crossbow distributor, is in the

Blackman Corp., a rapidly expanding crossbow distributor, is in the process of formulating plans for 2011. Cara Jordan, director of marketing, has completed her 2011 forecast and is confident that sal...

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Q: Shredder Manufacturing has the following projected unit sales (at $18

Shredder Manufacturing has the following projected unit sales (at $18 per unit) for four months of operations: January ……………………………………………25,000 February ………………………………………….30,000 March ………………………………………………...

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Q: Differentiate between the operating and financial budgets that are contained in a

Differentiate between the operating and financial budgets that are contained in a master budget. Why are both types needed?

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Q: Discuss the sequence in which the major components of the master budget

Discuss the sequence in which the major components of the master budget are prepared. Why is it necessary to prepare the components in such a sequence?

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Q: Why is a firm’s production budget influenced by the finished goods inventory

Why is a firm’s production budget influenced by the finished goods inventory policy?

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Q: Assume that in preparing the cash budget, the accountant discovers that

Assume that in preparing the cash budget, the accountant discovers that a cash shortage will likely occur in a specific month. What actions might the accountant recommend to management to deal with th...

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Q: The cash budget and the budgeted statement of cash flows both provide

The cash budget and the budgeted statement of cash flows both provide information about cash. What information about cash is common to these two sources, and what information is unique to the two sour...

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Q: Why is continuous (rolling) budgeting becoming more popular than it

Why is continuous (rolling) budgeting becoming more popular than it was in the past for organizational managers?

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Q: If the majority of companies find that their forecasts are inaccurate,

If the majority of companies find that their forecasts are inaccurate, why should managers engage in budgeting at all?

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Q: What is meant by classifying costs (a) functionally and (

What is meant by classifying costs (a) functionally and (b) behaviorally? Why would a company be concerned about functional and behavioral classifications?

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Q: What is budgetary slack, and what might top managers do to

What is budgetary slack, and what might top managers do to rid their firms’ budgets of slack?

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Q: (Appendix) Why is it helpful for a company to prepare

(Appendix) Why is it helpful for a company to prepare a budget manual? Appendix: Most companies combine many materials and various classes of direct labor to produce goods. In such settings, the mate...

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Q: How does the strategic plan influence preparation of the master budget?

How does the strategic plan influence preparation of the master budget?

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Q: Distinguish between a strategic plan and a tactical plan. How are

Distinguish between a strategic plan and a tactical plan. How are these plans related?

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Q: After a master budget has been prepared, what is its role

After a master budget has been prepared, what is its role in managerial control?

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Q: How does budgeting provide important information to managers and operating personnel?

How does budgeting provide important information to managers and operating personnel?

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Q: Lansing Mfg. prepared the following 2010 abbreviated flexible budget for different

Lansing Mfg. prepared the following 2010 abbreviated flexible budget for different levels of machine hours: Each product requires 4 hours of machine time, and the company expects to produce 10,000 uni...

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Q: Use the information in Exercise 11 and assume that Lansing Mfg.

Use the information in Exercise 11 and assume that Lansing Mfg. has decided to use units of production to apply overhead to production. In April 2010, the company produced 875 units and incurred $7,50...

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Q: For 2010, Omaha Mechanical has a monthly overhead cost formula of

For 2010, Omaha Mechanical has a monthly overhead cost formula of $42,900+$6 per direct labor hour. The firm’s 2010 expected annual capacity is 78,000 direct labor hours, to be incurred evenly each mo...

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Q: Langston Automotive Accessories applies overhead using a combined rate for fixed and

Langston Automotive Accessories applies overhead using a combined rate for fixed and variable overhead. The rate is 250 percent of direct labor cost. During the first three months of the current year,...

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Q: Is variable or absorption costing generally required for external reporting? Why

Is variable or absorption costing generally required for external reporting? Why is this method preferred to the alternative?

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Q: Roddickton Manufacturing Co. has gathered the following information to develop predetermined

Roddickton Manufacturing Co. has gathered the following information to develop predetermined OH rates for 2010. The company produces a wide variety of energy-saving products that are processed through...

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Q: At the end of 2010, Jackson Tank Company’s accounts showed a

At the end of 2010, Jackson Tank Company’s accounts showed a $66,000 credit balance in Manufacturing Overhead Control. In addition, the company had the following account balances: Work in Process Inve...

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Q: Davidson’s Dolls had the following information in its Work in Process Inventory

Davidson’s Dolls had the following information in its Work in Process Inventory account for June 2010: All workers are paid the same rate per hour. Factory overhead is applied to Wor...

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Q: At year-end 2010, Dub’s Wind Generator Co. had

At year-end 2010, Dub’s Wind Generator Co. had a $40,000 debit balance in its Manufacturing Overhead Control account. Overhead is applied to products based on direct labor cost. Rele...

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Q: For 2010, Milltown Iron Manufacturing has estimated its production capacities as

For 2010, Milltown Iron Manufacturing has estimated its production capacities as follows: Theoretical capacity ………………………………400,000 units Practical capacity ………………………………….300,000 units Normal capacity...

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Q: Alberton Electronics makes inexpensive GPS navigation devices and uses a normal cost

Alberton Electronics makes inexpensive GPS navigation devices and uses a normal cost system that applies overhead based on machine hours. The following 2010 budgeted data are available: Variable facto...

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Q: Information about Indiana Industrial’s utility cost for the last six months of

Information about Indiana Industrial’s utility cost for the last six months of 2010 follows. The high–low method will be used to develop a cost formula to predict 2...

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Q: Wyoming Wholesale has gathered the following data on the number of shipments

Wyoming Wholesale has gathered the following data on the number of shipments received and the cost of receiving reports for the first seven weeks of 2010. Number of Weekly Cost of Shipments Re...

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Q: La Mia’s Casas builds replicas of residences of famous and infamous people

La Mia’s Casas builds replicas of residences of famous and infamous people. The company is highly automated, and the new accountant owner has decided to use machine hours as the basis for predicting m...

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Q: Why does variable costing provide more useful information than absorption costing for

Why does variable costing provide more useful information than absorption costing for making internal decisions?

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Q: What are the income relationships between absorption and variable costing when production

What are the income relationships between absorption and variable costing when production volume differs from sales volume? What causes these relationships to occur?

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Q: What is the difference between variable and mixed costs, considering that

What is the difference between variable and mixed costs, considering that both change in total with changes in activity levels?

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Q: The high–low method of analyzing mixed costs uses only two

The high–low method of analyzing mixed costs uses only two observation points: the high and the low points of activity. Are these always the best points for prediction purposes? Why or why not?

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Q: Discuss the reasons a company would use a predetermined overhead rate rather

Discuss the reasons a company would use a predetermined overhead rate rather than actual overhead to determine cost of products or services.

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Q: Why are departmental predetermined OH rates more useful for managerial decision making

Why are departmental predetermined OH rates more useful for managerial decision making than plantwide OH rates? Why do firms use separate variable and fixed rates rather than total rates?

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Q: Why would regression analysis provide a more accurate cost formula than the

Why would regression analysis provide a more accurate cost formula than the high– low method for a mixed cost?

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Q: The Sioux City Storage System’s plant prepared the following flexible overhead budget

The Sioux City Storage System’s plant prepared the following flexible overhead budget for three levels of activity within the plant’s relevant range. After discussi...

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Q: Lin Products manufactures special-order office cubicle systems. Production time

Lin Products manufactures special-order office cubicle systems. Production time is two days, but the average cycle time for any order is three weeks. The company president has asked you, as the new co...

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Q: For each of the following cost pools in a temporary employment agency

For each of the following cost pools in a temporary employment agency, identify a cost driver and explain why it is appropriate. a. Accounts receivable department b. Payroll department c. Advertising...

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Q: For each of the following costs commonly incurred in a manufacturing company

For each of the following costs commonly incurred in a manufacturing company, identify a cost driver and explain why it is an appropriate choice. a. Machine setup cost b. Computer operations c. Freigh...

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Q: DaSilva Co. has a casting machine that is used for three

DaSilva Co. has a casting machine that is used for three of the company’s products. Each setup of the machine costs was $18,760 and the casting machine was set up in June for six dif...

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Q: Three clients (A, B, and C) use Kingsley

Three clients (A, B, and C) use Kingsley Call Service’s call center. During October, Kingsley initiated four new equipment advancements. The following information indicates the cost...

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Q: Leopold & Olney LLP has 5 partners and 12 staff accountants.

Leopold & Olney LLP has 5 partners and 12 staff accountants. The partners each work 2,100 hours per year and earn $350,000 annually. The staff accountants each work 2,600 hours per year and earn $80,0...

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Q: Wyeth Corp. has decided to implement an activity-based costing

Wyeth Corp. has decided to implement an activity-based costing system for its in-house legal department. The legal department’s primary expense is professional salaries, which are estimated for associ...

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Q: Regis Place is a health-care facility that has been allocating

Regis Place is a health-care facility that has been allocating its overhead costs to patients based on number of patient days. The facility’s overhead costs total $3,620,400 per year...

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Q: Briones Books is concerned about the profitability of its regular dictionaries.

Briones Books is concerned about the profitability of its regular dictionaries. Company managers are considering producing only the top-quality, hand-sewn dictionaries with gold-edged pages. Briones i...

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Q: Rice Inc. manufactures lawn mowers and garden tractors. Lawn mowers

Rice Inc. manufactures lawn mowers and garden tractors. Lawn mowers are relatively simple to produce and are made in large quantities. Garden tractors are customized to individual wholesale customer s...

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Q: Tom’s Shoe Repair provides a variety of shoe and repair services.

Tom’s Shoe Repair provides a variety of shoe and repair services. Analysis of monthly costs revealed the following cost formulas when direct labor hours are used as the basis of cost determination: Su...

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Q: Starshine Company is in the process of analyzing and updating its cost

Starshine Company is in the process of analyzing and updating its cost information and pricing practices. Since the company’s product line changed from general paints to specialized marine coatings, t...

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Q: The cost systems at many companies selling multiple products have become less

The cost systems at many companies selling multiple products have become less than adequate in today’s global competition. Managers often make important product decisions based on distorted cost infor...

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Q: Many manufacturers are deciding to service only customers that buy $10

Many manufacturers are deciding to service only customers that buy $10,000 or more of products from the manufacturers annually. Manufacturers defend such policies by stating that they can provide bett...

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Q: The following activities take place in Usher’s Department Store. Upon receipt

The following activities take place in Usher’s Department Store. Upon receipt, Usher’s discounts all products 25 percent from the manufacturer’s suggested retail price. Only after the goods have been...

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Q: The Raleigh plant manager of Allentown Corp. has noticed the plant

The Raleigh plant manager of Allentown Corp. has noticed the plant frequently changes the schedule on its production line. He has gathered the following information on the activities, estimated times,...

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Q: Farrah Westin plans to build a concrete walkway for her home during

Farrah Westin plans to build a concrete walkway for her home during her vacation. The following schedule shows how project time will be allocated: Hours Purchase materials …………………………………………………....5 Obt...

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Q: Log Cabins Unlimited constructs vacation houses in the North Carolina mountains.

Log Cabins Unlimited constructs vacation houses in the North Carolina mountains. The company has developed the following value chart: Operations Average Number of Days Receiving materials...

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Q: Spice-a-licious produces creole seasoning using the following process

Spice-a-licious produces creole seasoning using the following process for each batch: Function Time (Minutes) Receiving ingredients ………………………………………………....60...

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Q: The following costs are incurred in a fast-food restaurant that

The following costs are incurred in a fast-food restaurant that relies on computer-controlled equipment to prepare customers’ food. Classify each cost as unit level (U), batch level (B), product/proce...

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Q: Carpenter Inc. designs industrial tooling parts and makes the molds for

Carpenter Inc. designs industrial tooling parts and makes the molds for those parts. The following activities take place when the company creates a new mold. Classify each cost as unit level (U), batc...

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Q: Pete’s Plant Stands manufactures wooden stands used by plant nurseries. In

Pete’s Plant Stands manufactures wooden stands used by plant nurseries. In May 2010, the company manufactured 18,000 and sold 16,560 stands. The cost per unit for the 18,000 stands produced was as fol...

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Q: Elaydo Inc. makes flavored water and performs the following tasks in

Elaydo Inc. makes flavored water and performs the following tasks in the beverage manufacturing process: Hours Receiving and transferring ingredients to storage …………………………….9.0 Storing ingredients ………...

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Q: Hurley Corporation has identified the following overhead costs and cost drivers for

Hurley Corporation has identified the following overhead costs and cost drivers for the coming year: The following information was collected on three jobs that were completed during the year: Budgeted...

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Q: Believing that its traditional cost system may be providing misleading information,

Believing that its traditional cost system may be providing misleading information, Dover Corporation is considering an activity-based costing (ABC) approach. Dover Corporation employs a full-cost sys...

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Q: Clare’s Super Cake Company makes very elaborate wedding cakes to order.

Clare’s Super Cake Company makes very elaborate wedding cakes to order. The company’s owner, Clare Cole, has provided the following data concerning the activity rat...

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Q: Treffle Molding Company manufactures two products: large jar covers and small

Treffle Molding Company manufactures two products: large jar covers and small bottle caps. Large jar covers require special handling. Each cover must be individually sanded on a special machine to rem...

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Q: Strategic Supply is a world leader in the production of electronic test

Strategic Supply is a world leader in the production of electronic test and measurement instruments. The company experienced almost uninterrupted growth through the 1990s, but in the 2000s, the low-pr...

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Q: Companies that want to be more globally competitive can consider the implementation

Companies that want to be more globally competitive can consider the implementation of activity-based management (ABM). Such companies often have used other initiatives that involve higher efficiency,...

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Q: As the chief executive officer of a large corporation, you have

As the chief executive officer of a large corporation, you have decided after discussion with production and accounting personnel to implement activity-based management concepts. Your goal is to reduc...

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Q: Shirtz Community Hospital has been under increasing pressure to be accountable for

Shirtz Community Hospital has been under increasing pressure to be accountable for its patient charges. The hospital’s current pricing system is ad hoc, based on pricing norms for th...

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Q: Balfore Office makes metal five-drawer desks and, occasionally,

Balfore Office makes metal five-drawer desks and, occasionally, takes custom orders. The company’s overhead costs for a month in which no custom desks are produced are as follows: Purchasing Departmen...

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Q: Reese’s Tot Toy Boxes uses variable costing to manage its internal operations

Reese’s Tot Toy Boxes uses variable costing to manage its internal operations. The following data relate to the company’s first year of operation, when 25,000 units were produced and 21,000 units were...

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Q: Illiad Inc. has a total of $2,362,

Illiad Inc. has a total of $2,362,500 in production overhead costs. The company’s products and related statistics follow. Additional data: The 330,000 pounds of material were purchas...

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Q: Louisiana Leisure makes umbrellas, gazebos, and chaise lounges. The

Louisiana Leisure makes umbrellas, gazebos, and chaise lounges. The company uses a traditional overhead allocation scheme and assigns overhead to products at the rate of $30 per direct labor hour. The...

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Q: Casito Corp. manufactures multiple types of products; however, most

Casito Corp. manufactures multiple types of products; however, most of the company’s sales are from Product #347 and Product #658. Product #347 has been a standard in the industry fo...

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Q: West Virginia Concepts provides a wide range of engineering and architectural consulting

West Virginia Concepts provides a wide range of engineering and architectural consulting services through its three offices in Charleston, Morgantown, and Martinsburg. The company allocates resources...

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Q: Bernie Lipscomb owns and manages a commercial cold-storage warehouse that

Bernie Lipscomb owns and manages a commercial cold-storage warehouse that has 100,000 cubic feet of storage capacity. Historically, he has charged customers a flat rate of $0.16 per pound per month fo...

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Q: Moriarity Manufacturing produces two product models: Regular and Special. The

Moriarity Manufacturing produces two product models: Regular and Special. The following information was taken from the accounting records for the first quarter of 2010: Moriarity currently uses a trad...

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Q: If five people from the same organization calculated manufacturing cycle efficiency for

If five people from the same organization calculated manufacturing cycle efficiency for one specific process, would each compute the same MCE? Why or why not?

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Q: Do cost drivers exist in a traditional accounting system? Are they

Do cost drivers exist in a traditional accounting system? Are they designated as such? How, if at all, does the use of cost drivers in a traditional accounting system differ from those in an activity-...

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Q: Why do more traditional methods of overhead assignment “overload” standard

Why do more traditional methods of overhead assignment “overload” standard high volume products with overhead costs. How does ABC improve overhead assignments?

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Q: Once an activity-based costing system has been developed and implemented

Once an activity-based costing system has been developed and implemented in a company, will that system be appropriate for the long term? Why or why not?

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Q: Ollie’s Olive Oil began business in 2010, during which it produced

Ollie’s Olive Oil began business in 2010, during which it produced 104,000 quarts of olive oil. In 2010, the company sold 100,000 quarts of olive oil. Costs incurred during the year were as follows: I...

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Q: Are all companies likely to benefit to an equal extent from adopting

Are all companies likely to benefit to an equal extent from adopting ABC? Discuss.

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Q: Significant hurdles, including a large time commitment, are often encountered

Significant hurdles, including a large time commitment, are often encountered in adopting ABC. What specific activities associated with ABC adoption require large investments of time?

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Q: What is activity-based management (ABM), and what specific

What is activity-based management (ABM), and what specific management tools are used in ABM?

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Q: What is activity analysis, and how is it used with cost

What is activity analysis, and how is it used with cost driver analysis to manage costs?

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Q: Why are value-added activities defined from a customer viewpoint?

Why are value-added activities defined from a customer viewpoint?

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Q: In a televised football game, what activities are value-added

In a televised football game, what activities are value-added? What activities are nonvalue-added? Would everyone agree with your choices? Why or why not?

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Q: Following are specific types of information that can be located in a

Following are specific types of information that can be located in a particular account (such as WIP Inventory) or on a particular document (such as an employee time card). For each item listed, ident...

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Q: For each of the following firms, determine whether it is more

For each of the following firms, determine whether it is more likely to use job order or process costing. This firm a. provides legal services. b. is a health-care clinic. c. manufactures shampoo. d....

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Q: The law firm of Taub & Lawson, LLP, currently has

The law firm of Taub & Lawson, LLP, currently has four cases in process. Following is information related to those cases as of the end of March 2010: Taub & Lawson allocates overhead to cases...

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Q: Mystic Inc. uses a job order costing system and applies overhead

Mystic Inc. uses a job order costing system and applies overhead to jobs at a predetermined rate of $4.25 per direct labor dollar. During April 2010, the company spent $29,600 on direct material and $...

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Q: Tennessee Tack manufactures horse blankets. In 2010, fixed overhead was

Tennessee Tack manufactures horse blankets. In 2010, fixed overhead was applied to products at the rate of $8 per unit. Variable cost per unit remained constant throughout the year. In July 2010, inco...

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Q: Rio Valde Co. uses a normal cost, job order costing

Rio Valde Co. uses a normal cost, job order costing system. In the Mixing Department, overhead is applied using machine hours; in Paving, overhead is applied using direct labor hours. In December 2009...

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Q: Country Products manufactures quilt racks. Pine is introduced in Department 1

Country Products manufactures quilt racks. Pine is introduced in Department 1, where the raw material is cut and assembled. In Department 2, completed racks are stained and packaged for shipment. Depa...

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Q: Routine maintenance services are provided by Latamore Industries to oil and gas

Routine maintenance services are provided by Latamore Industries to oil and gas firms in their production facilities. Although many of the client services are relatively unique, some services are repe...

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Q: Weingold Inc. engages in routine and customer print jobs for customers

Weingold Inc. engages in routine and customer print jobs for customers. In November 2010, a client specified the use of one of the company’s standard papers for a large job, but asked for a high level...

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Q: Harvey Inc. uses a standard cost system for labor. Standard

Harvey Inc. uses a standard cost system for labor. Standard costs for material cannot be used because customers require unique materials and all jobs are different sizes. One of the company’s jobs exp...

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Q: Bonivo Inc. manufactures computers from commodity components to client specifications.

Bonivo Inc. manufactures computers from commodity components to client specifications. The company has historically tracked only the cost of components to computers, and computer selling prices, or bi...

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Q: Attorney Maria Conroe uses a job order costing system to collect costs

Attorney Maria Conroe uses a job order costing system to collect costs of client engagements. Conroe is currently working on a case for Stacie Olivgra. During the first three months of 2010, Conroe lo...

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Q: Juneau Container makes steel storage canisters for various chemical products. The

Juneau Container makes steel storage canisters for various chemical products. The company uses a job order costing system and obtains jobs based on competitive bidding. For each project, a budget is d...

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Q: Companies use time sheets for two primary reasons: to know how

Companies use time sheets for two primary reasons: to know how many hours an employee works and, in a job order production situation, to trace work hours to products. An article (“Altering of Worker T...

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Q: San Angelo Corp. uses a job order costing system for client

San Angelo Corp. uses a job order costing system for client contracts related to custom-manufactured pulley systems. Elmore Mechanical recently ordered 20,000 pulleys, and the job was assigned #BA468....

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Q: “I’m going to focus on the customers of my business and

“I’m going to focus on the customers of my business and leave cost-allocation issues to my accountant.” Do you agree with this comment by a division president? Explain.

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Q: Describe three key components in doing a strategic analysis of operating income

Describe three key components in doing a strategic analysis of operating income.

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Q: Pharmahelp, Inc., a distributor of special pharmaceutical products, operates

Pharmahelp, Inc., a distributor of special pharmaceutical products, operates at capacity and has three main market segments: a. General supermarket chains b. Drugstore chains c. Mom-and-pop single-...

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Q: Pastel Bags (PB) is a designer of high-quality

Pastel Bags (PB) is a designer of high-quality backpacks and purses. Each design is made in small batches. Each spring, PB comes out with new designs for the backpack and for the purse. The company us...

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Q: Crosstown Health Center runs two programs: drug addict rehabilitation and aftercare

Crosstown Health Center runs two programs: drug addict rehabilitation and aftercare (counseling and support of patients after release from a mental hospital). The center’s budget for...

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Q: Zarson’s Netballs is a manufacturer of high-quality basketballs and volleyballs

Zarson’s Netballs is a manufacturer of high-quality basketballs and volleyballs. Setup costs are driven by the number of setups. Equipment and maintenance costs increase with the num...

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Q: Archer Pro manufactures two models of sport bows, Basic and Deluxe

Archer Pro manufactures two models of sport bows, Basic and Deluxe, using a combination of machining and hand finishing. Machine setup costs are driven by the number of setups. Indirect manufacturing...

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Q: Plum Electronics, a division of Berry Corporation, manufactures two large

Plum Electronics, a division of Berry Corporation, manufactures two large-screen television models: The Mammoth, which has been produced since 2013 and sells for $990, and the Maximum, a newer model i...

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Q: Mountain Outfitters operates a large outdoor clothing and equipment store with three

Mountain Outfitters operates a large outdoor clothing and equipment store with three main product lines: clothing, equipment, and shoes. Mountain Outfitters operates at capacity and allocates selling,...

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Q: Hale Specialties manufactures, among other things, woolen blankets for the

Hale Specialties manufactures, among other things, woolen blankets for the athletic teams of the two local high schools. The company sews the blankets from fabric and sews on a logo patch purchased fr...

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Q: US Apparel (USA) manufactures plain white and solid-colored

US Apparel (USA) manufactures plain white and solid-colored T-shirts. Budgeted inputs include the following: Budgeted sales and selling price per unit are as follows: USA has the opportunity to swit...

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Q: The Chen Corporation manufactures and sells two products: Thingone and Thingtwo

The Chen Corporation manufactures and sells two products: Thingone and Thingtwo. In July 2016, Chen’s budget department gathered the following data to prepare budgets for 2017: The...

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Q: “A branch office or business segment that shows negative operating income

“A branch office or business segment that shows negative operating income should be shut down.” Do you agree? Explain briefly.

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Q: Smart Video Company is a manufacturer of videoconferencing products. Maintaining the

Smart Video Company is a manufacturer of videoconferencing products. Maintaining the videoconferencing equipment is an important area of customer satisfaction. A recent downturn in the computer indust...

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Q: Paula Beane owns a restaurant franchise that is part of a chain

Paula Beane owns a restaurant franchise that is part of a chain of “southern homestyle” restaurants. One of the chain’s popular breakfast items is biscuits and gravy. Central Warehouse makes and freez...

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Q: Animal Gear Company makes two pet carriers, the Cat-allac

Animal Gear Company makes two pet carriers, the Cat-allac and the Dog-eriffic. They are both made of plastic with metal doors, but the Cat-allac is smaller. Information for the two products for the mo...

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Q: Refer to the information in Problem 6-40. Assume the

Refer to the information in Problem 6-40. Assume the following: Animal Gear (AG) does not make any sales on credit. AG sells only to the public and accepts cash and credit cards; 90% of its sales are...

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Q: Skulas, Inc., manufactures and sells snowboards. Skulas manufactures a

Skulas, Inc., manufactures and sells snowboards. Skulas manufactures a single model, the Pipex. In late 2017, Skulas’s management accountant gathered the following data to prepare bu...

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Q: Refer to the information in Problem 6-42. Budgeted balances

Refer to the information in Problem 6-42. Budgeted balances at January 31, 2018 are as follows: Cash…………â€&br...

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Q: Hazlett, Inc., operates at capacity and makes plastic combs and

Hazlett, Inc., operates at capacity and makes plastic combs and hairbrushes. Although the combs and brushes are a matching set, they are sold individually and so the sales mix is not 1:1. Hazlett&acir...

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Q: Refer to the information in Problem 6-44. All purchases

Refer to the information in Problem 6-44. All purchases made in a given month are paid for in the following month, and direct material purchases make up all of the accounts payable balance and are ref...

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Q: Jayzee Company manufactures a variety of products in a variety of departments

Jayzee Company manufactures a variety of products in a variety of departments and evaluates departments and departmental managers by comparing actual cost and output relative to the budget. Department...

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Q: Apex Chemical Company currently operates three manufacturing plants in Colorado, Utah

Apex Chemical Company currently operates three manufacturing plants in Colorado, Utah, and Arizona. Annual carbon emissions for these plants in the first quarter of 2018 are 125,000 metric tons per qu...

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Q: How does an engineered cost differ from a discretionary cost?

How does an engineered cost differ from a discretionary cost?

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Q: Tyva makes a very popular undyed cloth sandal in one style,

Tyva makes a very popular undyed cloth sandal in one style, but in Regular and Deluxe. The Regular sandals have cloth soles and the Deluxe sandals have cloth-covered wooden soles. Tyva is preparing it...

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Q: Emerald Statuary manufactures bust statues of famous historical figures. All statues

Emerald Statuary manufactures bust statues of famous historical figures. All statues are the same size. Each unit requires the same amount of resources. The following information is from the static bu...

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Q: Joyce Brown has run Medical Maids, a specialty cleaning service for

Joyce Brown has run Medical Maids, a specialty cleaning service for medical and dental offices, for the past 10 years. Her static budget and actual results for April 2017 are shown below. Joyce has on...

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Q: Give two examples in which the difference in the costs of two

Give two examples in which the difference in the costs of two products or services is much smaller than the difference in their prices.

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Q: What are three benefits of using a product life-cycle reporting

What are three benefits of using a product life-cycle reporting format?

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Q: Define predatory pricing, dumping, and collusive pricing.

Define predatory pricing, dumping, and collusive pricing.

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Q: Describe two alternative approaches to long-run pricing decisions.

Describe two alternative approaches to long-run pricing decisions.

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Q: Give two examples of a value-added cost and two examples

Give two examples of a value-added cost and two examples of a non-value-added cost.

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Q: “A company should not allocate costs that are fixed in the

“A company should not allocate costs that are fixed in the short run to customers.” Do you agree? Explain briefly.

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Q: How should a company decide on the number of cost pools it

How should a company decide on the number of cost pools it should use to allocate costs to divisions, channels, and customers?

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Q: “Managers will always choose the alternative that maximizes operating income or

“Managers will always choose the alternative that maximizes operating income or minimizes costs in the decision model.” Do you agree? Why?

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Q: Show how managers can gain insight into the causes of a sales

Show how managers can gain insight into the causes of a sales-volume variance by subdividing the components of this variance.

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Q: How can the concept of a composite unit be used to explain

How can the concept of a composite unit be used to explain why an unfavorable total sales-mix variance of contribution margin occurs?

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Q: How can the sales-quantity variance be decomposed further?

How can the sales-quantity variance be decomposed further?

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Q: “A customer-profitability profile highlights those customers a company should

“A customer-profitability profile highlights those customers a company should drop to improve profitability.” Do you agree? Explain.

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Q: Give examples of three different levels of costs in a customer-

Give examples of three different levels of costs in a customer-cost hierarchy.

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Q: “A company should not allocate all of its corporate costs to

“A company should not allocate all of its corporate costs to its divisions.” Do you agree? Explain.

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Q: What criteria might managers use to guide cost-allocation decisions?

What criteria might managers use to guide cost-allocation decisions? Which are the dominant criteria?

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Q: “Once a company allocates corporate costs to divisions, these costs

“Once a company allocates corporate costs to divisions, these costs should not be reallocated to the indirect-cost pools of the division.” Do you agree? Explain.

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Q: Distinguish between the single-rate and the dual-rate methods

Distinguish between the single-rate and the dual-rate methods.

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Q: What are the challenges of using the incremental cost allocation method when

What are the challenges of using the incremental cost allocation method when allocating common costs and how might they be overcome?

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Q: Why might an analyst incorporate the industry-market-size factor

Why might an analyst incorporate the industry-market-size factor and the interrelationships among the growth, price-recovery, and productivity components into a strategic analysis of operating income?...

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Q: Distinguish between the stand-alone and the incremental revenue-allocation

Distinguish between the stand-alone and the incremental revenue-allocation methods.

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Q: Identify and discuss arguments that individual product managers may put forward to

Identify and discuss arguments that individual product managers may put forward to support their preferred revenue-allocation method. 

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Q: Why might a manager prefer that budgeted rather than actual cost-

Why might a manager prefer that budgeted rather than actual cost-allocation rates be used for costs being allocated to his or her department from another department?

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Q: Distinguish among the three methods of allocating the costs of support departments

Distinguish among the three methods of allocating the costs of support departments to operating departments.

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Q: Why is the constant gross-margin percentage NRV method sometimes called

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

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Q: “Managers must decide whether a product should be sold at splitoff

“Managers must decide whether a product should be sold at splitoff or processed further. The sales value at splitoff method of joint-cost allocation is the best method for generating the information m...

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Q: “Managers should consider only additional revenues and separable costs when making

“Managers should consider only additional revenues and separable costs when making decisions about selling at splitoff or processing further.” Do you agree? Explain.

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Q: Why might managers seeking a monthly bonus based on attaining a target

Why might managers seeking a monthly bonus based on attaining a target operating income prefer the sales method of accounting for byproducts rather than the production method?

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Q: Distinguish between a joint product and a byproduct.

Distinguish between a joint product and a byproduct.

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Q: “We are already measuring total factor productivity. Measuring partial productivities

“We are already measuring total factor productivity. Measuring partial productivities would be of no value.” Do you agree? Comment briefly.

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Q: Why might the number of products in a joint-cost situation

Why might the number of products in a joint-cost situation differ from the number of outputs? Give an example.

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Q: Provide three reasons for allocating joint costs to individual products or services

Provide three reasons for allocating joint costs to individual products or services.

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Q: Describe a situation in which the sales value at splitoff method cannot

Describe a situation in which the sales value at splitoff method cannot be used but the NRV method can be used for joint-cost allocation.

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Q: Distinguish between the sales value at splitoff method and the NRV method

Distinguish between the sales value at splitoff method and the NRV method.

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Q: Give two limitations of the physical-measure method of joint-

Give two limitations of the physical-measure method of joint-cost allocation.

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Q: “The standard-costing method is particularly applicable to process-

“The standard-costing method is particularly applicable to process-costing situations.” Do you agree? Why?

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Q: Why should the accountant distinguish between transferred-in costs and additional

Why should the accountant distinguish between transferred-in costs and additional direct materials costs for each subsequent department in a process-costing system?

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Q: “There’s no reason for me to get excited about the choice

“There’s no reason for me to get excited about the choice between the weighted-average and FIFO methods in my process-costing system. I have long-term contracts with my materials suppliers at fixed pr...

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Q: In process costing, why are costs often divided into two main

In process costing, why are costs often divided into two main classifications?

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Q: Explain equivalent units. Why are equivalent-unit calculations necessary in

Explain equivalent units. Why are equivalent-unit calculations necessary in process costing?

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Q: What are the five types of conditions to consider when evaluating a

What are the five types of conditions to consider when evaluating a strategy map?

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Q: What problems might arise in estimating the degree of completion of semiconductor

What problems might arise in estimating the degree of completion of semiconductor chips in a semiconductor plant?

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Q: Name the five steps in process costing when equivalent units are computed

Name the five steps in process costing when equivalent units are computed.

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Q: Describe the distinctive characteristic of FIFO computations in assigning costs to units

Describe the distinctive characteristic of FIFO computations in assigning costs to units completed and to units in ending work in process.

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Q: “In job costing, the costs of normal spoilage that occur

“In job costing, the costs of normal spoilage that occur while a specific job is being done are charged to the specific job.” Do you agree? Explain.

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Q: “Abnormal rework costs should be charged to a loss account,

“Abnormal rework costs should be charged to a loss account, not to manufacturing overhead.” Do you agree? Explain.

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Q: How do managers use information about scrap?

How do managers use information about scrap?

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Q: Distinguish among spoilage, rework, and scrap.

Distinguish among spoilage, rework, and scrap.

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Q: “Total input includes abnormal as well as normal spoilage and is

“Total input includes abnormal as well as normal spoilage and is, therefore, inappropriate as a basis for computing normal spoilage.” Do you agree? Explain.

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Q: “When evaluating alternative ways to improve quality, managers need to

“When evaluating alternative ways to improve quality, managers need to consider the fully allocated costs of quality.” Do you agree? Explain.

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Q: Distinguish between customer-response time and manufacturing cycle time.

Distinguish between customer-response time and manufacturing cycle time.

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Q: What are three important pitfalls to avoid when implementing a balanced scorecard

What are three important pitfalls to avoid when implementing a balanced scorecard?

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Q: “There is no tradeoff between customer-response time and on

“There is no tradeoff between customer-response time and on-time performance.” Do you agree? Explain.

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Q: Give two reasons why delays occur.

Give two reasons why delays occur.

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Q: “Companies should always make and sell all products whose selling prices

“Companies should always make and sell all products whose selling prices exceed variable costs.” Assuming fixed costs are irrelevant, do you agree? Explain.

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Q: “When evaluating a company’s performance on the time dimension, managers

“When evaluating a company’s performance on the time dimension, managers should only consider financial measures.” Do you agree? Explain.

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Q: Distinguish between internal failure costs and external failure costs.

Distinguish between internal failure costs and external failure costs.

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Q: Describe three methods that companies use to identify quality problems.

Describe three methods that companies use to identify quality problems.

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Q: “Companies should focus on financial measures of quality because these are

“Companies should focus on financial measures of quality because these are the only measures of quality that can be linked to bottom-line performance.” Do you agree? Explain.

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Q: Give two examples of nonfinancial measures of customer satisfaction relating to quality

Give two examples of nonfinancial measures of customer satisfaction relating to quality.

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Q: Give two examples of nonfinancial measures of internal-business-process

Give two examples of nonfinancial measures of internal-business-process quality.

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Q: Why do better decisions regarding the purchasing and managing of goods for

Why do better decisions regarding the purchasing and managing of goods for sale frequently cause dramatic percentage increases in net income?

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Q: Roberta, Inc., manufactures elliptical machines for several well-known

Roberta, Inc., manufactures elliptical machines for several well-known companies. The machines differ significantly in their complexity and their manufacturing batch sizes. The following costs were in...

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Q: “You should always choose the supplier who offers the lowest price

“You should always choose the supplier who offers the lowest price per unit.” Do you agree? Explain.

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Q: What is supply-chain analysis, and how can it benefit

What is supply-chain analysis, and how can it benefit manufacturers and retailers?

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Q: What are the main features of JIT production, and what are

What are the main features of JIT production, and what are its benefits and costs?

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Q: Distinguish inventory-costing systems using sequential tracking from those using backflush

Distinguish inventory-costing systems using sequential tracking from those using backflush costing.

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Q: Describe three different versions of backflush costing.

Describe three different versions of backflush costing.

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Q: Discuss the differences between lean accounting and traditional cost accounting.

Discuss the differences between lean accounting and traditional cost accounting.

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Q: What assumptions are made when using the simplest version of the economic

What assumptions are made when using the simplest version of the economic-order-quantity (EOQ) decision model?

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Q: Give three examples of opportunity costs that typically are not recorded in

Give three examples of opportunity costs that typically are not recorded in accounting systems, although they are relevant when using the EOQ model in the presence of demand uncertainty.

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Q: What are the steps in computing the cost of a prediction error

What are the steps in computing the cost of a prediction error when using the EOQ decision model?

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Q: Why might goal-congruence issues arise when managers use an EOQ

Why might goal-congruence issues arise when managers use an EOQ model to guide decisions on how much to order?

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Q: Vineyard Test Laboratories does heat testing (HT) and stress testing

Vineyard Test Laboratories does heat testing (HT) and stress testing (ST) on materials and operates at capacity. Under its current simple costing system, Vineyard aggregates all operating costs of $1,...

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Q: “JIT purchasing has many benefits but also some risks.” Do

“JIT purchasing has many benefits but also some risks.” Do you agree? Explain briefly.

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Q: What are three factors causing reductions in the cost to place purchase

What are three factors causing reductions in the cost to place purchase orders for materials?

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Q: “All overhead costs are relevant in NPV analysis.” Do you

“All overhead costs are relevant in NPV analysis.” Do you agree? Explain.

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Q: Bill Watts, president of Western Publications, accepts a capital budgeting

Bill Watts, president of Western Publications, accepts a capital budgeting project proposed by division X. This is the division in which the president spent his first 10 years with the company. On the...

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Q: Distinguish different categories of cash flows to be considered in an equipment

Distinguish different categories of cash flows to be considered in an equipment-replacement decision by a taxpaying company.

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Q: Describe three ways income taxes can affect the cash inflows or outflows

Describe three ways income taxes can affect the cash inflows or outflows in a motor-vehicle-replacement decision by a taxpaying company.

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Q: How can capital budgeting tools assist in evaluating a manager who is

How can capital budgeting tools assist in evaluating a manager who is responsible for retaining customers of a cellular telephone company?

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Q: Distinguish the nominal rate of return from the real rate of return

Distinguish the nominal rate of return from the real rate of return.

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Q: List and briefly describe each of the five stages in capital budgeting

List and briefly describe each of the five stages in capital budgeting.

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Q: What is the essence of the discounted cash flow methods?

What is the essence of the discounted cash flow methods?

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Q: “Relevant costs for pricing decisions are full costs of the product

“Relevant costs for pricing decisions are full costs of the product.” Do you agree? Explain.

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Q: The Walliston Group (WG) provides tax advice to multinational firms

The Walliston Group (WG) provides tax advice to multinational firms. WG charges clients for (a) direct professional time (at an hourly rate) and (b) support services (at 30% of the direct profession...

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Q: “Only quantitative outcomes are relevant in capital budgeting analyses.” Do

“Only quantitative outcomes are relevant in capital budgeting analyses.” Do you agree? Explain.

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Q: What is the payback method? What are its main strengths and

What is the payback method? What are its main strengths and weaknesses?

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Q: Describe the accrual accounting rate-of-return method. What

Describe the accrual accounting rate-of-return method. What are its main strengths and weaknesses?

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Q: “The trouble with discounted cash flow methods is that they ignore

“The trouble with discounted cash flow methods is that they ignore depreciation.” Do you agree? Explain.

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Q: “Let’s be more practical. DCF is not the gospel.

“Let’s be more practical. DCF is not the gospel. Managers should not become so enchanted with DCF that strategic considerations are overlooked.” Do you agree? Explain.

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Q: Under what conditions is a market-based transfer price optimal?

Under what conditions is a market-based transfer price optimal?

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Q: What is one potential limitation of full-cost-based transfer

What is one potential limitation of full-cost-based transfer prices?

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Q: Give two reasons why the dual-pricing system of transfer pricing

Give two reasons why the dual-pricing system of transfer pricing is not widely used.

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Q: “Cost and price information play no role in negotiated transfer prices

“Cost and price information play no role in negotiated transfer prices.” Do you agree? Explain.

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Q: “Under the general guideline for transfer pricing, the minimum transfer

“Under the general guideline for transfer pricing, the minimum transfer price will vary depending on whether the supplying division has unused capacity or not.” Do you agree? Explain.

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Q: In each of the following situations, determine whether job costing or

In each of the following situations, determine whether job costing or process costing would be more appropriate. a. A CPA firm b. An oil refinery c. A custom furniture manufacturer d. A tire manufa...

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Q: How should managers consider income tax issues when choosing a transfer-

How should managers consider income tax issues when choosing a transfer-pricing method?

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Q: Name three benefits and two costs of decentralization.

Name three benefits and two costs of decentralization.

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Q: “Transfer pricing is confined to profit centers.” Do you agree

“Transfer pricing is confined to profit centers.” Do you agree? Explain.

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Q: Give examples of financial and nonfinancial performance measures that can be found

Give examples of financial and nonfinancial performance measures that can be found in each of the four perspectives of the balanced scorecard.

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Q: “Managers should be rewarded only on the basis of their performance

“Managers should be rewarded only on the basis of their performance measures. They should be paid no salary.” Do you agree? Explain.

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Q: Explain the role of benchmarking in evaluating managers.

Explain the role of benchmarking in evaluating managers.

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Q: Explain the incentive problems that can arise when employees must perform multiple

Explain the incentive problems that can arise when employees must perform multiple tasks as part of their jobs.

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Q: Describe two disclosures required by the SEC with respect to executive compensation

Describe two disclosures required by the SEC with respect to executive compensation.

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Q: Describe the four levers of control.

Describe the four levers of control.

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Q: What are the three steps in designing accounting-based performance measures

What are the three steps in designing accounting-based performance measures?

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Q: Dakota Products uses a job-costing system with two direct-

Dakota Products uses a job-costing system with two direct-cost categories (direct materials and direct manufacturing labor) and one manufacturing overhead cost pool. Dakota allocates manufacturing ove...

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Q: “RI is not identical to ROI, although both measures incorporate

“RI is not identical to ROI, although both measures incorporate income and investment into their computations.” Do you agree? Explain.

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Q: Distinguish between measuring assets based on current cost and historical cost.

Distinguish between measuring assets based on current cost and historical cost.

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Q: What special problems arise when evaluating performance in multinational companies?

What special problems arise when evaluating performance in multinational companies?

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Q: Why is it important to distinguish between the performance of a manager

Why is it important to distinguish between the performance of a manager and the performance of the organization subunit for which the manager is responsible? Give an example.

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Q: Esquire Clothing is a manufacturer of designer suits. The cost of

Esquire Clothing is a manufacturer of designer suits. The cost of each suit is the sum of three variable costs (direct material costs, direct manufacturing labor costs, and manufacturing overhead cost...

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Q: Esquire Clothing allocates fixed manufacturing overhead to each suit using budgeted direct

Esquire Clothing allocates fixed manufacturing overhead to each suit using budgeted direct manufacturing labor-hours per suit. Data pertaining to fixed manufacturing overhead costs for June 2017 are b...

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Q: The Sourdough Bread Company bakes baguettes for distribution to upscale grocery stores

The Sourdough Bread Company bakes baguettes for distribution to upscale grocery stores. The company has two direct-cost categories: direct materials and direct manufacturing labor. Variable manufactur...

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Q: The Sourdough Bread Company also allocates fixed manufacturing overhead to products on

The Sourdough Bread Company also allocates fixed manufacturing overhead to products on the basis of standard direct manufacturing labor-hours. For 2017, fixed manufacturing overhead was budgeted at $3...

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Q: The Rotations Corporation is a manufacturer of centrifuges. Fixed and variable

The Rotations Corporation is a manufacturer of centrifuges. Fixed and variable manufacturing overheads are allocated to each centrifuge using budgeted assembly-hours. Budgeted assembly time is 2 hours...

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Q: ProChem, Inc., produces chemicals for large biotech companies. It

ProChem, Inc., produces chemicals for large biotech companies. It has the following data for manufacturing overhead costs during August 2017: Fill in the blanks. Use F for favorable and U for unfavor...

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Q: Atkinson Construction assembles residential houses. It uses a job-costing

Atkinson Construction assembles residential houses. It uses a job-costing system with two direct-cost categories (direct materials and direct labor) and one indirect-cost pool (assembly support). Dire...

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Q: The Lopez Company uses standard costing in its manufacturing plant for auto

The Lopez Company uses standard costing 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...

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Q: The Brazil division of an American telecommunications company uses standard costing for

The Brazil division of an American telecommunications company uses standard costing for its machine-paced production of telephone equipment. Data regarding production during June are as follows: Varia...

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Q: Meals Made Easy (MME) operates a meal home-delivery

Meals Made Easy (MME) operates a meal home-delivery service. It has agreements with 20 restaurants to pick up and deliver meals to customers who place orders on MME’s website. MME al...

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Q: Pampered Pets, Inc., makes embellished accessories primarily for dogs.

Pampered Pets, Inc., makes embellished accessories primarily for dogs. For 2017, budgeted variable overhead is $70,000 for 10,000 direct labor-hours. Budgeted total overhead is $100,000 at 8,000 direc...

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Q: Chart Hills Company makes customized golf shirts for sale to golf courses

Chart Hills Company makes customized golf shirts for sale to golf courses. Each shirt requires 3 hours to produce because of the customized logo for each golf course. Chart Hills uses direct labor-hou...

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Q: Carlyle Capital Company offers financial services to its clients. Recently,

Carlyle Capital Company offers financial services to its clients. Recently, Carlyle has experienced rapid growth and has increased both its client base and the variety of services it offers. The compa...

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Q: Tred-America, Inc., manufactures tires for large auto companies

Tred-America, Inc., manufactures tires for large auto companies. It uses standard costing and allocates variable and fixed manufacturing overhead based on machine-hours. For each independent scenario...

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Q: Eric Williams is a cost accountant and business analyst for Diamond Design

Eric Williams is a cost accountant and business analyst for Diamond Design Company (DDC), which manufactures expensive brass doorknobs. DDC uses two direct-cost categories: direct materials and direct...

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Q: Nascar Motors assembles and sells motor vehicles and uses standard costing.

Nascar Motors assembles and sells motor vehicles and uses standard costing. Actual data relating to April and May 2017 are as follows: The selling price per vehicle is $24,000. The budgeted level of...

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Q: The variable manufacturing costs per unit of Nascar Motors are as follows

The variable manufacturing costs per unit of Nascar Motors are as follows: Required: 1. Prepare income statements for Nascar Motors in April and May 2017 under throughput costing. 2. Contrast the re...

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Q: Taylor Company uses normal costing. It allocates manufacturing overhead costs using

Taylor Company uses normal costing. It allocates manufacturing overhead costs using a budgeted rate per machine-hour. The following data are available for 2017: Budgeted manufacturing overhead costs……...

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Q: EntertainMe Corporation manufactures and sells 50-inch television sets and uses

EntertainMe Corporation manufactures and sells 50-inch television sets and uses standard costing. Actual data relating to January, February, and March 2017 are as follows: The selling price per unit...

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Q: The variable manufacturing costs per unit of EntertainMe Corporation are as follows

The variable manufacturing costs per unit of EntertainMe Corporation are as follows: Required: 1. Prepare income statements for EntertainMe in January, February, and March 2017 under throughput costi...

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Q: The Tomlinson Company manufactures trendy, high-quality, moderately priced

The Tomlinson Company manufactures trendy, high-quality, moderately priced watches. As Tomlinson’s senior financial analyst, you are asked to recommend a method of inventory costing. The CFO will use...

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Q: Miami, Inc., planned and actually manufactured 250,000 units

Miami, Inc., planned and actually manufactured 250,000 units of its single product in 2017, its first year of operation. Variable manufacturing cost was $19 per unit produced. Variable operating (nonm...

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Q: Horace Company manufactures a professional-grade vacuum cleaner and began operations

Horace Company manufactures a professional-grade vacuum cleaner and began operations in 2017. For 2017, Horace budgeted to produce and sell 25,000 units. The company had no price, spending, or efficie...

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Q: Candyland uses standard costing to produce a particularly popular type of candy

Candyland uses standard costing to produce a particularly popular type of candy. Candyland’s president, Jack McCay, was unhappy after reviewing the income statements for the first th...

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Q: Thunder Bolt, Inc., is a manufacturer of the very popular

Thunder Bolt, Inc., is a manufacturer of the very popular G36 motorcycles. The management at Thunder Bolt has recently adopted absorption costing and is debating which denominator level concept to use...

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Q: Camino, a leading firm in the sports industry, produces basketballs

Camino, a leading firm in the sports industry, produces basketballs for the consumer market. For the year ended December 31, 2017, Camino sold 400,000 basketballs at an average selling price of $12 pe...

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Q: The Garvis Company uses an absorption-costing system based on standard

The Garvis Company uses an absorption-costing system based on standard costs. Variable manufacturing cost consists of direct material cost of $4.50 per unit and other variable manufacturing costs of $...

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Q: The Garvis Company uses an absorption-costing system based on standard

The Garvis Company uses an absorption-costing system based on standard costs. Variable manufacturing cost consists of direct material cost of $4.50 per unit and other variable manufacturing costs of $...

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Q: The Matthew Company uses a normal job-costing system at its

The Matthew Company uses a normal job-costing system at its Minneapolis plant. The plant has a machining department and an assembly department. Its job-costing system has two direct-cost categories (d...

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Q: The controller of the Javier Company is preparing the budget for 2018

The controller of the Javier Company is preparing the budget for 2018 and needs to estimate a cost function for delivery costs. Information regarding delivery costs incurred in the prior two months ar...

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Q: The Sunrise Corporation operates car rental agencies at more than

The Sunrise Corporation operates car rental agencies at more than 20 airports. Customers can choose from one of three contracts for car rentals of one day or less: ■ Contract 1: $45 for the day ■...

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Q: The vertical axes of the graphs below represent total cost, and

The vertical axes of the graphs below represent total cost, and the horizontal axes represent units produced during a calendar year. In each case, the zero point of dollars and production is at the in...

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Q: Given here are a number of graphs. /

Given here are a number of graphs. The horizontal axis of each graph represents the units produced over the year, and the vertical axis represents total cost or revenues. Required: Indicate by numb...

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Q: Stein Corporation wants to find an equation to estimate some of their

Stein Corporation wants to find an equation to estimate some of their monthly operating costs for the operating budget for 2018. The following cost and other data were gathered for 2017: Required: 1....

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Q: Gower, Inc., a manufacturer of plastic products, reports the

Gower, Inc., a manufacturer of plastic products, reports the following manufacturing costs and account analysis classification for the year ended December 31, 2017. Gower, Inc., produced 75,000 units...

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Q: Reisen Travel offers helicopter service from suburban towns to John F.

Reisen Travel offers helicopter service from suburban towns to John F. Kennedy International Airport in New York City. Each of its 10 helicopters makes between 1,000 and 2,000 round-trips per year. Th...

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Q: Lacy Dallas is examining customer-service costs in the southern region

Lacy Dallas is examining customer-service costs in the southern region of Camilla Products. Camilla Products has more than 200 separate electrical products that are sold with a 6-month guarantee of fu...

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Q: Dr. Young, of Young and Associates, LLP, is

Dr. Young, of Young and Associates, LLP, is examining how overhead costs behave as a function of monthly physician contact hours billed to patients. The historical data are as follows: Required: 1. C...

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Q: Relling Corporation manufactures a drink bottle, model CL24. During 2017

Relling Corporation manufactures a drink bottle, model CL24. During 2017, Relling produced 210,000 bottles at a total cost of $808,500. Kraff Corporation has offered to supply as many bottles as Relli...

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Q: Frontier Partners, a management consulting firm, has the following condensed

Frontier Partners, a management consulting firm, has the following condensed budget for 2017: Frontier has a single direct-cost category (professional labor) and a single indirect-cost pool (client s...

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Q: Linda Olson owns a professional character business in a large metropolitan area

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Q: May Blackwell is the new manager of the materials storeroom for Clayton

May Blackwell is the new manager of the materials storeroom for Clayton Manufacturing. May has been asked to estimate future monthly purchase costs for part #696, used in two of Claytonâ€&#...

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Q: Northern Defense manufactures radar systems. It has just completed the manufacture

Northern Defense manufactures radar systems. It has just completed the manufacture of its first newly designed system, RS-32. Manufacturing data for the RS-32 follow: Required: Calculate the total va...

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Q: Assume the same information for Northern Defense as in Exercise 10-

Assume the same information for Northern Defense as in Exercise 10-33, except that Northern Defense uses an 85% incremental unit-time learning model as a basis for predicting direct manufacturing labo...

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Q: Wayne Mueller, financial analyst at CELL Corporation, is examining the

Wayne Mueller, financial analyst at CELL Corporation, is examining the behavior of quarterly utility costs for budgeting purposes. Mueller collects the following data on machine-hours worked and utili...

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Q: Each of the following statements is correct regarding overhead variances except:

Each of the following statements is correct regarding overhead variances except: a. Actual overhead greater than applied overhead is unfavorable. b. The efficiency overhead variance ignores the standa...

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Q: Steed Co. budgets production of 150,000 units in the

Steed Co. budgets production of 150,000 units in the next year. Steed’s CFO expects that each unit will take 8 hours to produce at an hourly wage rate of $10 per hour. If factory overhead is applied o...

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Q: As part of her annual review of her company’s budgets versus actuals

As part of her annual review of her company’s budgets versus actuals, Mary Gerard isolates unfavorable variances with the hope of getting a better understanding of what caused them and how to avoid th...

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Q: Culpepper Corporation had the following inventories at the beginning and end of

Culpepper Corporation had the following inventories at the beginning and end of the month of January: The following additional manufacturing data was available for the month of January. Direct materi...

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Q: Fordham Corporation produces a single product. The standard costs for one

Fordham Corporation produces a single product. The standard costs for one unit of its Concourse product are as follows: Direct materials (6 pounds at $0.50 per pound)……………………………$ 3 Direct labor (2 hou...

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Q: Capitola Manufacturing produces surfboards. The company uses a normal-costing

Capitola Manufacturing produces surfboards. The company uses a normal-costing system and allocates manufacturing overhead on the basis of direct manufacturing labor-hours. Most of the companyâ&#...

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Q: In comparing the absorption and variable cost methods, each of the

In comparing the absorption and variable cost methods, each of the following statements is true except: a. SG&A fixed expenses are not included in inventory in either method. b. Only the absorption me...

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Q: Queen Sales, Inc. has just completed its first year of

Queen Sales, Inc. has just completed its first year of operations. The company has not had any sales to date. Queen has incurred the following costs associated with its production as of December 31, Y...

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Q: King Tooling has produced and sold the following number of units of

King Tooling has produced and sold the following number of units of their only product during their first two years in business: Production costs per unit have not changed over the two-year period. U...

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Q: The following information relates to Drexler Inc.’s Year 3 financials

The following information relates to Drexler Inc.’s Year 3 financials: Direct labor………………….$. 420,000 Direct materials………………210,000 Variable overhead…………. 205,000 Fixed overhead……………..355,000 Variable...

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Q: Which of the following statements is not true regarding the use of

Which of the following statements is not true regarding the use of variable and absorption costing for performance measurement? a. The net income reported under the absorption method is less reliable...

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Q: HL Co. uses the high-low method to derive a

HL Co. uses the high-low method to derive a total cost formula. Using a range of units produced from 1,500 to 7,500, and a range of total costs from $21,000 to $45,000, producing 2,000 units will cost...

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Q: A firm uses simple linear regression to forecast the costs for its

A firm uses simple linear regression to forecast the costs for its main product line. If fixed costs are equal to $235,000 and variable costs are $10 per unit, how many units does it need to sell at $...

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Q: In regression analysis, the coefficient of determination: a.

In regression analysis, the coefficient of determination: a. Is used to determine the proportion of the total variation in the dependent variable (y) explained by the independent variable (X). b. Rang...

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Q: A regression equation is set up, where the dependent variable is

A regression equation is set up, where the dependent variable is total costs and the independent variable is production. A correlation coefficient of 0.70 implies that: a. The coefficient of determina...

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Q: What would be the approximate value of the coefficient of correlation between

What would be the approximate value of the coefficient of correlation between advertising and sales where a company advertises aggressively as an alternative to temporary worker layoffs and cuts off a...

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Q: Creative Woodworking uses normal costing and allocates manufacturing overhead to jobs based

Creative Woodworking uses normal costing and allocates manufacturing overhead to jobs based on a budgeted labor-hour rate and actual direct labor-hours. Under- or overallocated overhead, if immaterial...

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Q: Which of the following is not a qualitative factor that Atlas Manufacturing

Which of the following is not a qualitative factor that Atlas Manufacturing should consider when deciding whether to buy or make a part used in manufacturing their product? a. Quality of the outside p...

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Q: Chade Corp. is considering a special order brought to it by

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Q: In order to determine whether a special order should be accepted at

In order to determine whether a special order should be accepted at full capacity, the sales price of the special order must be compared to the per unit: a. Contribution margin of the special order. b...

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Q: Lees Corp. is deciding whether to keep or drop a small

Lees Corp. is deciding whether to keep or drop a small segment of its business. Key information regarding the segment includes: Contribution margin……………. 35,000 Avoidable fixed costs…………..30,000 Unavo...

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Q: Ace Cleaning Service is considering expanding into one or more new market

Ace Cleaning Service is considering expanding into one or more new market areas. Which costs are relevant to Ace’s decision on whether to expand?

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Q: Jacobs Inc. is a relatively new company that has established a

Jacobs Inc. is a relatively new company that has established a position in the highly competitive biotechnology industry. Which of the following statements is correct regarding Jacobs’ profitability?...

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Q: The balanced scorecard describes all of the following except which one?

The balanced scorecard describes all of the following except which one? a. The descriptions of critical initiatives for the organization’s performance. b. The strategic goals. c. The related measures...

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Q: Canarsie Corporation uses a balanced scorecard to evaluate its digital camera manufacturing

Canarsie Corporation uses a balanced scorecard to evaluate its digital camera manufacturing operation. Which of the following statements with respect to balanced scorecards is/are correct? I. A balanc...

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Q: Which of the following statements regarding price elasticity is incorrect?

Which of the following statements regarding price elasticity is incorrect? a. A product with a perfectly inelastic demand would have the same demand even as prices change. b. A product with a perfectl...

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Q: The actual contribution margin per unit will impact the following sales variance

The actual contribution margin per unit will impact the following sales variance: a. Flexible-budget variance b. Market-size variance c. Market-share variance. d. Sales-quantity variance

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Q: The University of Chicago Press is wholly owned by the university.

The University of Chicago Press is wholly owned by the university. It performs the bulk of its work for other university departments, which pay as though the press were an outside business enterprise....

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Q: Lexota, Inc., an auto manufacturer, reported the following budgeted

Lexota, Inc., an auto manufacturer, reported the following budgeted and actual sales of its vehicles during September, Year 2: The budgeted contribution margin is 20% for both vehicle types. Which of...

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Q: Select Manufacturing Co. produces three joint products and one organic waste

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Q: Joint costs of $8,000 are incurred to process X

Joint costs of $8,000 are incurred to process X and Y. Upon splitoff, $4,000 and $6,000 in costs are incurred to produce 200 units of X and 150 units of Y, respectively. In order to justify processing...

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Q: Houston Corporation has two products, Astros and Texans, with the

Houston Corporation has two products, Astros and Texans, with the following volume information: Volume Product Astros……. 20,000 gal Product Texans………………..10,000 gal Total………………………………. 30,000 gal The j...

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Q: Dallas Company produces joint products, TomL and JimmyJ, each of

Dallas Company produces joint products, TomL and JimmyJ, each of which incurs separable production costs after the splitoff point. Information concerning a batch produced at a $200,000 joint cost befo...

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Q: Earl’s Hurricane Lamp Oil Company produces both A-1 Fancy and

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Q: Assuming beginning work in process is zero, the equivalent units of

Assuming beginning work in process is zero, the equivalent units of production computed using FIFO versus weighted average will have the following relationship: 1. FIFO equivalent units will be greate...

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Q: The following information concerns Westheimer Corporation’s equivalent units in May 20X1:

The following information concerns Westheimer Corporation’s equivalent units in May 20X1:...

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Q: Sepulveda Corporation uses a process costing system to manufacture laptop PCs.

Sepulveda Corporation uses a process costing system to manufacture laptop PCs. The following information summarizes operations for its VeryLite model during the quarter ending March 31, Year 1: Begin...

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Q: Penn Manufacturing Corporation uses a process-costing system to manufacture printers

Penn Manufacturing Corporation uses a process-costing system to manufacture printers for PCs. The following information summarizes operations for its NoToner model during the quarter ending September...

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Q: Describe two generic strategies.

Describe two generic strategies.

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Q: Visual Company produces gadgets for the coveted small appliance market. The

Visual Company produces gadgets for the coveted small appliance market. The following data reflect activity for the year 2017: Costs Incurred Purchases of direct materials (net) on creditâ€...

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Q: Kimberly Manufacturing uses a process-costing system to manufacture Dust Density

Kimberly Manufacturing uses a process-costing system to manufacture Dust Density Sensors for the mining industry. The following information pertains to operations for the month of May, Year 5....

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Q: All of the following are accurate regarding the treatment of normal or

All of the following are accurate regarding the treatment of normal or abnormal spoilage by a firm with the exception of: a. Abnormal spoilage is excluded in the standard cost of a manufactured produc...

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Q: Which of the following is a TRUE statement regarding the treatment of

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Q: 18-18 Healthy Dinners Co. produces frozen dinners

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Q: Fresh Products, Inc. incurred the following costs during December related

Fresh Products, Inc. incurred the following costs during December related to the production of its 162,500 frozen ice cream cone specialty items: Food product labor………………$175,000 Ice cream cone ingred...

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Q: Rector Corporation is examining its quality control program. Which of the

Rector Corporation is examining its quality control program. Which of the following statements is/are correct? I. Rework costs should be regarded as a cost of quality when the rework is caused by inte...

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Q: Six Sigma is a continuous quality improvement methodology that is designed to

Six Sigma is a continuous quality improvement methodology that is designed to promote: 1. Improvements for existing products and business processes. 2. Development of new products or business processe...

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Q: The order size associated with the economic-order-quantity (

The order size associated with the economic-order-quantity (EOQ) model will necessarily decline if: a. Ordering costs rise b. Storage costs rise c. Insurance costs for materials in storage fall d. St...

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Q: Jack’s Tracks sells 24,000 custom-designed GoKarts per year

Jack’s Tracks sells 24,000 custom-designed GoKarts per year. These GoKarts are sold evenly throughout the year. The manufacturer charges Jack a $50 processing cost per order, and Jack incurs a carryin...

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Q: Jill’s Custom Bags manufacturers and sells 12,000 customer designer bags

Jill’s Custom Bags manufacturers and sells 12,000 customer designer bags per year, each requiring three yards of a specially manufactured fabric. These bags are sold evenly throughout the year. The ma...

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Q: Donald Transport assembles prestige manufactured homes. Its job costing system has

Donald Transport assembles prestige manufactured homes. Its job costing system has two direct-cost categories (direct materials and direct manufacturing labor) and one indirect-cost pool (manufacturin...

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Q: Lyle Co. has only one product line. For that line

Lyle Co. has only one product line. For that line, the reorder point is 500 units, the lead time for production is three weeks, and the sales volume is estimated at 50 units per week. Lyle has establi...

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Q: Just-in-time inventory assumes all of the following,

Just-in-time inventory assumes all of the following, except: 1. Zero defects. 2. Resources will only be introduced as they are needed. 3. Just-in-time inventory presumes first-in, first-out costing. 4...

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Q: A company should accept for investment all positive NPV investment alternatives when

A company should accept for investment all positive NPV investment alternatives when which of the following conditions is true? a. The company has extremely limited resources for capital investment. b...

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Q: Which of the following items describes a weakness of the internal rate

Which of the following items describes a weakness of the internal rate-of-return method? a. The internal rate of return is difficult to calculate and requires a financial calculator or spreadsheet too...

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Q: Which of the following statements is true if the NPV of a

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Q: The following information pertains to the January 2, year 2 transaction

The following information pertains to the January 2, year 2 transaction replacing a print machine for Hidden Creek Enterprises, Inc. Net book value – old print machine…………. $20,000 Total cost of new...

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Q: Nick’s Enterprises has purchased a new machine tool that will allow the

Nick’s Enterprises has purchased a new machine tool that will allow the company to improve the efficiency of its operations. On an annual basis, the machine will produce 20,000 units with an expected...

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Q: During the current year, a strategic business unit (SBU)

During the current year, a strategic business unit (SBU) within Roke Inc. saw costs increase by $2 million, revenues increase by $4 million, and assets decrease by $1 million. SBUs are set up by Roke...

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Q: Assuming an increase in price levels over time, which of the

Assuming an increase in price levels over time, which of the following asset valuations will produce the highest return on assets? a. Net book value b. Gross book value c. Replacement cost d. Deprecia...

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Q: If ROI is used to evaluate a manager’s performance for a relatively

If ROI is used to evaluate a manager’s performance for a relatively new division, which of the following measures for assets (or investment) will increase ROI? a. Gross book value used instead of net...

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Q: Rowan Company produces pipes for concert quality organs. Each job is

Rowan Company produces pipes for concert quality organs. Each job is unique. In April 2016, it completed all outstanding orders, and then, in May 2016, it worked on only two jobs, M1 and M2: Direct m...

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Q: The Long Haul Trucking Company is developing metrics for its drivers.

The Long Haul Trucking Company is developing metrics for its drivers. The company computes variable costs of each load based upon miles driven and allocates fixed costs based upon time consumed. Load...

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Q: ABC Inc. desires to maintain a capital structure of 80%

ABC Inc. desires to maintain a capital structure of 80% equity and 20% debt. They currently have an effective tax rate of 30%. The company’s cost of equity capital is 12%. To obtain their debt financi...

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Q: It is the end of 2017. Z-Var Corporation began

It is the end of 2017. Z-Var Corporation began operations in January 2016. The company is so named because it has no variable costs (Zero VARiable). All its costs are fixed; they do not vary with outp...

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Q: Cooking Whiz manufactures premium food processors. The following are some manufacturing

Cooking Whiz manufactures premium food processors. The following are some manufacturing overhead data for Cooking Whiz for the year ended December 31, 2017: Budgeted number of output units: 915 Plan...

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Q: Cooking Whiz manufactures premium food processors. The following are some manufacturing

Cooking Whiz manufactures premium food processors. The following are some manufacturing overhead data for Cooking Whiz for the year ended December 31, 2017: Budgeted number of output units: 915 Plan...

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Q: Best Around, Inc., is a manufacturer of vacuums and uses

Best Around, Inc., is a manufacturer of vacuums and uses standard costing. Manufacturing overhead (both variable and fixed) is allocated to products on the basis of budgeted machine-hours. In 2017, bu...

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Q: Consider the following two situations—cases A and B— independently

Consider the following two situations—cases A and B— independently. Data refer to operations for April 2017. For each situation, assume standard costing. Also assum...

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Q: Wilson Products uses standard costing. It allocates manufacturing overhead (both

Wilson Products uses standard costing. It allocates manufacturing overhead (both variable and fixed) to products on the basis of standard direct manufacturing labor-hours (DLH). Wilson Products develo...

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Q: Audrina’s Fleet Feet, Inc., produces dance shoes for stores all

Audrina’s Fleet Feet, Inc., produces dance shoes for stores all over the world. While the pairs of shoes are boxed individually, they are crated and shipped in batches. The shipping...

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Q: The Roller Bag Company manufactures extremely light and rolling suitcases. It

The Roller Bag Company manufactures extremely light and rolling suitcases. It was one of the first companies to produce rolling suitcases and sales have increased for the past several years. In 2017,...

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Q: Cheney & Partners, a Quebec based public accounting partnership, specializes

Cheney & Partners, a Quebec based public accounting partnership, specializes in audit services. Its job-costing system has a single direct-cost category (professional labor) and a single indirect-...

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Q: The Saluki Company specializes in making fraternity and sorority T-shirts

The Saluki Company specializes in making fraternity and sorority T-shirts for the college market. Due to the high setup costs for each batch printed, Saluki holds the T-shirt requests until demand is...

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Q: The Gallo Company uses a flexible budget and standard costs to aid

The Gallo Company uses a flexible budget and standard costs to aid planning and control of its machining manufacturing operations. It’s costing system for manufacturing has two direct-cost categories...

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Q: The Beal Manufacturing Company’s costing system has two direct-cost categories

The Beal Manufacturing Company’s costing system has two direct-cost categories: direct materials and direct manufacturing labor. Manufacturing overhead (both variable and fixed) is a...

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Q: Kathy’s Kettle Potato Chips produces gourmet chips distributed to chain sub shops

Kathy’s Kettle Potato Chips produces gourmet chips distributed to chain sub shops throughout California. To ensure that their chips are of the highest quality and have taste appeal, Kathy has a rigoro...

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Q: Cavio is a cloud service provider that offers computing resources to handle

Cavio is a cloud service provider that offers computing resources to handle enterprise-wide applications. For March 2017, Cavio estimates that it will provide 18,000 RAM hours of services to clients....

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Q: The Greenspace Company started business on January 1, 2017. The

The Greenspace Company started business on January 1, 2017. The company adopted a standard costing system for the production of ergonomic backpacks. Greenspace chose direct labor as the application ba...

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Q: Carpenter Company uses standard costing. The company has a manufacturing plant

Carpenter Company uses standard costing. The company has a manufacturing plant in Georgia. Standard labor-hours per unit are 0.50, and the variable overhead rate for the Georgia plant is $3.50 per dir...

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Q: Gammaro Company uses standard costing. Tim Sweeney, the new president

Gammaro Company uses standard costing. Tim Sweeney, the new president of Gammaro Company, is presented with the following data for 2017: Required: 1. At what percentage of denominator level was the p...

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Q: Mountain Press produces textbooks for high school accounting courses. The company

Mountain Press produces textbooks for high school accounting courses. The company recently hired a new editor, Jan Green, to handle production and sales of books for an introductory accounting course....

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Q: Castle Lager has just purchased the Jacksonville Brewery. The brewery is

Castle Lager has just purchased the Jacksonville Brewery. The brewery is two years old and uses absorption costing. It will “sell” its product to Castle Lager at $4...

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Q: Creative Solutions designs Web pages for clients in the education sector.

Creative Solutions designs Web pages for clients in the education sector. The company’s job-costing system has a single direct cost category (Web-designing labor) and a single indirect cost pool compo...

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Q: Castle Lager has just purchased the Jacksonville Brewery. The brewery is

Castle Lager has just purchased the Jacksonville Brewery. The brewery is two years old and uses absorption costing. It will “sell” its product to Castle Lager at $4...

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Q: Magic Me is a manufacturer of magic kits. It uses absorption

Magic Me is a manufacturer of magic kits. It uses absorption costing based on standard costs and reports the following data for 2017: There is no price, spending, or efficiency variances. Actual oper...

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Q: LLAP Company manufactures a specialized hoverboard. LLAP began 2017 with an

LLAP Company manufactures a specialized hoverboard. LLAP began 2017 with an inventory of 240 hoverboards. During the year, it produced 1,200 boards and sold 1,300 for $800 each. Fixed production costs...

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Q: Market.com is about to enter the highly competitive personal electronics

Market.com is about to enter the highly competitive personal electronics market with a new type of tablet. In anticipation of future growth, the company has leased a large manufacturing facility and h...

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Q: Planet Light First (PLF), a producer of energy-efficient

Planet Light First (PLF), a producer of energy-efficient light bulbs, expects that demand will increase markedly over the next decade. Due to the high fixed costs involved in the business, PLF has dec...

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Q: Planet Light First (PLF), a producer of energy-efficient

Planet Light First (PLF), a producer of energy-efficient light bulbs, expects that demand will increase markedly over the next decade. Due to the high fixed costs involved in the business, PLF has dec...

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Q: The Iron City Company started business on January 1, 2017.

The Iron City Company started business on January 1, 2017. Iron City manufactures a specialty honey beer, which it sells directly to state-owned distributors in Pennsylvania. Honey beer is produced an...

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Q: Meals To Go operates a chain of 10 hospitals in the Los

Meals To Go operates a chain of 10 hospitals in the Los Angeles area. Its central food-catering facility, Mealman, prepares and delivers meals to the hospitals. It has the capacity to deliver up to 1,...

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Q: In 2018, only 876,000 Mealman meals were produced and

In 2018, only 876,000 Mealman meals were produced and sold to the hospitals. Wright suspects that hospital controllers had systematically inflated their 2018 meal estimates. Required: 1. Recall that...

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Q: Tesla Motors assembles the fully electric Model S-85 automobile at

Tesla Motors assembles the fully electric Model S-85 automobile at its Fremont, California, plant. The standard variable manufacturing cost per vehicle in 2017 is $58,800, which consists of: Direct ma...

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Q: The Ride-On-Wave Company (ROW) produces a

The Ride-On-Wave Company (ROW) produces a line of non-motorized boats. ROW uses a normal-costing system and allocates manufacturing overhead using direct manufacturing labor cost. The following data a...

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Q: Rob Kapito, the controller of Blackstar Paint Supply Company, has

Rob Kapito, the controller of Blackstar Paint Supply Company, has been exploring a variety of internal accounting systems. Rob hopes to get the input of Blackstar’s board of director...

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Q: Differences in operating income between variable costing and absorption costing are due

Differences in operating income between variable costing and absorption costing are due solely to accounting for fixed costs. Do you agree? Explain.

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Q: How does the planning of fixed overhead costs differ from the planning

How does the planning of fixed overhead costs differ from the planning of variable overhead costs?

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Q: How does standard costing differ from actual costing?

How does standard costing differ from actual costing?

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Q: What are the steps in developing a budgeted variable overhead cost-

What are the steps in developing a budgeted variable overhead cost-allocation rate?

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Q: What are the factors that affect the spending variance for variable manufacturing

What are the factors that affect the spending variance for variable manufacturing overhead?

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Q: Why is the term direct costing a misnomer?

Why is the term direct costing a misnomer?

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Q: Explain the main conceptual issue under variable costing and absorption costing regarding

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

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Q: What are the steps in developing a budgeted fixed overhead rate?

What are the steps in developing a budgeted fixed overhead rate?

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Q: Why is the flexible-budget variance the same amount as the

Why is the flexible-budget variance the same amount as the spending variance for fixed manufacturing overhead?

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Q: Roadster Company (RC) designs and produces automotive parts. In

Roadster Company (RC) designs and produces automotive parts. In 2017, actual variable manufacturing overhead is $280,000. RC’s simple costing system allocates variable manufacturing...

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Q: What are two ways of reducing the negative aspects associated with using

What are two ways of reducing the negative aspects associated with using absorption costing to evaluate the performance of a plant manager?

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Q: Provide one caveat that will affect whether a production-volume variance

Provide one caveat that will affect whether a production-volume variance is a good measure of the economic cost of unused capacity.

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Q: “The production-volume variance should always be written off to

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

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Q: Describe the downward demand spiral and its implications for pricing decisions.

Describe the downward demand spiral and its implications for pricing decisions.

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Q: “Overhead variances should be viewed as interdependent rather than independent.”

“Overhead variances should be viewed as interdependent rather than independent.” Give an example.

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Q: Describe how flexible-budget variance analysis can be used in the

Describe how flexible-budget variance analysis can be used in the control of costs of activity areas.

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Q: What is the IRS’s requirement for tax reporting regarding the choice of

What is the IRS’s requirement for tax reporting regarding the choice of a denominator-level capacity concept?

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Q: “Companies that make no variable-cost/fixed-cost

“Companies that make no variable-cost/fixed-cost distinctions must use absorption costing, and those that do make variable-cost/fixed-cost distinctions must use variable costing.” Do you agree? Explai...

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Q: What are the factors that affect the breakeven point under (

What are the factors that affect the breakeven point under (a) variable costing and (b) absorption costing?

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Q: Critics of absorption costing have increasingly emphasized its potential for leading to

Critics of absorption costing have increasingly emphasized its potential for leading to undesirable incentives for managers. Give an example.

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Q: Acclaim Inc. makes two styles of trophies, basic and deluxe

Acclaim Inc. makes two styles of trophies, basic and deluxe, and operates at capacity. Acclaim does large custom orders. Acclaim budgets to produce 10,000 basic trophies and 5,000 deluxe trophies. Man...

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Q: What two assumptions are frequently made when estimating a cost function?

What two assumptions are frequently made when estimating a cost function?

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Q: Define learning curve. Outline two models that can be used when

Define learning curve. Outline two models that can be used when incorporating learning into the estimation of cost functions.

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Q: Discuss four frequently encountered problems when collecting cost data on variables included

Discuss four frequently encountered problems when collecting cost data on variables included in a cost function.

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Q: “All the independent variables in a cost function estimated with regression

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

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Q: Describe three alternative linear cost functions.

Describe three alternative linear cost functions.

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Q: What is the difference between a linear and a nonlinear cost function

What is the difference between a linear and a nonlinear cost function? Give an example of each type of cost function.

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Q: “High correlation between two variables means that one is the cause

“High correlation between two variables means that one is the cause and the other is the effect.” Do you agree? Explain.

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Q: Describe the conference method for estimating a cost function. What are

Describe the conference method for estimating a cost function. What are two advantages of this method?

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Q: List the six steps in estimating a cost function on the basis

List the six steps in estimating a cost function on the basis of an analysis of a past cost relationship. Which step is typically the most difficult for the cost analyst?

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Q: Outline the five-step sequence in a decision process.

Outline the five-step sequence in a decision process.

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Q: Sander Company produces mathematical and financial calculators and operates at capacity.

Sander Company produces mathematical and financial calculators and operates at capacity. Data related to the two products are presented here: Total manufacturing overhead costs are as follows: Total...

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Q: Define relevant costs. Why are historical costs irrelevant?

Define relevant costs. Why are historical costs irrelevant?

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Q: “All future costs are relevant.” Do you agree? Why

“All future costs are relevant.” Do you agree? Why?

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Q: What is a customer preference map, and why is it useful

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

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Q: What is reengineering?

What is reengineering?

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Q: “Variable costs are always relevant, and fixed costs are always

“Variable costs are always relevant, and fixed costs are always irrelevant.” Do you agree? Why?

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Q: Define strategy.

Define strategy.

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Q: Define opportunity cost.

Define opportunity cost.

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Q: Describe the five key forces to consider when analyzing an industry.

Describe the five key forces to consider when analyzing an industry.

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Q: “Management should always maximize sales of the product with the highest

“Management should always maximize sales of the product with the highest contribution margin per unit.” Do you agree? Why?

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Q: Describe three alternative cost-plus pricing methods.

Describe three alternative cost-plus pricing methods.

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Q: DLN is an architectural firm that designs and builds buildings. It

DLN is an architectural firm that designs and builds buildings. It prices each job on a cost plus 20% basis. Overhead costs in 2017 are $8,100,000. DLN’s simple costing system alloca...

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Q: “Cost written off as depreciation on equipment already purchased is always

“Cost written off as depreciation on equipment already purchased is always irrelevant.” Do you agree? Why?

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Q: What is downsizing?

What is downsizing?

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Q: Describe the three steps in solving a linear programming problem.

Describe the three steps in solving a linear programming problem.

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Q: How might the optimal solution of a linear programming problem be determined

How might the optimal solution of a linear programming problem be determined?

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Q: What is a partial-productivity measure?

What is a partial-productivity measure?

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Q: What are the three major influences on pricing decisions?

What are the three major influences on pricing decisions?

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Q: What is cost-plus pricing?

What is cost-plus pricing?

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Q: What is life-cycle budgeting?

What is life-cycle budgeting?

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Q: Describe four purposes of cost allocation.

Describe four purposes of cost allocation.

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Q: How is activity-based costing useful for pricing decisions?

How is activity-based costing useful for pricing decisions?

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Q: Distinguish between quantitative and qualitative factors in decision making.

Distinguish between quantitative and qualitative factors in decision making.

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Q: Speediprint Corporation owns a small printing press that prints leaflets, brochures

Speediprint Corporation owns a small printing press that prints leaflets, brochures, and advertising materials. Speediprint classifies its various printing jobs as standard jobs or special jobs. Speed...

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Q: What is a target cost per unit?

What is a target cost per unit?

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Q: Describe value engineering and its role in target costing.

Describe value engineering and its role in target costing.

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Q: “It is not important for a company to distinguish between cost

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

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Q: Explain why a favorable sales-quantity variance occurs.

Explain why a favorable sales-quantity variance occurs.

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Q: Why is customer-profitability analysis an important topic for managers?

Why is customer-profitability analysis an important topic for managers?

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Q: How can a company track the extent of price discounting on a

How can a company track the extent of price discounting on a customer-by-customer basis?

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Q: What information does the whale curve provide?

What information does the whale curve provide?

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Q: What role does the Cost Accounting Standards Board play when companies contract

What role does the Cost Accounting Standards Board play when companies contract with the U.S. government?

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Q: What is one key way to reduce cost-allocation disputes that

What is one key way to reduce cost-allocation disputes that arise with government contracts?

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Q: Describe how companies are increasingly facing revenue-allocation decisions.

Describe how companies are increasingly facing revenue-allocation decisions.

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Q: Decorative Doors, Inc., produces two types of doors, interior

Decorative Doors, Inc., produces two types of doors, interior and exterior. The company’s simple costing system has two direct-cost categories (materials and labor) and one indirect-...

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Q: Describe how the dual-rate method is useful to division managers

Describe how the dual-rate method is useful to division managers in decision making.

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Q: How do budgeted cost rates motivate the support-department manager to

How do budgeted cost rates motivate the support-department manager to improve efficiency?

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Q: Give examples of allocation bases used to allocate support-department cost

Give examples of allocation bases used to allocate support-department cost pools to operating departments.

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Q: “To ensure unbiased cost allocations, fixed costs should be allocated

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

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Q: What is conceptually the most defensible method for allocating support-department

What is conceptually the most defensible method for allocating support-department costs? Why?

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Q: Give two examples of industries in which joint costs are found.

Give two examples of industries in which joint costs are found. For each example, what are the individual products at the splitoff point?

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Q: How might a company simplify its use of the NRV method when

How might a company simplify its use of the NRV method when final selling prices can vary sizably in an accounting period and management frequently changes the point at which it sells individual produ...

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Q: Describe two major methods to account for byproducts.

Describe two major methods to account for byproducts.

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Q: What is a joint cost? What is a separable cost?

What is a joint cost? What is a separable cost?

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Q: Why does the sales value at splitoff method use the sales value

Why does the sales value at splitoff method use the sales value of the total production in the accounting period and not just the revenues from the products sold?

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Q: Fitzgerald Supermarkets (FS) operates at capacity and decides to apply

Fitzgerald Supermarkets (FS) operates at capacity and decides to apply ABC analysis to three product lines: baked goods, milk and fruit juice, and frozen foods. It identifies four activities and their...

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Q: Give three examples of industries that use process-costing systems.

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

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Q: Identify a major advantage of the FIFO method for purposes of planning

Identify a major advantage of the FIFO method for purposes of planning and control.

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Q: Identify the main difference between journal entries in process costing and job

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

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Q: “Transferred-in costs are those costs incurred in the preceding

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

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Q: Name the three inventory methods commonly associated with process costing.

Name the three inventory methods commonly associated with process costing.

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Q: Describe the distinctive characteristic of weighted-average computations in assigning costs

Describe the distinctive characteristic of weighted-average computations in assigning costs to units completed and to units in ending work in process.

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Q: Why should the FIFO method be called a modified or department FIFO

Why should the FIFO method be called a modified or department FIFO method?

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Q: Why is there an unmistakable trend in manufacturing to improve quality?

Why is there an unmistakable trend in manufacturing to improve quality?

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Q: “The unit cost of normal spoilage is the same as the

“The unit cost of normal spoilage is the same as the unit cost of abnormal spoilage.” Do you agree? Explain.

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Q: “The costs of rework are always charged to the specific jobs

“The costs of rework are always charged to the specific jobs in which the defects were originally discovered.” Do you agree? Explain.

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Q: Veritek Wholesalers operates at capacity and sells furniture items to four department

Veritek Wholesalers operates at capacity and sells furniture items to four department-store chains (customers). Mr. Veritek commented, “We apply ABC to determine product-line profita...

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Q: When is a company justified in inventorying scrap?

When is a company justified in inventorying scrap?

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Q: “Normal spoilage is planned spoilage.” Discuss.

“Normal spoilage is planned spoilage.” Discuss.

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Q: “Costs of abnormal spoilage are losses.” Explain.

“Costs of abnormal spoilage are losses.” Explain.

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Q: “What has been regarded as normal spoilage in the past is

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

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Q: “Units of abnormal spoilage are inferred rather than identified.” Explain

“Units of abnormal spoilage are inferred rather than identified.” Explain.

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Q: “In accounting for spoiled units, we are dealing with cost

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

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Q: “The inspection point is the key to the allocation of spoilage

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

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Q: Describe two benefits of improving quality.

Describe two benefits of improving quality.

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Q: How does conformance quality differ from design quality? Explain.

How does conformance quality differ from design quality? Explain.

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Q: Name two items classified as prevention costs

Name two items classified as prevention costs

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Q: The job-costing system at Melody’s Custom Framing has five indirect

The job-costing system at Melody’s Custom Framing has five indirect cost pools (purchasing, material handling, machine maintenance, product inspection, and packaging). The company is...

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Q: Give two examples of appraisal costs.

Give two examples of appraisal costs.

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Q: Name six cost categories that are important in managing goods for sale

Name six cost categories that are important in managing goods for sale in a retail company.

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Q: Give examples of costs included in annual carrying costs of inventory when

Give examples of costs included in annual carrying costs of inventory when using the EOQ decision model.

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Q: “Capital budgeting has the same focus as accrual accounting.” Do

“Capital budgeting has the same focus as accrual accounting.” Do you agree? Explain.

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Q: How can sensitivity analysis be incorporated in DCF analysis?

How can sensitivity analysis be incorporated in DCF analysis?

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Q: Describe moral hazard.

Describe moral hazard.

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Q: What factors affecting ROI does the DuPont method of profitability analysis highlight

What factors affecting ROI does the DuPont method of profitability analysis highlight?

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Q: Describe EVA.

Describe EVA.

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Q: Give three definitions of investment used in practice when computing ROI.

Give three definitions of investment used in practice when computing ROI.

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Q: Match each of the following numbered descriptions with one or more of

Match each of the following numbered descriptions with one or more of the denominator-level capacity concepts by putting the appropriate letter(s) by each item: a. Theoretical capacity b. Practical...

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Q: United Savings Bank (USB) is examining the profitability of its

United Savings Bank (USB) is examining the profitability of its Premier Account, a combined savings and checking account. Depositors receive a 2% annual interest rate on their average deposit. USB ear...

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Q: How do managers plan for variable overhead costs?

How do managers plan for variable overhead costs?

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Q: Explain how the analysis of fixed manufacturing overhead costs differs for (

Explain how the analysis of fixed manufacturing overhead costs differs for (a) planning and control and (b) inventory costing for financial reporting.

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Q: What denominator-level capacity concepts emphasize the output a plant can

What denominator-level capacity concepts emphasize the output a plant can supply? What denominator-level capacity concepts emphasize the output customers demand for products produced by a plant?

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Q: Describe three criteria for evaluating cost functions and choosing cost drivers.

Describe three criteria for evaluating cost functions and choosing cost drivers.

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Q: What are the variances in a 4-variance analysis?

What are the variances in a 4-variance analysis?

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Q: Will the financial statements of a company always differ when different choices

Will the financial statements of a company always differ when different choices at the start of the accounting period are made regarding the denominator-level capacity concept?

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Q: “The difference between practical capacity and master-budget capacity utilization

“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 cap...

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Q: What are the four key assumptions examined in specification analysis in the

What are the four key assumptions examined in specification analysis in the case of simple regression?

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Q: “Multicollinearity exists when the dependent variable and the independent variable are

“Multicollinearity exists when the dependent variable and the independent variable are highly correlated.” Do you agree? Explain.

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Q: Describe the account analysis method for estimating a cost function.

Describe the account analysis method for estimating a cost function.

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Q: In 2017, Hart & Sons, a small environmental-testing

In 2017, Hart & Sons, a small environmental-testing firm, performed 11,400 radon tests for $260 each and 15,000 lead tests for $210 each. Because newer homes are being built with lead-free pipes, lead...

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Q: When using the high-low method, should you base the

When using the high-low method, should you base the high and low observations on the dependent variable or on the cost driver?

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Q: Do companies in either the service sector or the merchandising sector make

Do companies in either the service sector or the merchandising sector make choices about absorption costing versus variable costing?

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Q: Name four approaches to estimating a cost function.

Name four approaches to estimating a cost function.

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Q: Assume variable manufacturing overhead is allocated using machine-hours. Give

Assume variable manufacturing overhead is allocated using machine-hours. Give three possible reasons for a favorable variable overhead efficiency variance.

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Q: Describe the difference between a direct materials efficiency variance and a variable

Describe the difference between a direct materials efficiency variance and a variable manufacturing overhead efficiency variance.

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Q: The main trouble with variable costing is that it ignores the increasing

The main trouble with variable costing is that it ignores the increasing importance of fixed costs in manufacturing companies. Do you agree? Why?

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Q: Give an example of how, under absorption costing, operating income

Give an example of how, under absorption costing, operating income could fall even though the unit sales level rises.

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Q: What properties should transfer-pricing systems have?

What properties should transfer-pricing systems have?

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Q: “All transfer-pricing methods give the same division operating income

“All transfer-pricing methods give the same division operating income.” Do you agree? Explain.

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Q: What is a management control system?

What is a management control system?

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Q: The McGrath Company has prepared a sales budget of 42,000

The McGrath Company has prepared a sales budget of 42,000 finished units for a 3-month period. The company has an inventory of 13,000 units of finished goods on hand at December 31 and has a target fi...

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Q: Describe three criteria you would use to evaluate whether a management control

Describe three criteria you would use to evaluate whether a management control system is effective.

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Q: What is the relationship among motivation, goal congruence, and effort

What is the relationship among motivation, goal congruence, and effort?

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Q: “Organizations typically adopt a consistent decentralization or centralization philosophy across all

“Organizations typically adopt a consistent decentralization or centralization philosophy across all their business functions.” Do you agree? Explain.

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Q: What are the three methods for determining transfer prices?

What are the three methods for determining transfer prices?

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Q: The Yucatan Co. in Mexico has a division that manufactures bicycles

The Yucatan Co. in Mexico has a division that manufactures bicycles. Its budgeted sales for Model XG in 2018 are 95,000 units. Yucatan’s target ending inventory is 7,000 units, and its beginning inven...

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Q: Saphire, Inc., bottles and distributes mineral water from the company’s

Saphire, Inc., bottles and distributes mineral water from the company’s natural springs in northern Oregon. Saphire markets two products: 12-ounce disposable plastic bottles and 1-gallon reusable plas...

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Q: Describe two potential problems that should be avoided in relevant-cost

Describe two potential problems that should be avoided in relevant-cost analysis.

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Q: Xander Manufacturing Company manufactures blue rugs, using wool and dye as

Xander Manufacturing Company manufactures blue rugs, using wool and dye as direct materials. One rug is budgeted to use 36 skeins of wool at a cost of $2 per skein and 0.8 gallons of dye at a cost of...

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Q: Ever Clean Company provides gutter cleaning services to residential clients. The

Ever Clean Company provides gutter cleaning services to residential clients. The company has enjoyed considerable growth in recent years due to a successful marketing campaign and favorable reviews on...

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Q: DeWitt Company makes and sells artistic frames for pictures of weddings,

DeWitt Company makes and sells artistic frames for pictures of weddings, graduations, and other special events. Ron Bahar, the controller, is responsible for preparing DeWitt’s maste...

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Q: The Jerico store of Jiffy Mart, a chain of small neighborhood

The Jerico store of Jiffy Mart, a chain of small neighborhood convenience stores, is preparing its activity-based budget for January 2018. Jiffy Mart has three product categories: soft drinks (35% of...

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Q: Jiffy Mart has a Kaizen (continuous improvement) approach to budgeting

Jiffy Mart has a Kaizen (continuous improvement) approach to budgeting monthly activity costs for each month of 2018. Each successive month, the budgeted cost-driver rate decreases by 0.4% relative to...

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Q: Consider each of the following independent situations for Prestige Fountains. Prestige

Consider each of the following independent situations for Prestige Fountains. Prestige manufactures and sells decorative fountains for commercial properties. The company also contracts to service both...

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Q: Consider each of the following independent situations for Sunrise Tours, a

Consider each of the following independent situations for Sunrise Tours, a company owned by David Bartlett that sells motor coach tours to schools and other groups. Sunshine Tours owns a fleet of 10 m...

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Q: HealthMart is a retail store selling home oxygen equipment. HealthMart also

HealthMart is a retail store selling home oxygen equipment. HealthMart also services home oxygen equipment, for which the company bills customers monthly. HealthMart has budgeted for increases in serv...

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Q: Sweeney Enterprises manufactures tires for the Formula I motor racing circuit.

Sweeney Enterprises manufactures tires for the Formula I motor racing circuit. For August 2017, it budgeted to manufacture and sell 3,600 tires at a variable cost of $71 per tire and total fixed costs...

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Q: Bryant Company’s budgeted prices for direct materials, direct manufacturing labor,

Bryant Company’s budgeted prices for direct materials, direct manufacturing labor, and direct marketing (distribution) labor per attaché case are $43, $6, and $13, respe...

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Q: What are four key perspectives in the balanced scorecard?

What are four key perspectives in the balanced scorecard?

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Q: Bank Management Printers, Inc., produces luxury checkbooks with three checks

Bank Management Printers, Inc., produces luxury checkbooks with three checks and stubs perpage. Each checkbook is designed for an individual customer and is ordered through the customer’s bank. The co...

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Q: The Clarkson Company produces engine parts for car manufacturers. A new

The Clarkson Company produces engine parts for car manufacturers. A new accountant intern at Clarkson has accidentally deleted the company’s variance analysis calculations for the ye...

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Q: Cascade, Inc., produces the basic fillings used in many popular

Cascade, Inc., produces the basic fillings used in many popular frozen desserts and treats—vanilla and chocolate ice creams, puddings, meringues, and fudge. Cascade uses standard cos...

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Q: Sunshine Foods manufactures pumpkin scones. For January 2017, it budgeted

Sunshine Foods manufactures pumpkin scones. For January 2017, it budgeted to purchase and use 14,750 pounds of pumpkin at $0.92 a pound. Actual purchases and usage for January 2017 were 16,000 pounds...

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Q: Consider the following data collected for Great Homes, Inc.:

Consider the following data collected for Great Homes, Inc.: Required: Compute the price, efficiency, and flexible-budget variances for direct materials and direct manufacturing labor.

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Q: Rugged Life, Inc., designs and manufactures fleece quarter-zip

Rugged Life, Inc., designs and manufactures fleece quarter-zip jackets. It sells its jackets to brand-name outdoor outfitters in lots of one dozen. Rugged Life’s May 2017 static budg...

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Q: The Schuyler Corporation manufactures lamps. It has set up the following

The Schuyler Corporation manufactures lamps. It has set up the following standards per finished unit for direct materials and direct manufacturing labor: Direct materials: 10 lb. at $4.50 per lb……………...

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Q: Dawson, Inc., is a privately held furniture manufacturer. For

Dawson, Inc., is a privately held furniture manufacturer. For August 2017, Dawson had the following standards for one of its products, a wicker chair: Standards per Chair Direct material...

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Q: Prepare journal entries and post them to T-accounts for all

Prepare journal entries and post them to T-accounts for all transactions in Exercise 7-30, including requirement 2. Summarize how these journal entries differ from the normal-costing entries described...

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Q: Nantucket Enterprises manufactures insulated cold beverage cups printed with college and corporate

Nantucket Enterprises manufactures insulated cold beverage cups printed with college and corporate logos, which it distributes nationally in lots of 12 dozen cups. In June 2017, Nantucket produced 5,0...

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Q: “A component part should be purchased whenever the purchase price is

“A component part should be purchased whenever the purchase price is less than its total manufacturing cost per unit.” Do you agree? Why?

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Q: Student Finance (StuFi) is a start-up that aims

Student Finance (StuFi) is a start-up that aims to use the power of social communities to transform the student loan market. It connects participants through a dedicated lending pool, enabling current...

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Q: Ellis Animal Health, Inc., produces a generic medication used to

Ellis Animal Health, Inc., produces a generic medication used to treat cats with feline diabetes. The liquid medication is sold in 100 ml vials. Ellis employs a team of sales representatives who are p...

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Q: You have been invited to interview for an internship with an international

You have been invited to interview for an internship with an international food manufacturing company. When you arrive for the interview, you are given the following information related to a fictitiou...

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Q: Katharine Johnson is the owner of Best Bikes, a company that

Katharine Johnson is the owner of Best Bikes, a company that produces high-quality cross-country bicycles. Best Bikes participates in a supply chain that consists of suppliers, manufacturers, distribu...

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Q: Oyster Bay Surfboards manufactures fiberglass surfboards. The standard cost of direct

Oyster Bay Surfboards manufactures fiberglass surfboards. The standard cost of direct materials and direct manufacturing labor is $248 per board. This includes 35 pounds of direct materials, at the bu...

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Q: Sandy’s Snacks produces snack mixes for the gourmet and natural foods market

Sandy’s Snacks produces snack mixes for the gourmet and natural foods market. Its most popular product is Tempting Trail Mix, a mixture of peanuts, dried cranberries, and chocolate p...

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Q: On May 1, 2017, Bovar Company began the manufacture of

On May 1, 2017, Bovar Company began the manufacture of a new paging machine known as Dandy. The company installed a standard costing system to account for manufacturing costs. The standard costs for a...

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Q: Collegiate Corn Hole is a small business that Zach Morris developed while

Collegiate Corn Hole is a small business that Zach Morris developed while in college. He began building wooden corn hole game sets for friends, hand painted with college colors and logos. As demand gr...

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Q: You are a new junior accountant at In Focus Corporation, maker

You are a new junior accountant at In Focus Corporation, maker of lenses for eyeglasses. Your company sells generic-quality lenses for a moderate price. Your boss, the controller, has given you the la...

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Q: Elena Martinez employs two workers in her wedding cake bakery. The

Elena Martinez employs two workers in her wedding cake bakery. The first worker, Gabrielle, has been making wedding cakes for 20 years and is paid $25 per hour. The second worker, Joseph, is less expe...

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Q: Describe three features of a good balanced scorecard.

Describe three features of a good balanced scorecard.

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Q: MicroDisk is the market leader in the Secure Digital (SD)

MicroDisk is the market leader in the Secure Digital (SD) card industry and sells memory cards for use in portable devices such as mobile phones, tablets, and digital cameras. Its most popular card is...

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Q: Derek Wilson operates Clean Ride Enterprises, an auto detailing company with

Derek Wilson operates Clean Ride Enterprises, an auto detailing company with 20 employees. Jamal Jackson has recently been hired by Wilson as a controller. Clean Ride’s previous accountant had done ve...

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Q: Sunto Scientific manufactures GPS devices for a chain of retail stores.

Sunto Scientific manufactures GPS devices for a chain of retail stores. Its most popular model, the Magellan XS, is assembled in a dedicated facility in Savannah, Georgia. Sunto is keenly aware of the...

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Q: Wharton Associates is a recently formed law partnership. Denise Peyton,

Wharton Associates is a recently formed law partnership. Denise Peyton, the managing partner of Wharton Associates, has just finished a tense phone call with Gus Steger, president of Steger Enterprise...

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Q: Peyton asks her assistant to collect details on those costs included in

Peyton asks her assistant to collect details on those costs included in the $500,000 indirect-cost pool that can be traced to each individual job. After analysis, Wharton is able to reclassify $300,00...

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Q: Wharton has two classifications of professional staff: partners and associates.

Wharton has two classifications of professional staff: partners and associates. Peyton asks his assistant to examine the relative use of partners and associates on the recent Steger Enterprises and Bl...

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Q: Marshall Devices manufactures metal products and uses activity-based costing to

Marshall Devices manufactures metal products and uses activity-based costing to allocate overhead costs to customer orders for pricing purposes. Many customer orders are won through competitive biddin...

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Q: LawnCare USA provides lawn care and landscaping services to commercial clients.

LawnCare USA provides lawn care and landscaping services to commercial clients. LawnCare USA uses activity-based costing to bid on jobs and to evaluate their profitability. LawnCare USA reports the fo...

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Q: The Solomon Company uses a job-costing system at its Dover

The Solomon Company uses a job-costing system at its Dover, Delaware, plant. The plant has a machining department and a finishing department. Solomon uses normal costing with two direct-cost categorie...

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Q: Kidman & Associates is a law firm specializing in labor relations and

Kidman & Associates is a law firm specializing in labor relations and employee-related work. It employs 30 professionals (5 partners and 25 associates) who work directly with its clients. The average...

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Q: “Managers should always buy inventory in quantities that result in the

“Managers should always buy inventory in quantities that result in the lowest purchase cost per unit.” Do you agree? Why?

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Q: Kidman has just completed a review of its job-costing system

Kidman has just completed a review of its job-costing system. This review included a detailed analysis of how past jobs used the firm’s resources and interviews with personnel about...

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Q: The Zaf Radiator Company uses a normal-costing system with a

The Zaf Radiator Company uses a normal-costing system with a single manufacturing overhead cost pool and machine-hours as the cost-allocation base. The following data are for 2017: Budgeted manufactur...

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Q: Gardi Manufacturing uses normal costing for its job-costing system,

Gardi Manufacturing uses normal costing for its job-costing system, which has two direct-cost categories (direct materials and direct manufacturing labor) and one indirect-cost category (manufacturing...

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Q: Adventure Designs makes custom backyard play structures that it sells to dealers

Adventure Designs makes custom backyard play structures that it sells to dealers across the Midwest. The play structures are produced in two departments, fabrication (a mostly automated department) an...

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Q: Keezel Company uses normal costing in its job-costing system.

Keezel Company uses normal costing in its job-costing system. Partially completed T-accounts and additional information for Keezel for 2017 are as follows: Additional information follows: a. Direct...

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Q: Estevez Company uses normal costing in its job-costing system.

Estevez Company uses normal costing in its job-costing system. The company produces kitchen cabinets. The beginning balances (December 1) and ending balances (as of December 30) in their inventory acc...

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Q: Resource Room prints custom training material for corporations. The business was

Resource Room prints custom training material for corporations. The business was started January 1, 2017. The company uses a normal-costing system. It has two direct-cost pools, materials and labor, a...

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Q: Joseph Underwood joined Anderson Enterprises as controller in October 2016. Anderson

Joseph Underwood joined Anderson Enterprises as controller in October 2016. Anderson Enterprises manufactures and installs home greenhouses. The company uses a normal-costing system with two direct-co...

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Q: Market Pulse performs market research for consumer product companies across the country

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Q: Raynham’s Radiology Center (RRC) performs X-rays, ultrasounds

Raynham’s Radiology Center (RRC) performs X-rays, ultrasounds, computer tomography (CT) scans, and magnetic resonance imaging (MRI). RRC has developed a reputation as a top radiology...

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Q: The Coby Company expects sales in 2018 of 201,000 units

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Q: Dawson Co. produces wine. The company expects to produce 2

Dawson Co. produces wine. The company expects to produce 2,535,000 two-liter bottles of Chablis in 2018. Dawson purchases empty glass bottles from an outside vendor. Its target ending inventory of suc...

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Q: Tasty Beverages began business in 2010 selling bottles of a thirst-

Tasty Beverages began business in 2010 selling bottles of a thirst-quenching drink. Production for the first year was 104,000 bottles, and sales were 98,000 bottles. The selling price per bottle was $...

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Q: Use the information for Sheridan Shacks in Exercise and assume a tax

Use the information for Sheridan Shacks in Exercise and assume a tax rate for the company of 35 percent. Information given in Exercise 8: Sheridan Shacks makes portable garden sheds that sell for $1,...

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Q: Indicate whether each of the following is a potential advantage (A

Indicate whether each of the following is a potential advantage (A) or disadvantage (D) of decentralization. If an item is neither an advantage nor a disadvantage, use N. a. Provision of increased job...

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Go to your university’s Web site and review the various organizational units within the university. Assuming no transfer pricing exists, make a list of the units that you believe would be classified a...

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Fashion Fabrics sells sewing and craft materials to specialty retail and department stores. For 2010, the company’s New York Division had the following performance targets: Asset turnover ………………………………...

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Q: Imelda Sanchez, manager of the Arias Division of Poncé Chemical,

Imelda Sanchez, manager of the Arias Division of Poncé Chemical, is evaluated based on the division’s return on investment and residual income. Near the end of November 2010, she was reviewing the div...

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Q: Morton Industrial produces stamping machinery for manufacturers. In 2009, the

Morton Industrial produces stamping machinery for manufacturers. In 2009, the company expanded vertically by acquiring a supplier, Lancaster Company. Lancaster is now operated as a divisional investme...

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Q: Miami Marine uses ROI to evaluate the performance of both its Powerboat

Miami Marine uses ROI to evaluate the performance of both its Powerboat and Sailboat Division managers. The following estimates of relevant measures have been made for the upcoming year: Both divisio...

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Q: As one of the division managers for Premier Inc., your performance

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Q: Although they should be considered independently, often the investing and financing

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Q: Use the information for Bill’s Cabinets in Exercise 9 and assume a

Use the information for Bill’s Cabinets in Exercise 9 and assume a tax rate for the company of 30 percent. Information given in Exercise 9: Bill’s Cabinets sells a product for $360 per unit. The comp...

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Q: LA Property Management is expanding operations, and the firm’s president,

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Q: Illinois Investments is considering purchasing a 50-room motel for sale

Illinois Investments is considering purchasing a 50-room motel for sale outside of Atlanta as an investment. The current owners state that the motel’s occupancy rate averages 80 percent each of the 30...

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Q: Ten years ago, based on a pre-tax NPV analysis

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Q: The management of Pittsburgh Pipe is evaluating a proposal to buy a

The management of Pittsburgh Pipe is evaluating a proposal to buy a new turning lathe as a replacement for a less efficient piece of similar equipment that would then be sold. The new latheâ ...

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Candice Klammer was reprimanded by the home office for recommending a pollution abatement project because the project did not meet the standard financial criterion of a 12 percent rate of return. Howe...

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Q: Best Bakery is considering the purchase of a new delivery truck to

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Pneu Shoe Company manufactures various types of athletic shoes. Several types require a built-in air pump. Presently, the company makes all air pumps it requires. However, management is evaluating an...

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Q: Forester Fashions is considering the purchase of computerized clothes-designing software

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Casper Karts manufactures a three-wheeled shopping cart that sells for $60. Variable manufacturing and variable selling cost are, respectively, $35 and $10 per unit. Annual fixed cost is $975,000. a....

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Aqua Gear, in business since 2008, makes swimwear for professional athletes. Analysis of the firm’s financial records for the current year reveals the following: Average swimsuit selling price ………………...

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Q: One product produced and sold by Outback Outfitters is an ATV gun

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Leather Accessories produces leather belts and key fobs that sell for $40 and $10, respectively. The company currently sells 100,000 units of each type with the following operating results: Corporate...

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Q: Structural Steel Systems manufactures steel buildings for agricultural and home applications.

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Q: The officers of Bardwell Company are reviewing the profitability of the company’s

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Q: Riedel Motors uses ten units of Part No. T305 each month

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Q: Tangy Fresh produces orange juice and orange marmalade from a joint process

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Q: During March 2010, the first month of operations, Oink Oink’s

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Buchan’s Junction Manufacturing Corporation uses a joint production process that produces three products at the split-off point. Joint production costs during March were $720,000. Th...

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Q: Choose a fairly common product that you believe would generate multiple by

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Natural Beauty Corp. uses a joint process to make two main products: Forever perfume and Fantasy lotion. Production is organized in two sequential departments: Combining and Heating. The products do n...

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Q: Powisett Farms Dairy began operations at the start of May 2010.

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Q: Refer to the information in Problem 3. a.

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Q: Refer to the information in Problem 4. a. Calculate

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Through its three sets of elements (motivational, informational, and reporting), a CMS focuses the attention of a given decision maker on the data and information that are crucial to that decision mak...

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Mean Machine makes three types of electric scooters. The company’s total fixed cost is $1,080,000,000. Selling prices, variable cost, and sales percentages for each type of scooter f...

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New England Bottling was founded in the late 1800s and was owned by the same family until 1960 when the firm went public. Throughout its life as a public firm, the company has been continuously profit...

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Q: In 1993, Procter & Gamble (P&G) management

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Ohio Steel produces steel products for a variety of customers. One division of the company is the Garage Door Division, created in the late 1940s. Since that time, this division’s principal products h...

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After graduating last year from an Ivy League university, Joe Tyler was hired as a stock analyst. Wanting to make his mark on the industry, Tyler issued a scathing report on a major discount departmen...

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Q: In August 2007, Heelys, a Texas-based maker of

In August 2007, Heelys, a Texas-based maker of wheeled shoes, reported quarterly profits that beat the street estimates by three cents per share. Upon receiving the news, the market price of Heelys dr...

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Q: Laura Thompson, newly appointed controller of Allied Networking Services Inc.

Laura Thompson, newly appointed controller of Allied Networking Services Inc. (ANSI), a rapidly growing company, has just been asked to serve as lead facilitator of a team charged with designing a cos...

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Q: A large U.S. corporation participates in a highly competitive

A large U.S. corporation participates in a highly competitive industry. Company management has decided that decentralization will best allow the company to meet the competition and achieve profit goal...

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Q: Kessla Taub manages the marketing department at Electronic Village. Company management

Kessla Taub manages the marketing department at Electronic Village. Company management has been concerned about the sales of three products and has informed Taub that, regardless of other sales, her p...

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Q: Sid Simon wants to cash in on the increased demand for ethanol

Sid Simon wants to cash in on the increased demand for ethanol. Accordingly he purchased a corn farm in Iowa. Simon believes his corn crop can be sold to an ethanol plant for $4.80 per bushel. Variabl...

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Because of a monumental error committed by its purchasing department, Corner Grocery ordered 5,000 heads of lettuce rather than the 1,000 that should have been ordered. The company paid $0.65 per head...

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Q: Racine Tire Co. manufactures tires for all-terrain vehicles.

Racine Tire Co. manufactures tires for all-terrain vehicles. The tires sell for $60 and variable cost per tire is $30; monthly fixed cost is $450,000. a. What is the break-even point in units and sale...

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Q: Hippolito Inc. manufactures industrial tools and has annual sales of approximately

Hippolito Inc. manufactures industrial tools and has annual sales of approximately $3.5 million with no evidence of cyclical demand. R&D is very important to Hippolito because its market share exp...

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Q: To respond to increased competition and a reduction in profitability, the

To respond to increased competition and a reduction in profitability, the nationwide law firm of O’Brien New & Cave recently instituted a responsibility accounting system. One of...

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Q: Swimmingly Corp. buys raw fish, cooks and processes it,

Swimmingly Corp. buys raw fish, cooks and processes it, and then cans it in single-portion containers. The canned fish is sold to several wholesalers, who specialize in providing food to school lunch...

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Q: The accounting department at Kerrville College has decided to offer a three

The accounting department at Kerrville College has decided to offer a three-day ethics workshop for local CPAs in March 2010. Rose Morris, a tenured professor, will supervise the seminarâ€&...

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Q: Tennessee Tonic makes a high-energy protein drink. The selling

Tennessee Tonic makes a high-energy protein drink. The selling price per gallon is $7.20, and variable cost of production is $4.32. Total fixed cost per year is $316,600. The company is currently sell...

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Q: Organizational spending on outsourced contact centers (previously referred to as call

Organizational spending on outsourced contact centers (previously referred to as call centers) continues to increase. Contact centers are critical to organizational success because these units often h...

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Q: Many companies provide on-site child care facilities for employees’ children

Many companies provide on-site child care facilities for employees’ children. In some situations, this service is provided free of charge; in other situations, employees are charged, usually on a slid...

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Q: Cardiff Sports sells footballs and shoulder pads. For 2010, company

Cardiff Sports sells footballs and shoulder pads. For 2010, company management budgeted the following: At the end of 2010, management was told that actual sales of footballs were 21,000 units and the...

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Q: The Mergers & Acquisitions Division (M&A) of Global

The Mergers & Acquisitions Division (M&A) of Global Financial Services is evaluated by corporate management based on a comparison of budgeted and actual pre-tax income. For 2010, M&A’s budgeted income...

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Q: Terry Travers is the manufacturing supervisor of the Aurora Manufacturing Company,

Terry Travers is the manufacturing supervisor of the Aurora Manufacturing Company, which produces a variety of plastic products. Some of these products are standard items that are listed in the compan...

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Q: For each of the following items, indicate two performance measurements that

For each of the following items, indicate two performance measurements that could be obtained from a cost management system. Classify each item into one of the four balanced scorecard perspectives. a....

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Q: Chesterville Manufacturing makes a variety of glass products having both commercial and

Chesterville Manufacturing makes a variety of glass products having both commercial and household applications. One of its newest divisions, ColOptics, manufactures fiber optic cable and other high-te...

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Q: In September 2010, Lyon Precision Corporation (LPC) decided to

In September 2010, Lyon Precision Corporation (LPC) decided to launch an expansion plan for some product lines. To finance this expansion, the firm has decided to issue $400,000,000 of new common stoc...

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Q: Relative to worker compensation, no topic is more hotly debated than

Relative to worker compensation, no topic is more hotly debated than the minimum wage law. Using concepts from this chapter, prepare a report in which you explain why increases in the minimum wage are...

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Q: In 2010, the lead story in your college newspaper reports the

In 2010, the lead story in your college newspaper reports the details of the hiring of the current football coach. The previous football coach was fired for failing to win games and attract fans. In h...

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Q: A group of prospective investors has asked for your help in understanding

A group of prospective investors has asked for your help in understanding the comparative advantages and disadvantages of starting a company that is either labor intensive or, in contrast, one that us...

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Q: San Francisco Sea Salt’s controller prepared the following cash flow statements (

San Francisco Sea Salt’s controller prepared the following cash flow statements (in thousands of dollars) for the past two years, the current year (2010), and the upcoming year (2011...

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Q: A recent survey of U.S. chief financial officers provides

A recent survey of U.S. chief financial officers provides compelling evidence that managers are willing to take extraordinary measures to achieve financial earnings targets. For example, the survey fo...

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Q: Anthem Manufacturing has just initiated a formula bonus plan that rewards plant

Anthem Manufacturing has just initiated a formula bonus plan that rewards plant managers for various achievements. One of the current criteria for bonuses is the improvement of asset turnover. The pla...

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Q: Family Fun Vehicle Co. (FFV), a subsidiary of Drummondville

Family Fun Vehicle Co. (FFV), a subsidiary of Drummondville Automotive, manufactures go-carts and other recreational vehicles. Family recreational centers that feature go-cart tracks, miniature golf,...

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Q: Assume you are the newly appointed CFO of an international engineering services

Assume you are the newly appointed CFO of an international engineering services firm. As one of your first assignments you need to appoint a new controller for the branch of your firm located in Bueno...

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Q: Many domestic companies have chosen to “offshore” their production operations

Many domestic companies have chosen to “offshore” their production operations to countries with lower wage rates. Some of the countries being used have been accused of allowing sweatshops, child labor...

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Q: Wayne Coyle, the controller of PEI Potato Co., is disillusioned

Wayne Coyle, the controller of PEI Potato Co., is disillusioned with the company’s system of evaluating the performance of divisional profit centers and their managers. The present system focuses on a...

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Q: How is the accounting rate of return computed? How does this

How is the accounting rate of return computed? How does this rate differ from the discount rate and the internal rate of return? Appendix 2: Accounting Rate of Return The accounting rate of return (A...

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Q: What information provided by a variable costing income statement is used in

What information provided by a variable costing income statement is used in computing the break-even point? Is this information on an absorption costing income statement? Explain your answer.

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Q: How is “break-even point” defined? What are

How is “break-even point” defined? What are the differences among the formula, graph, and income statement approaches for computing breakeven?

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Q: A friend of yours, attending another university, states she learned

A friend of yours, attending another university, states she learned that CVP is a short-run-oriented model and is, therefore, of limited usefulness. Your professor, however, has often discussed CVP in...

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Q: What is the contribution margin ratio? How is it used to

What is the contribution margin ratio? How is it used to calculate the break-even point?

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Q: Why is CVP analysis generally used as a short-run tool

Why is CVP analysis generally used as a short-run tool? Would CVP ever be appropriate as a long-run model?

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Q: How is the “bag” assumption used in CVP analysis for

How is the “bag” assumption used in CVP analysis for a multiproduct firm? What additional assumption must be made in multiproduct CVP analysis that doesn’t pertain to a single-product CVP situation?

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Q: A multiproduct company has a sales mix of nine widgees to three

A multiproduct company has a sales mix of nine widgees to three squigees. Widgees have a contribution margin ratio of 45 percent, and squigees have a contribution margin ratio of 80 percent. If the sa...

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Q: Define and explain the relationship between margin of safety and degree of

Define and explain the relationship between margin of safety and degree of operating leverage.

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Q: What is a special order decision? Under what circumstances would a

What is a special order decision? Under what circumstances would a company refuse to accept a special order?

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Q: What is segment margin? How is segment margin used in the

What is segment margin? How is segment margin used in the quantitative analysis of a decision to drop or keep a product line?

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Q: How does the passage of time affect the set of costs that

How does the passage of time affect the set of costs that is relevant to a decision?

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Q: What are opportunity costs and why are they often the most difficult

What are opportunity costs and why are they often the most difficult costs to analyze in decision making?

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Q: What is outsourcing? Why is the practice heatedly debated in the

What is outsourcing? Why is the practice heatedly debated in the United States?

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Q: Compute the answers to each of the following independent situations.

Compute the answers to each of the following independent situations. a. Orlando Ray sells liquid and spray mouthwash in a sales mix of 1:2, respectively. The liquid mouthwash has a contribution margin...

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Q: What is a scarce resource? Why is an organization’s most scarce

What is a scarce resource? Why is an organization’s most scarce resource likely to change from time to time?

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Q: What is the objective of managing the sales mix of products?

What is the objective of managing the sales mix of products? What are the major factors that influence sales mix?

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Q: How does management determine how to classify each type of output from

How does management determine how to classify each type of output from a joint process? Is this decided before or after production?

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Q: In a company that engages in a joint production process, will

In a company that engages in a joint production process, will all processing stop at the split-off point? Discuss the rationale for your answer.

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Q: Why is cost allocation necessary in accounting? Why is it necessary

Why is cost allocation necessary in accounting? Why is it necessary in a joint process?

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Q: Compare the advantages and disadvantages of the two primary methods used to

Compare the advantages and disadvantages of the two primary methods used to allocate joint cost to joint products.

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Q: Why are approximated, rather than actual, net realizable values at

Why are approximated, rather than actual, net realizable values at split-off sometimes used to allocate joint cost?

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Q: Which of the two common approaches used to account for by-

Which of the two common approaches used to account for by-product/scrap provides better information to management? Discuss the rationale for your answer.

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Q: When is by-product/scrap cost considered in setting the

When is by-product/scrap cost considered in setting the predetermined overhead rate in a job order costing system? When is cost not considered?

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Q: Why must not-for-profit organizations determine when it is

Why must not-for-profit organizations determine when it is appropriate to allocate any cost for a joint activity among fund-raising, program, and administrative activities?

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Q: Niobrara Pesticide Company’s new president has learned that, for the past

Niobrara Pesticide Company’s new president has learned that, for the past four years, the company has been dumping its industrial waste into the local river and falsifying reports to authorities about...

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Q: What is CAM-I, and why is it organized?

What is CAM-I, and why is it organized? Appendix: Most companies combine many materials and various classes of direct labor to produce goods. In such settings, the material and labor variance computa...

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Q: What is a control system? What purpose does a control system

What is a control system? What purpose does a control system serve in an organization?

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Q: Why does a cost management system necessarily have both a short-

Why does a cost management system necessarily have both a short-term and longterm focus?

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Q: How does the choice of organizational form influence the design of a

How does the choice of organizational form influence the design of a firm’s cost management system?

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Q: What information could be generated by a cost management system that would

What information could be generated by a cost management system that would help an organization manage its core competencies?

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Q: How could an organization’s culture be used as a control mechanism?

How could an organization’s culture be used as a control mechanism?

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Q: How does a product’s life cycle stage influence the nature of information

How does a product’s life cycle stage influence the nature of information required to successfully manage costs of that product?

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Q: In the present highly competitive environment, why has cost management risen

In the present highly competitive environment, why has cost management risen to such a high level of concern whereas price management has declined in importance?

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Q: Wayne Litcomb is the president and chief operating officer of Litcomb Electronics

Wayne Litcomb is the president and chief operating officer of Litcomb Electronics. He founded the company and has led it to its prominent place in the electronics field. He has manufacturing plants or...

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Q: What type of transfer price would you recommend be used in each

What type of transfer price would you recommend be used in each of the following selling and buying responsibility centers: cost, revenue, profit, and investment? How and why would such prices be set?...

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Q: Identify which of the CVP assumptions is violated in each of the

Identify which of the CVP assumptions is violated in each of the circumstances described below. a. Price per unit declines as the volume of sales and production increase. b. Labor productivity increas...

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Q: How can support departments use transfer prices, and what advantages do

How can support departments use transfer prices, and what advantages do transfer prices have over cost allocation methods?

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Q: Explain why the determination of transfer prices is more complex in a

Explain why the determination of transfer prices is more complex in a multinational, rather than in a domestic, setting.

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Q: Why are responsibility reports prepared? Is it appropriate for a single

Why are responsibility reports prepared? Is it appropriate for a single responsibility report to be prepared for a division of a major company? Why or why not?

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Q: What is suboptimization, and what factors contribute to it in a

What is suboptimization, and what factors contribute to it in a decentralized firm?

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Q: Why are support department costs often allocated to operating departments? Is

Why are support department costs often allocated to operating departments? Is such an allocation process always useful from a decision-making standpoint? How might support department cost allocation c...

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Q: The four criteria for selecting an allocation base for support department costs

The four criteria for selecting an allocation base for support department costs should be applied equally.” Discuss the merits of this statement.

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Q: Compare and contrast the direct, step, and algebraic methods of

Compare and contrast the direct, step, and algebraic methods of allocating support department costs. What are the advantages and disadvantages of each method?

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Q: What are transfer prices, and why do companies use them?

What are transfer prices, and why do companies use them? How could the use of transfer prices improve or impair goal congruence?

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Q: What problems might be encountered when attempting to implement a cost-

What problems might be encountered when attempting to implement a cost-based transfer pricing system? A market-based transfer pricing system?

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Q: What are the benefits of organizational mission and values statements? How

What are the benefits of organizational mission and values statements? How are organizational missions and strategies related to performance measures?

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Q: A local businesswoman, Jane Aire, has hired you and a

A local businesswoman, Jane Aire, has hired you and a colleague, Joanna, from your cost accounting class to advise her regarding her small manufacturing business that makes leather valises. The busine...

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Q: Why is the trend in U.S. business away from

Why is the trend in U.S. business away from automatic pay increases and toward increased use of incentive compensation plans?

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Q: If worker performance measures used in a pay-for-performance

If worker performance measures used in a pay-for-performance plan are not highly correlated with corporate goals, what is the likely result for the organization? For the workers?

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Q: How does the time perspective of a performance-based plan affect

How does the time perspective of a performance-based plan affect the selection of performance measures?

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Q: Why should different missions for two subunits result in different performance reward

Why should different missions for two subunits result in different performance reward structures for the managers of those subunits? How does the mission of an organizational subunit affect the mix of...

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Q: How can feedback, both positive and negative, be used to

How can feedback, both positive and negative, be used to improve managerial performance? How is feedback used in a performance-based reward system?

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Q: Many pay structures involve compensation combining both cash and stock. Why

Many pay structures involve compensation combining both cash and stock. Why do firms want employees to be holders of the firm’s common stock? What additional performance measurement and reward issues...

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Q: What are some of the important equity issues in designing reward structures

What are some of the important equity issues in designing reward structures? Why is the achievement of equity in the reward structure important?

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Q: Why is performance measurement important to the success of businesses? Should

Why is performance measurement important to the success of businesses? Should performance measures be qualitative, quantitative, or both? Justify your answer. For performance measurements to be meanin...

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Q: What benefits can be gained by allowing a manager to participate in

What benefits can be gained by allowing a manager to participate in developing the performance measures that will be used to assess that manager’s performance?

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Q: On what basis should the performance of a responsibility center be measured

On what basis should the performance of a responsibility center be measured? What are the traditional financial performance measures for each type of responsibility center? Why can the same quantitati...

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Q: Michigan Mfg. makes electronic products. Because the employees of one

Michigan Mfg. makes electronic products. Because the employees of one of the company’s plants are on strike, the Chicago plant is operating at peak capacity. It makes two electronic...

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Q: How can cash flow be used as a performance measure? In

How can cash flow be used as a performance measure? In what ways is cash flow a relatively stronger or weaker performance measure than accrual measures such as segment income?

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Q: The president of Toys for Boys evaluates the performance of Annie and

The president of Toys for Boys evaluates the performance of Annie and Andy, the divisional managers, on the basis of a variety of net income measures. Drew, the controller, informs the president that...

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Q: What is residual income, and how is it used to measure

What is residual income, and how is it used to measure divisional performance? How is it similar to, and different from, the return on investment measure? How is residual income similar to, and differ...

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Q: In designing a performance measurement system, why should managerial rewards be

In designing a performance measurement system, why should managerial rewards be linked to performance measures? Why would an effective compensation strategy treat top managers, middle managers, and ot...

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Q: What is the balanced scorecard? What perspectives are considered in selecting

What is the balanced scorecard? What perspectives are considered in selecting performance measures for the balanced scorecard, and why is each of these perspectives important?

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Q: What four questions should managers ask when choosing the investment proposals to

What four questions should managers ask when choosing the investment proposals to fund?

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Q: How is risk defined in capital budgeting analysis? List several aspects

How is risk defined in capital budgeting analysis? List several aspects of a project in which risk is involved and how risk can affect a project’s net present value.

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Q: How is sensitivity analysis used in capital budgeting?

How is sensitivity analysis used in capital budgeting?

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Q: What is meant by the term time value of money? Why

What is meant by the term time value of money? Why is a present value always less than the future value to which it relates? Appendix 1: The time value of money can be discussed in relation to either...

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Q: Why do capital budgeting evaluation methods use cash flows rather than accounting

Why do capital budgeting evaluation methods use cash flows rather than accounting income?

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Q: Pet Palace provides two types of services to dog owners: grooming

Pet Palace provides two types of services to dog owners: grooming and training. All company personnel can perform each service equally well. To expand sales and market share, Pet Palaceâ€&#...

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Q: What is measured by the net present value (NPV) of

What is measured by the net present value (NPV) of a potential project? If the NPV of a project is $0, is it an acceptable project? Explain.

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Q: Will the NPV amount determined in the capital budgeting process be the

Will the NPV amount determined in the capital budgeting process be the same amount as that which actually occurs after a project is undertaken? Why or why not?

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Q: How is the profitability index (PI) related to the NPV

How is the profitability index (PI) related to the NPV method? What does the PI measure?

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Q: Production of ethanol, made from corn, is on the rise

Production of ethanol, made from corn, is on the rise. Some states are even requiring that ethanol be blended in small amounts with gasoline to reduce pollution. The problem is that there is not enoug...

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Q: How can a company evaluate whether it is effectively managing its costs

How can a company evaluate whether it is effectively managing its costs?

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Q: By what criteria would management determine whether to proceed with processing at

By what criteria would management determine whether to proceed with processing at each decision point in a joint production process?

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Q: Describe sunk costs. Are there circumstances in which sunk costs are

Describe sunk costs. Are there circumstances in which sunk costs are relevant to decisions? Discuss.

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Q: Why is it not possible simply to take a cost management system

Why is it not possible simply to take a cost management system “off the shelf. ”?

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Q: What is a capital asset? How is it distinguished from other

What is a capital asset? How is it distinguished from other assets?

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Q: When the algebraic method of allocating support department costs is used,

When the algebraic method of allocating support department costs is used, total costs for each support department increase from what they were prior to the allocation. Why does this occur, and how are...

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Q: High Frequency manufactures and sells MP-3 players. Information on

High Frequency manufactures and sells MP-3 players. Information on last year’s operations (sales and production of the 2010 model) follows. Sales price per unit ………………………………………………….$70 Costs per unit...

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Q: Wisconsin Metal Co. produces 12.5-gauge barbed wire

Wisconsin Metal Co. produces 12.5-gauge barbed wire that is retailed through farm supply companies. Presently, the company has the capacity to produce 100,000 tons of wire per year. It is operating at...

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Q: How are time lines helpful in evaluating capital projects?

How are time lines helpful in evaluating capital projects?

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Q: What is measured by the internal rate of return? When is

What is measured by the internal rate of return? When is a project considered acceptable using this method?

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Q: Under what circumstances is linear programming needed to analyze a scarce resource

Under what circumstances is linear programming needed to analyze a scarce resource decision? Appendix: Most companies combine many materials and various classes of direct labor to produce goods. In s...

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Q: What is the objective function in a linear programming model? What

What is the objective function in a linear programming model? What are the two common types of objective functions? Appendix: Most companies combine many materials and various classes of direct labor...

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Q: What is dual pricing? What is the intended effect of dual

What is dual pricing? What is the intended effect of dual pricing on the performance of each division affected by the dual price?

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Q: Because depreciation is not a cash flow, why is it important

Because depreciation is not a cash flow, why is it important in capital budgeting evaluation techniques that use discounted cash flows?

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Q: Why are post investment audits performed? When should they be performed

Why are post investment audits performed? When should they be performed?

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Q: What does the payback method measure? What are its major weaknesses

What does the payback method measure? What are its major weaknesses?

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Q: What is the distinction between a return of capital and a return

What is the distinction between a return of capital and a return on capital?

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Q: What does the term relevance mean in the context of making management

What does the term relevance mean in the context of making management decisions?

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Q: For The Ages Inc. produces solid-oak umbrella stands.

For The Ages Inc. produces solid-oak umbrella stands. Each stand is handmade and hand finished using the finest materials available. The firm has been operating at capacity (2,000 stands per year) for...

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Q: Go to the Ernst & Young Web site to find information on

Go to the Ernst & Young Web site to find information on the 2009 Transfer Pricing Global Reference Guide. Choose five countries (other than the United States) and compare and contrast the transfer pri...

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Q: Operations of Borderland Oil Drilling Services are separated into two geographical divisions

Operations of Borderland Oil Drilling Services are separated into two geographical divisions: United States and Mexico. The operating results of each division for 2010 are as follows: Corporate fixed...

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Q: Lakeland Financial Services provides outsourcing services for three areas: payroll,

Lakeland Financial Services provides outsourcing services for three areas: payroll, general ledger (GL), and tax compliance. The company is currently contemplating the elimination of the GL area becau...

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Q: Ludmilla Sanches is a college student with a food budget of $

Ludmilla Sanches is a college student with a food budget of $250 per month. She wants to get a certain level of nutritional benefits from the food she buys. The following table lists the foods she can...

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Q: Your roommate, Jill Blalock, purchased a new portable DVD player

Your roommate, Jill Blalock, purchased a new portable DVD player just before this school term for $80. Shortly after the semester began, her new DVD player was crushed by an errant “flying plant” duri...

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Q: Certain production equipment used by Cincinnati Chemical has become obsolete relative to

Certain production equipment used by Cincinnati Chemical has become obsolete relative to current technology. The company is considering whether it should keep or replace its existing equipment. To aid...

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Q: Orlando Auto Accessories produces pickup truck bumpers that it sells on a

Orlando Auto Accessories produces pickup truck bumpers that it sells on a wholesale basis to new car retailers. The average bumper sales price is $160. Normal annual sales volume is 300,000 units, whi...

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Q: Washington Cannery makes three products from a single joint process. For

Washington Cannery makes three products from a single joint process. For 2010, the cannery processed all three products beyond split-off. The following data were generated for the year: Analysis of 2...

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Q: In a joint process, Sylvia’s Styles produces precut fabrics for three

In a joint process, Sylvia’s Styles produces precut fabrics for three products: dresses, jackets, and blouses. Joint cost is allocated on the basis of relative sales value at split-o...

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Q: Assume that you are about to graduate from your university and are

Assume that you are about to graduate from your university and are deciding whether to apply for graduate school or enter the job market. To help make the decision, you have gathered the following dat...

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Q: English Realty separates its activities into two operating divisions: Rentals and

English Realty separates its activities into two operating divisions: Rentals and Sales. In March 2010, the firm spent $21,000 for general company promotions (as opposed to advertisements for specific...

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Q: Ring Corporation, which began operations in 2010, produces gasoline and

Ring Corporation, which began operations in 2010, produces gasoline and a gasoline by-product. The following information is available pertaining to 2010 sales and production: Total production costs to...

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Q: Abrula Archery provides archery training for children and adults. During 2010

Abrula Archery provides archery training for children and adults. During 2010, the camp had the following operating data: Direct instructional costs for 2010 were $120,000; overhead costs for the two...

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Q: Indicate whether each item that follows is associated with (1)

Indicate whether each item that follows is associated with (1) the realized value approach or (2) the net realizable value approach. a. Is easier to apply b. Is used to reduce the cost of main product...

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Q: Your employer engages in numerous joint processes that produce significant quantities and

Your employer engages in numerous joint processes that produce significant quantities and types of by-product. You have been asked to give a report to management on the best way to account for by-prod...

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Q: Bethany Lutrell’s uncle has asked her to take over the family poultry

Bethany Lutrell’s uncle has asked her to take over the family poultry processing plant. Provide Lutrell, who graduated in engineering, answers to the following issues: a. What are the important questi...

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Q: Dover Studios shot hundreds of hours of footage that cost $20

Dover Studios shot hundreds of hours of footage that cost $20,000,000. From this footage, the company produced two movies: Greedy CEOs and Greedy CEOs: The Sequel. The sequel used better sound effects...

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Q: The Bishop’s Falls Lumber Corporation harvests lumber and prepares it for sale

The Bishop’s Falls Lumber Corporation harvests lumber and prepares it for sale to wholesalers of lumber and wood products. The main product is finished lumber, which is sold to wholesale construction...

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Q: Potato skins are generated as a by-product in making potato

Potato skins are generated as a by-product in making potato chips and frozen hash browns at Zeena Foods. The skins are sold to restaurants for use in appetizers. Processing and disposal costs associat...

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Q: Hammatt Inc. provides a variety of services for commercial clients.

Hammatt Inc. provides a variety of services for commercial clients. Hammatt destroys any paper client records after seven years and the shredded paper is sold to a recycling company. The net realizabl...

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Q: Diamond Jim’s makes and sells class rings for local schools. Operating

Diamond Jim’s makes and sells class rings for local schools. Operating information is as follows: Selling price per ring ………………………………………………….$600 Variable cost per ring Rings and stones ……………………...

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Q: Michigan Timber uses a joint process to manufacture two grades of wood

Michigan Timber uses a joint process to manufacture two grades of wood: A and B. During October 2010, the company incurred $12,000,000 of joint production cost in producing 18,000,000 board feet of Gr...

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Q: Cal-C-Yum produces milk and sour cream from a

Cal-C-Yum produces milk and sour cream from a joint process. During June, the company produced 120,000 quarts of milk and 160,000 pints of sour cream (there are two pints in a quart). Sales value at s...

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Q: FINS produces three products from its fish farm: fish, fish

FINS produces three products from its fish farm: fish, fish oil, and fish meal. During July 2010, FINS produced the following average quantities of each product from each pound (16 ounces) of fish pro...

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Q: MediaForum has three operating groups: Games, News, and Documentaries

MediaForum has three operating groups: Games, News, and Documentaries. In May, the company incurred $24,000,000 of joint cost for facilities and administration. May revenues and separate production co...

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Q: Keiffer Production manufactures three joint products in a single process. The

Keiffer Production manufactures three joint products in a single process. The following information is available for August 2010: Allocate the joint cost of $558,000 to the production based on the a....

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Q: All-A-Buzz makes three products from a joint production

All-A-Buzz makes three products from a joint production process using honey. Joint cost for the process in 2010 is $123,200. Each container of honey butter, jam, and syrup, respectively, contains 16...

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Q: A few years after graduation, Ibrahim and four of his friends

A few years after graduation, Ibrahim and four of his friends from college organized an engineering consulting business called 5Q. All five individuals had earned degrees in engineering fields and wer...

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Q: In recent years, many firms have been forced to restate the

In recent years, many firms have been forced to restate the earnings that they previously reported in their public financial reports. A number of these restatements have been linked to attempts by top...

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Q: The use of stock options to compensate executives has become much more

The use of stock options to compensate executives has become much more common in recent years. The increased use of options to compensate executives is based on efforts of boards of directors to align...

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Q: Susan Cheng is the CFO of Automotive Solutions, a small company

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Star International manufactures after-market parts for lawn mowers and recreational all-terrain vehicles (ATVs). Because of the growth in the ATV market, sales of Star International’s products have gr...

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Q: Elba Division of Haimes Industries manufactures product #54B89. Three-

Elba Division of Haimes Industries manufactures product #54B89. Three-fourths of the production is transferred to the Crete Division of Haimes Industries; the remainder is sold externally for $67 per...

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Prior to the 2009 Super Bowl, a Phoenixarea retailer ordered 50,000 T-shirts that read: Arizona Cardinals—2009 Super Bowl Champs. The company paid $11.75 for each of the custom T-shirts. Following the...

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Peyvandi Co., a profit center of California Enterprises, manufactures Product BP3751-9S to sell internally to other company divisions as well as externally. One unit of Product BP3751-9S sells for $72...

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Great Taste Food Stores operates 20 large supermarkets in the East. Each store is evaluated as a profit center, and store managers have complete control over their purchases and inventory policy. Comp...

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Walsdorf Company’s information technology department is developing a support department transfer price based on minutes of computer time. For 2010, its expected capacity was 700,000 minutes, and theor...

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Use the Internet to identify a multinational company encountering tax problems related to transfer pricing between its organizational units in different countries. Prepare a brief discussion of the is...

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Many companies are trying to determine the best organizational structure for information technology (IT) operations. Although IT operations had been decentralized in the past, there has been a growing...

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For 2010, Wagner Company planned to sell 460,000 units at a $37 selling price. In early 2011, the marketing manager was asked to explain why budgeted revenue had not been achieved. Investigation revea...

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Q: You have asked your sales manager to explain why budgeted revenues for

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Schulz GmbH, a German company, set an 18 percent target rate of return for its U.S. division for 2010. For 2010, the U.S. division generated $39,000,000 of revenue on average assets of $25,000,000. Th...

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EVA is used by top management at College Learning Technologies to measure and evaluate the performance of segment managers. The company’s cost of capital is 11 percent. In 2010, its Audio/Visual subsi...

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Q: Following is a list of transactions that affected one division within a

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Q: Jeannie South is a division manager of Montana Manufacturing Inc. She

Jeannie South is a division manager of Montana Manufacturing Inc. She is in the process of evaluating a $4,000,000 investment. The following net annual increases, before depreciation, in divisional in...

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Q: In recent years, salaries for chief financial officers (CFOs)

In recent years, salaries for chief financial officers (CFOs) of large U.S. corporations averaged only about 20 percent of the total CFO compensation package; the other 80 percent is performance-based...

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Q: The company president has asked you, as the new controller,

The company president has asked you, as the new controller, to comment on any deficiencies of the firm. After saying you believe that the firm needs long-run performance measurements, the president sa...

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Q: For the most recent fiscal year, the Northern Division of Eastern

For the most recent fiscal year, the Northern Division of Eastern Corporation generated an asset turnover ratio of 4 and a profit margin (as measured by the segment margin) ratio of 4 percent on sales...

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Q: In discussing your cost accounting class with friends, you explained that

In discussing your cost accounting class with friends, you explained that you were currently studying methods of evaluating capital investments. You mentioned that most of these methods rely upon cash...

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Q: Bill’s Cabinets sells a product for $360 per unit. The

Bill’s Cabinets sells a product for $360 per unit. The company’s variable cost per unit is $60 for direct material, $50 per unit for direct labor, and $34 per unit for overhead. Annual fixed productio...

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Rockport Municipal Marina is considering adding a new dock to accommodate large yachts. The dock would cost $700,000 and would generate $144,000 annually in new cash inflows. Its expected life would b...

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Natural Foods is considering the purchase of new food processing technology, which would cost $900,000 and would generate $150,000 in annual cost savings. No salvage is expected on the technology at t...

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Maine Trucking provides truck freight services throughout the northeast United States. The firm is considering an investment in a mainframe computer and communications software, which would cost $1,00...

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Q: Management of Frisco Films is considering the following capital projects:

Management of Frisco Films is considering the following capital projects: Assume that all projects have no salvage value and that the firm uses a discount rate of 10 percent. Management has decided t...

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Mountain Mist Inc.’s cost of capital is 11 percent. In 2010, one of the firm’s divisions generated an EVA of $1,130,000. The fair market value of the capital investment in that division was $29,500,00...

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For each of the following assumptions that underlie the capital project evaluation methods, indicate to which method, or methods, the assumption applies. Consider all of the following methods: payback...

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Q: For each of the following limitations of the capital project evaluation methods

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Q: The contribution margins for three different products are $19.00

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Q: The variable costs for four different products are $9.30

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Portsmouth Port Services creates and maintains shipping channels at various ports around the world. The company is considering the purchase of a $72,000,000 ocean-going dredge that has a 5-year life a...

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Q: The following financial data have been determined from analyzing the records of

The following financial data have been determined from analyzing the records of Tim’s Brake Co. (a one-product firm): Contribution margin per unit ………………………$ 50 Variable cost per unit …………………………………….4...

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Q: Data for the three autonomous divisions of Arizona Mining, Inc.

Data for the three autonomous divisions of Arizona Mining, Inc. for fiscal year 2010 follow. Compute the return on investment for each division.

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Lois Jilg, the CEO of Minnesota Manufacturing, was concerned about the amount the firm had spent on fuel and energy costs in the previous quarter. Jilg called Alice Briggs, the CFO, and expressed her...

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Duggan Mfg. began implementing a just-intime inventory system several months ago. The production and purchasing managers, however, have not seen any dramatic improvements in throughput. The managers h...

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The supply management director at Texas Oil Field Services has contracted to purchase $2 million of spare parts that are currently unneeded. His rationale for the contract was that the parts were curr...

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Tonight you are going to dine at the restaurant of your choice. To choose the restaurant, you are going to consider the fact that some manage their food production on a push basis and others manage th...

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Everyone in your company seems excited about the suggestion that the firm implement a JIT system. Being a cautious person, however, your company president has asked you to write a report describing si...

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Q: Recently you read an article regarding a new product introduced late last

Recently you read an article regarding a new product introduced late last year by 3G Inc., a consumer products company. The article’s author, although praising 3G Inc. for providing the marketplace wi...

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StatPro has just been presented the following market and production estimates on Product X27, which has been under development in the company. Use the concept of target costing to integrate the marke...

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Joe Giles is a product engineer for a firm that makes various home and office electronic gadgets. Some of this company’s products have long product life cycles and others have life cycles that are as...

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Utah Utensil has developed a new kitchen utensil. The firm has conducted significant market research and estimated the following pattern for sales of the new product: If the firm desires to net $3.50...

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Q: Acquisition of new technology is often a perilous event for firms.

Acquisition of new technology is often a perilous event for firms. The successful acquisition and implementation of new systems require much more than merely purchasing hardware and software. For exam...

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Q: ERP software programs allow tighter linkages within a supply chain than were

ERP software programs allow tighter linkages within a supply chain than were possible with earlier generations of software. Consider the possibility of a tighter link between the marketing and enginee...

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Q: ERP software can facilitate the sharing of information throughout the supply chain

ERP software can facilitate the sharing of information throughout the supply chain. For example, an Internet storefront can be used to interact downstream with the final customer. Sales data gathered...

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Q: You have been hired as a consultant by a company that manufactures

You have been hired as a consultant by a company that manufactures plastic and resin toys. Company management is presently discussing ways to improve product quality. Evidence of quality problems is e...

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Q: Following are descriptions of environmental waste situations. Identify the environmental strategy

Following are descriptions of environmental waste situations. Identify the environmental strategy you would select to deal with each situation and discuss your logic. a. A relatively small amount of l...

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Q: Colleges and universities have a variety of internal and external customers.

Colleges and universities have a variety of internal and external customers. Use a team of three or four individuals to answer the following: a. Who are three internal and two external customers of a...

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Q: Dayton Industrial produces a variety of chemicals that are used in an

Dayton Industrial produces a variety of chemicals that are used in an array of commercial applications. One popular product, a chemical solvent, contains two very caustic acids, A and B, each of which...

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Q: Financial professionals are at the forefront in adopting new technologies, many

Financial professionals are at the forefront in adopting new technologies, many of which comprise the core of business strategies. Discuss how the increasing reliance of business on technology coupled...

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Q: Business process reengineering (BPR) can be an effective tool to

Business process reengineering (BPR) can be an effective tool to aid in achieving breakthroughs in quality improvement and cost management. Total quality management (TQM) is another philosophy about a...

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Q: In the past decade, the Japanese economy has fallen from its

In the past decade, the Japanese economy has fallen from its lofty levels of the 1980s. As a consequence, many Japanese companies have been forced to downsize. In most companies, one of two strategies...

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Q: In recent years, the financial press reported story after story regarding

In recent years, the financial press reported story after story regarding downsizing and layoffs in the U.S. auto industry. Often the stories discussed multiple rounds of downsizing events (such as th...

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Q: In 2007, Nike settled a class action lawsuit filed on behalf

In 2007, Nike settled a class action lawsuit filed on behalf of 400 African American employees of the company’s Niketown store in Chicago. One of the allegations in the suit was that the store segrega...

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Q: With an ERP system, a company can develop a “storefront

With an ERP system, a company can develop a “storefront” on the Internet. Through its storefront connection with customers, the company can gather much information about the market and the demand for...

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Q: Slydell Industries produces a variety of consumer goods including lamps, home

Slydell Industries produces a variety of consumer goods including lamps, home office desks, and storage cabinets. Many products sold by the company are purchased disassembled, and then assembled by th...

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Q: The following graphic indicates where each part of the dollar that a

The following graphic indicates where each part of the dollar that a student pays for a new college textbook goes: Students are frustrated with the cost of their textbooks, but most publishers would...

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Q: A list of committed and discretionary costs follows. Annual audit

A list of committed and discretionary costs follows. Annual audit fees Internal audit salaries Annual report preparation and printing Marketing research Building flood insurance Preventive maintenance...

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Q: In many large business organizations today, it is common that the

In many large business organizations today, it is common that the financial experts are physically located separately from operational personnel. One effect of this isolation is that the people with f...

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Q: Temporary or part-time employees may be used rather than full

Temporary or part-time employees may be used rather than full-time employees in each of the following situations: a. To teach undergraduate accounting courses at a university. b. To serve as security...

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Q: The managers and partners [who] were interviewed listed reduced manpower

The managers and partners [who] were interviewed listed reduced manpower costs as the major advantage for utilizing paraprofessionals [in CPA firms]. It seems that these savings were realized in a num...

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Q: Sue and Jim Hansen are preparing their household financial budget for December

Sue and Jim Hansen are preparing their household financial budget for December. They have started with their November budget and are adjusting it to reflect the difference between November and Decembe...

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Q: Lucy Liu has been asked to monitor the efficiency and effectiveness of

Lucy Liu has been asked to monitor the efficiency and effectiveness of a newly installed machine. The specialized machine has been guaranteed by the manufacturer to package 2,000 engine gaskets per ki...

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Q: Top management of Capital Services observed that the budget for the EDP

Top management of Capital Services observed that the budget for the EDP department had been growing far beyond what was anticipated for the past several years. Each year, the EDP manager would demonst...

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Q: The founder and president of the Institute for Healthcare Improvement, Donald

The founder and president of the Institute for Healthcare Improvement, Donald Berwick, is convinced that the U.S. health-care system can reduce costs by 30 percent while improving overall quality—just...

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Q: Birmingham Chemical evaluates performance in part through the use of flexible budgets

Birmingham Chemical evaluates performance in part through the use of flexible budgets. The selling expense budgets at three activity levels within the relevant range follow. The following assumptions...

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Q: Multinational firms domiciled in the United States do not have to pay

Multinational firms domiciled in the United States do not have to pay U.S. income taxes on foreign earnings, unless those earnings are returned to the United States. Accordingly, the U.S. income tax s...

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Q: As the economy entered the new millennium, Internet companies were competing

As the economy entered the new millennium, Internet companies were competing head to head in many markets with established, traditional retailers for the consumer’s dollar. In comparing the financial...

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Q: Jose Martin founded a firm that manufactures innovative toys. Since its

Jose Martin founded a firm that manufactures innovative toys. Since its founding in 2000, the firm has experienced steady growth. However, in the past six months, the firm’s products were featured on...

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Q: Open-book management is consistent with another, larger trend in

Open-book management is consistent with another, larger trend in accounting—increased transparency of financial results. This trend follows a period in which many U.S. firms were guilty of generating...

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Q: Choose letter C (for committed cost) or D (for

Choose letter C (for committed cost) or D (for discretionary cost) to indicate the type of each of the following described costs. Explain the rationale for your choice. a. Control is first provided du...

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Q: The financial results for the Business Education Department of Omega Educational Services

The financial results for the Business Education Department of Omega Educational Services Corporation for November 2010 are presented in the schedule at the end of this problem. Caroline Roper, presid...

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Q: Your employer, Lawson Brake Systems, implemented an e-procurement

Your employer, Lawson Brake Systems, implemented an e-procurement system last year for purchasing nonoperating inputs. The installation has been such a success that the firm is now considering using t...

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Q: As an accounting intern working for your local police department, you

As an accounting intern working for your local police department, you learn that the department is considering starting a citizen’s police academy. In recent years, there have been events that have cr...

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Q: After reviewing financial results for 2010, Chicago Cannery’s president sent the

After reviewing financial results for 2010, Chicago Cannery’s president sent the following e-mail to his CFO and controller, Willie Logan. Dear Willie: I’m disappointed in the financial results for th...

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Q: Wilson Ceramics manufactures holiday ornaments in its sole plant located in Wisconsin

Wilson Ceramics manufactures holiday ornaments in its sole plant located in Wisconsin. Because the demand for the company’s products is very seasonal, the company builds inventory throughout the first...

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Q: In mid-2007, numerous findings of unsafe products produced in

In mid-2007, numerous findings of unsafe products produced in China were disclosed, including pet food, fish, toothpaste, toys, and fireworks. In early 2008, the FDA pointed to Chinese companies as th...

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Q: Elijah Electronics makes PDAs. The firm produced 45,000 PDAs

Elijah Electronics makes PDAs. The firm produced 45,000 PDAs during its first year of operation. At year-end, it had no inventory of finished goods. Elijah sold 42,300 units through regular market cha...

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Q: Golf courses are demanding in their quest for high-quality carts

Golf courses are demanding in their quest for high-quality carts because of the critical need for lawn maintenance. Antaris Co. manufactures golf carts and is a recognized leader in the industry for q...

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Q: BreatheWell is very aware that its scuba diving tanks must be of

BreatheWell is very aware that its scuba diving tanks must be of the highest quality to maintain its reputation of excellence and safety. The company has retained you as a consultant and you have sugg...

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Q: Laura Johnson, Technical Instruments Division manager of Worldwide Electronics, attended

Laura Johnson, Technical Instruments Division manager of Worldwide Electronics, attended a 30-minute seminar on open book management recently. As a result of the seminar, she decided to implement some...

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Q: Assume that you are in charge of Physicians Social Service Agency,

Assume that you are in charge of Physicians Social Service Agency, which provides counseling services to low-income families. The agency’s costs have been increasing with no corresponding increase in...

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Q: Houston Health Clinic has used funds during 2010 for the following purposes

Houston Health Clinic has used funds during 2010 for the following purposes: a. Sent two cost accounting staff members to seminars on activity-based costing. b. Purchased a kidney dialysis machine. c....

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Q: Choose an organization with which you have a solid familiarity (this

Choose an organization with which you have a solid familiarity (this may even be your fraternity, sorority, or college). You have been placed in charge of initiating a quality culture in that organiza...

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Q: Many companies are becoming ISO certified because of customer requests and because

Many companies are becoming ISO certified because of customer requests and because of the need to compete in the global marketplace. a. Why do you think customers are insisting that suppliers meet ISO...

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Q: In 2008, pharmaceutical company Genentech withdrew its psoriasis drug Raptiva from

In 2008, pharmaceutical company Genentech withdrew its psoriasis drug Raptiva from the market because it was linked to a rare but often fatal brain disorder (progressive multifocal leukoencephalopathy...

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Q: Three possible goals for a business are to (1) maximize

Three possible goals for a business are to (1) maximize profits, (2) maximize shareholder wealth, and (3) satisfy customer wants and needs. If goal (1) or (2) is chosen, the primary measurements of “s...

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Q: Go to the Web site for the Malcolm Baldrige National Quality Award

Go to the Web site for the Malcolm Baldrige National Quality Award and find the answers to the following questions: a. When and why were the health and education categories established? b. How do the...

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Q: Altazar Electronics has identified the following 2010 warranty costs for one of

Altazar Electronics has identified the following 2010 warranty costs for one of the company products. The information has been categorized according to the type of product failure. a. Rearrange the r...

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Q: Nanotechnology may be the future of manufacturing. The term refers to

Nanotechnology may be the future of manufacturing. The term refers to any area of research that deals with objects one-tenth the size of an atom. According to the Center for Responsible Nanotechnology...

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Q: In early 2007, Burger King, under pressure from animal rights

In early 2007, Burger King, under pressure from animal rights activists including People for Ethical Treatment of Animals (PETA), announced it would start purchasing pork and eggs from suppliers that...

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Q: Horizon Resins has experienced serious problems as a result of attempts to

Horizon Resins has experienced serious problems as a result of attempts to manage its impacts on the environment. To illustrate the problems, consider the following events, which occurred during the p...

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Q: Indicate by letter which of the three categories apply to the following

Indicate by letter which of the three categories apply to the following features of just-in-time systems. Use as many letters as appropriate. D = desired intermediate result of using JIT U = ultimate...

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Q: Cosmo Industries recorded the following transactions for its first month of operations

Cosmo Industries recorded the following transactions for its first month of operations: Because Cosmo employs JIT, the company’s CEO has asked how the accounting system could be sim...

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Q: The chapter discusses three approaches to managing environmental costs. Some strategies

The chapter discusses three approaches to managing environmental costs. Some strategies deal with hazardous waste only after it has been produced. a. Does a firm have any ethical obligations not to pr...

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Q: Most accounting professionals would agree that the accounting profession has developed effective

Most accounting professionals would agree that the accounting profession has developed effective tools for measuring and reporting events involving tangible assets. Most might also agree that the prof...

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Q: Allridge University formed a new department to recruit top out-of

Allridge University formed a new department to recruit top out-of-state students. The department’s funding for 2010 was $1,600,000, and the department was given the goal of recruiting 600 new nonresid...

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Q: One of the key drivers of downsizing and outsourcing is globalization.

One of the key drivers of downsizing and outsourcing is globalization. Recently, the Organization for Economic Cooperation and Development (OECD) acknowledged “growing unease about globalization.” The...

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Q: Most experienced CEOs have seen command-and control management come and

Most experienced CEOs have seen command-and control management come and go. They’ve been through downsizing and rightsizing. Now they’re seeing most companies (their own included) working to recast th...

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Q: Automakers provide an interesting study in cost management strategies. General Motors

Automakers provide an interesting study in cost management strategies. General Motors often provides a contrast to other U.S. manufacturers. For example, Chrysler and Ford opted to outsource many prod...

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Q: Dayna Moore, CEO of Layton Transmissions, sat dejected in her

Dayna Moore, CEO of Layton Transmissions, sat dejected in her chair after reviewing the 2011 first-quarter financial reports on one of the company’s core products: a standard, five-speed transmission...

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Q: Find a company’s Web site that provides information on the characteristics that

Find a company’s Web site that provides information on the characteristics that are desired for that company when establishing long-term/preferred supplier relationships. a. What characteristics are l...

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Q: Borders and Amazon .com are competitors in vending books and other

Borders and Amazon .com are competitors in vending books and other consumer items. The two are differentiated to an extent by their marketing strategies. Although Amazon.com relies exclusively on Inte...

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Q: Employees expect that all parties will honor their explicit and implicit obligations

Employees expect that all parties will honor their explicit and implicit obligations. Distrust occurs when these obligations are not met or when the parties have different expectations regarding the o...

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Q: Strategic alliances and joint ventures are being used with increasing frequency to

Strategic alliances and joint ventures are being used with increasing frequency to exploit market opportunities. Virtually all larger firms are involved in several to many strategic alliances. a. From...

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Q: What is meant by the term quality? In defining quality,

What is meant by the term quality? In defining quality, from what two perspectives can a definition be formulated? Why are both important?

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Q: Why does the general control model begin with planning activities?

Why does the general control model begin with planning activities?

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Q: Wisconsin Wire (WW) has implemented a just-in-

Wisconsin Wire (WW) has implemented a just-in-time inventory system for the production of its insulated wire. Inventories of raw material and work in process are so small that WW uses a Raw and In-Pro...

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Q: At what points in time is cost control for any specific organizational

At what points in time is cost control for any specific organizational activity exercised? Why are these points of cost control important?

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Q: What factors can cause costs to change? Which of these factors

What factors can cause costs to change? Which of these factors are subject to cost containment and which are not? What creates the difference in controllability?

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Q: Differentiate between committed and discretionary costs. Could a cost be considered

Differentiate between committed and discretionary costs. Could a cost be considered discretionary by one firm and committed by another? If so, discuss and give an example. If not, discuss why not.

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Q: Why is it often difficult to measure the output of activities funded

Why is it often difficult to measure the output of activities funded by discretionary costs?

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Q: Define the terms efficiency and effectiveness and distinguish one from the other

Define the terms efficiency and effectiveness and distinguish one from the other. Why is measuring the efficiency of discretionary costs often difficult? Explain how the effectiveness of discretionary...

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Q: Assume that Honda Motor Co. Ltd. paid for a full

Assume that Honda Motor Co. Ltd. paid for a full page advertisement in The Wall Street Journal. The ad neither discussed any Honda products nor referred to year-end earnings or a new stock issuance. I...

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Q: In the production–sales cycle, what are the four points

In the production–sales cycle, what are the four points at which quality costs are incurred? How are these costs interrelated through these points?

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Q: Why do firms hold cash balances? Why do some firms hold

Why do firms hold cash balances? Why do some firms hold larger cash balances than other firms?

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Q: How does strategic cost management link information to corporate strategies?

How does strategic cost management link information to corporate strategies?

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Q: What are the four generic approaches to reducing uncertainty? Describe the

What are the four generic approaches to reducing uncertainty? Describe the context in which each approach is typically used.

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Q: Recent years have been characterized by high, and volatile, energy

Recent years have been characterized by high, and volatile, energy prices. Some critics of the energy industry suggest that the oil companies’ use of JIT inventory management has contributed to the vo...

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Q: What factors create uncertainty when estimating future costs and revenues?

What factors create uncertainty when estimating future costs and revenues?

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Q: Compare and contrast the EFQM Excellence Model with the Malcolm Baldrige National

Compare and contrast the EFQM Excellence Model with the Malcolm Baldrige National Quality Award criteria. Most large companies view their markets on an international rather than a domestic basis. To...

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Q: Why might a common set of global quality standards be needed or

Why might a common set of global quality standards be needed or desirable? Most large companies view their markets on an international rather than a domestic basis. To compete effectively in a global...

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Q: Compare and contrast the eight characteristics that constitute overall quality from the

Compare and contrast the eight characteristics that constitute overall quality from the customer’s perspective with the three additional characteristics that constitute service quality from the custom...

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Q: Describe four types of benchmarking. Use the Internet to find a

Describe four types of benchmarking. Use the Internet to find a company that has engaged in benchmarking. Describe the type of benchmarking used and the benefits and costs of the company’s experience....

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Q: What is TQM? What are the four important tenets of TQM

What is TQM? What are the four important tenets of TQM, and why are they important?

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Q: New England Automotive manufactures aftermarket automobile parts that are sold in a

New England Automotive manufactures aftermarket automobile parts that are sold in a variety of outlets including auto parts stores and discount retailers. The following account data (in millions) have...

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Q: What is the Malcolm Baldrige National Quality Award? Why would an

What is the Malcolm Baldrige National Quality Award? Why would an organization apply for that award?

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Q: What is the theory of constraints? How is this concept appropriate

What is the theory of constraints? How is this concept appropriate for manufacturing and service companies?

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Q: How are ordering costs and carrying costs related? Companies making

How are ordering costs and carrying costs related? Companies making purchasing (rather than production) decisions often compute the economic order quantity (EOQ), which represents the least costly num...

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Q: Gale’s Garden grows and sells a variety of indoor and outdoor plants

Gale’s Garden grows and sells a variety of indoor and outdoor plants and garden vegetables. One of the firm’s more popular vegetables is a red onion, which has an a...

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Q: What is Pareto inventory analysis? Why do A items and C

What is Pareto inventory analysis? Why do A items and C items warrant different inventory control methods? What are some methods that can be employed to control C items? Companies making purchasing (r...

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Q: Differentiate between the push and pull systems of production. Is JIT

Differentiate between the push and pull systems of production. Is JIT a push or a pull system?

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Q: How does a product’s life cycle stage influence production cost management?

How does a product’s life cycle stage influence production cost management?

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Q: What is target costing, and how is it useful in assessing

What is target costing, and how is it useful in assessing a product’s total life cycle cost?

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Q: Why does the development stage have such a significant influence on a

Why does the development stage have such a significant influence on a product’s profitability over its life cycle?

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Q: What is kaizen costing, and how does it differ from target

What is kaizen costing, and how does it differ from target costing?

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Q: What are the primary goals of the JIT philosophy, and how

What are the primary goals of the JIT philosophy, and how does JIT attempt to achieve these goals?

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Q: You are employed by a firm engaging in heavy manufacturing. Its

You are employed by a firm engaging in heavy manufacturing. Its direct materials are sourced globally, but its non operating inputs are sourced from a variety of U.S. vendors. You have been charged wi...

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Q: What changes must occur in a production environment to effectively implement JIT

What changes must occur in a production environment to effectively implement JIT? Why are these changes necessary?

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Q: How would switching from a traditional manufacturing system to a flexible manufacturing

How would switching from a traditional manufacturing system to a flexible manufacturing system affect a firm’s inventory and production control systems?

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Q: IMeg manufactures various electronic assemblies that are sold primarily to computer manufacturers

IMeg manufactures various electronic assemblies that are sold primarily to computer manufacturers. IMeg’s reputation has been built on quality, timely delivery, and products that are consistently on t...

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Q: What is business process reengineering? Does it lead to radical or

What is business process reengineering? Does it lead to radical or modest changes in business practices? Discuss.

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Q: Describe the three generic strategies for dealing with the environmental effects of

Describe the three generic strategies for dealing with the environmental effects of operations. Is one of the strategies always preferred to the others? Discuss.

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Q: Describe “downsizing,” its causes, and its primary risks.

Describe “downsizing,” its causes, and its primary risks.

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Q: How has the globalization of firms affected the diversity of their employees

How has the globalization of firms affected the diversity of their employees? Why has increased diversity put an additional burden on accounting systems?

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Q: Besides increasing globalization, what trends within the United States are causing

Besides increasing globalization, what trends within the United States are causing firms to seek more diversified workforces?

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Q: What is an enterprise resource planning (ERP) system? How

What is an enterprise resource planning (ERP) system? How do ERP systems improve on prior generations of information systems?

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Q: New strategic alliances are formed every day. What are they,

New strategic alliances are formed every day. What are they, and why are they increasingly being used by businesses?

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Q: Open-book management is a relatively new philosophy about the use

Open-book management is a relatively new philosophy about the use of information in organizations. Describe open-book management and how it differs philosophically from the traditional view of the man...

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Q: You have been assigned the task of projecting the cost of 2011

You have been assigned the task of projecting the cost of 2011 employee fringe benefits for your firm and have identified number of employees, total labor hours, and total labor cost as candidate inde...

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Q: How does the implementation of open-book management require an organization’s

How does the implementation of open-book management require an organization’s accountants to change their traditional practices?

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Q: Tyler Tubing’s management has been evaluating company policies with respect to control

Tyler Tubing’s management has been evaluating company policies with respect to control of costs of corrugated metal, one of the firm’s major component materials. The firm’s controller has gathered the...

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Q: How does the cost control system interact with the overall cost management

How does the cost control system interact with the overall cost management system?

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Q: In conducting activity analyses, the presence of certain activities indicates low

In conducting activity analyses, the presence of certain activities indicates low production process quality. List five of these activities.

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Q: Business process reengineering and downsizing often occur together. Why?

Business process reengineering and downsizing often occur together. Why?

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Q: Go to the Web site for the Malcolm Baldrige National Quality Award

Go to the Web site for the Malcolm Baldrige National Quality Award and find the questionnaire titled “Are We Making Progress?”. a. Download the questionnaire and answer the questions relative to your...

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Q: Choose one product and one service with which you are well acquainted

Choose one product and one service with which you are well acquainted. Indicate how the product and service each meet (or do not meet) the eight overall quality characteristics. For the service, indic...

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Q: What types of discretionary costs are subject to control as engineered costs

What types of discretionary costs are subject to control as engineered costs? Provide several examples.

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Q: In 2002, a green engineering case study about automobile emissions and

In 2002, a green engineering case study about automobile emissions and saving energy was performed. The study generated designs for both gasoline- and diesel-powered automobiles with the following cha...

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Q: How is technology affecting supply-chain purchasing practices and transaction costs

How is technology affecting supply-chain purchasing practices and transaction costs?

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Q: How can Pareto analysis help focus managerial efforts on reducing the costs

How can Pareto analysis help focus managerial efforts on reducing the costs of quality related problems?

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Q: Omaha Metal Products manufactures a variety of industrial products from stock metal

Omaha Metal Products manufactures a variety of industrial products from stock metal components. The firm is engaged in its annual process of budgeting costs and revenues for the coming year. The cost...

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Q: Assume that you are a management consultant who advises manufacturing firms regarding

Assume that you are a management consultant who advises manufacturing firms regarding production technologies. One of the hot issues you often discuss with management is whether a pull system or a pus...

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Q: What is a quality audit? Most large companies view their

What is a quality audit? Most large companies view their markets on an international rather than a domestic basis. To compete effectively in a global environment, companies must recognize the need for...

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Q: Assume that you are in the market for a new car.

Assume that you are in the market for a new car. Since your promotion at work, price is no object. You are considering purchasing a Porsche, but your spouse has suggested the purchase of a Kia. a. Wha...

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Q: Johnson Consumer Electronics operates in an industry in which the demand for

Johnson Consumer Electronics operates in an industry in which the demand for products is cyclical and often unpredictable. Discuss a strategy for dealing with uncertainty associated with the cycles th...

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Q: By building quality into a process rather than having quality inspections at

By building quality into a process rather than having quality inspections at the end of the process, certain job functions (such as that of quality control inspector) can be eliminated. Additionally,...

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Q: Idaho Industrial is a medium-size manufacturing corporation in a capital

Idaho Industrial is a medium-size manufacturing corporation in a capital-intensive industry. Currently, actual profits are not meeting expectations. As a result, investment funds are limited and hirin...

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Q: Use the Internet to find four definitions of quality. a

Use the Internet to find four definitions of quality. a. Compare and contrast each of the four definitions with specific emphasis on whether the definition includes conformity or customer orientation....

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Q: The following production information about quality costs has been gathered for June

The following production information about quality costs has been gathered for June 2010: Total defective units ……………………………………………..580 Number of units reworked ……………………………………380 Number of units return...

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Q: Your company is interested in developing information about quality but has a

Your company is interested in developing information about quality but has a traditional accounting system that does not provide such information directly. In a three- or four-person team, prepare a s...

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Q: Find The Benchmarking Exchange on the Internet. a. What

Find The Benchmarking Exchange on the Internet. a. What are the five most actively benchmarked business processes of members of the exchange? b. Why do you think benchmarking processes related to mana...

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Q: For a benchmark, assume that the average firm incurs quality costs

For a benchmark, assume that the average firm incurs quality costs in the following proportions: Prevention ……………………………………..25% Appraisal ……………………………………….25% Internal failure ……………………………..25% External...

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Q: Koss Corp. makes high-quality headphones for a variety of

Koss Corp. makes high-quality headphones for a variety of applications. Koss is a Milwaukee-based company but has significant manufacturing operations in China. When manufacturing operations were move...

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Q: Hartigay Manufacturing is evaluating its quality control costs for 2010 and preparing

Hartigay Manufacturing is evaluating its quality control costs for 2010 and preparing the budget for 2011. Quality costs incurred at the company for 2010 are as follows: Prevention costs …………………………………...

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Q: Seymour Inc. has prepared the following summary quality cost report for

Seymour Inc. has prepared the following summary quality cost report for 2010: Prevention costs …………………………………..$1,560,000 Appraisal costs ………………………………………1,800,000 Internal failure costs ……………………………..2,...

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Q: The accounting system for Amaldi Co. reflected the following quality costs

The accounting system for Amaldi Co. reflected the following quality costs for 2009 and 2010: a. Which of these are costs of compliance, and which are costs of noncompliance? b. Calculate the percent...

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Q: Forsythe Furniture has gathered the following data on its quality costs for

Forsythe Furniture has gathered the following data on its quality costs for 2009 and 2010: a. Compute the percentage change in the two quality cost categories from 2009 to 2010. b. Write a brief expl...

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Q: Sometimes a company, in its efforts to reduce costs, might

Sometimes a company, in its efforts to reduce costs, might also reduce quality. a. What kinds of costs could an organization reduce that would almost automatically lower product/service quality? b. If...

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Q: Rogal and Associates Legal Services hires full- and part time professional

Rogal and Associates Legal Services hires full- and part time professional employees. Full-time experienced staff can be hired for a salary of $60,000 per year; fringe benefit costs for each full-time...

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Q: Mark each of the following statements as true or false and explain

Mark each of the following statements as true or false and explain why the false statements are incorrect. a. Results benchmarking relies only on comparisons to firms within the same industry. b. SPC...

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Q: The call center of Wobegon Electric Company handles 1.2 million

The call center of Wobegon Electric Company handles 1.2 million calls per year. The average call requires six minutes of operator time and 40 percent of the calls require a supervisor to be involved f...

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Q: According to the 2008 J.D. Power and Associates Reports

According to the 2008 J.D. Power and Associates Reports, Porsche models have the fewest quality problems in the industry, with just 87 problems per 100 vehicles. Infiniti and Lexus products follow wit...

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Q: Rocky Natore, owner of Rocky’s Pizza, has a policy to

Rocky Natore, owner of Rocky’s Pizza, has a policy to put 36 slices of pepperoni on a large pizza. Natore recently hired two college students to work part-time making pizzas and decided to observe the...

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Q: What are the three costs associated with inventory? Explain each and

What are the three costs associated with inventory? Explain each and give examples.  

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Q: Diane Delbert operates a health food bakery that uses a special type

Diane Delbert operates a health food bakery that uses a special type of ground flour in one of its high-margin products. The bakery operates 365 days a year. Delbert finds that she seems to order ei...

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Q: Farm Fresh manufactures a variety of animal food products from alfalfa “

Farm Fresh manufactures a variety of animal food products from alfalfa “pellets.” The firm has determined that its EOQ is 80,000 pounds of pellets. Based on the EOQ, the firm’s ann...

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Q: Determine the carrying costs for an item costing $6.80

Determine the carrying costs for an item costing $6.80, given the following per-unit cost information: Storage cost …………………………&...

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Q: Compute annual estimated demand for a product if the economic order quantity

Compute annual estimated demand for a product if the economic order quantity is 1,600 units, carrying cost is $0.35 per unit, and ordering cost is $140.00 per order.  

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Q: UpTown Mfg. custom manufactures machine parts used by other companies.

UpTown Mfg. custom manufactures machine parts used by other companies. The following data relate to production of Part #33: Annual quantity produced in units …………&hellip...

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Q: The Cincinnati power plant that services all manufacturing departments of Eastern Mountain

The Cincinnati power plant that services all manufacturing departments of Eastern Mountain Engineering has a budget for the coming year. This budget has been expressed in the following monthly terms:...

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Q: The Svenson Corporation manufactures cellular modems. It manufactures its own cellular

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 a...

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Q: Adirondack Company makes chairs for outside living spaces. The company has

Adirondack Company makes chairs for outside living spaces. The company has been working on improving quality over the last year and wants to evaluate how well it has done on costs-of-quality (COQ) mea...

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Q: Safe Travel produces car seats for children from newborn to 2 years

Safe Travel produces car seats for children from newborn to 2 years old. Safe Travel’s only problem with its car seats was stitching in the straps. The problem can usually be detected and repaired dur...

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Q: iCover produces bags for carrying laptop computers. iCover sells 1,

iCover produces bags for carrying laptop computers. iCover sells 1,000,000 units each year at a price of $20 per unit and a contribution margin of 40%. To respond to customer complaints, iCover’s mang...

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Q: SpeedPrint manufactures and sells 18,000 high-technology printing presses

SpeedPrint manufactures and sells 18,000 high-technology printing presses each year. The variable and fixed costs of rework and repair are as follows: SpeedPrint’s current presses h...

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Q: TidyCar washes vehicles using a nohands approach. Business is good but

TidyCar washes vehicles using a nohands approach. Business is good but Jonathan, the manager, has noticed that customers complain because there are streaks on their vehicles at pickup. TidyCar warrant...

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Q: It’s a Dog’s World (IDW) makes toys for big breed

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...

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Q: The registration advisors at a small Midwestern university (SMU) help

The registration advisors at a small Midwestern university (SMU) help 4,200 students develop their class schedules and register for classes each semester. Each advisor works for 10 hours a day during...

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Q: Refer to the information presented in Exercise 19-25. The

Refer to the information presented in Exercise 19-25. The head of the registration advisors at SMU has decided that the advisors must finish their advising in 2 weeks (10 working days) and therefore m...

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Q: For the past two years, Worldwide Cell Phones (WCP)

For the past two years, Worldwide Cell Phones (WCP) has been working to improve the quality of its phones. Data for 2016 and 2017 follows (in thousands of phones): Required: 1. For each year, 2016 an...

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Q: Turnkey Manufacturing evaluates the performance of its production managers based on a

Turnkey 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 a...

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Q: Best Trim, a manufacturer of lawn mowers, predicts that it

Best Trim, a manufacturer of lawn mowers, predicts that it will purchase 204,000 spark plugs next year. Best Trim estimates that 17,000 spark plugs will be required each month. A supplier quotes a pri...

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Q: Wonder Line (WL) operates a megastore featuring sports merchandise.

Wonder Line (WL) operates a megastore featuring sports merchandise. It uses an EOQ decision model to make inventory decisions. It is now considering inventory decisions for its Los Angeles Galaxy socc...

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Q: Sportsman Textiles (ST) manufactures the Galaxy jerseys that Wonder Line

Sportsman Textiles (ST) manufactures the Galaxy jerseys that Wonder Line (WL) sells to its customers. ST has recently installed computer software that enables its customers to conduct “one-stop” purch...

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Q: The Fabric World sells fabrics to a wide range of industrial and

The Fabric World sells fabrics to a wide range of industrial and consumer users. One of the products it carries is denim cloth, used in the manufacture of jeans and carrying bags. The supplier for the...

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Q: Sk8 Company produces skateboards and purchases 20,000 units of a

Sk8 Company produces skateboards and purchases 20,000 units of a wheel bearing each year at a cost of $1 per unit. Sk8 requires a 15% annual rate of return on investment. In addition, the relevant car...

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Q: Alpha Company’s annual demand for its only product, XT-590

Alpha Company’s annual demand for its only product, XT-590, is 10,000 units. Alpha is currently analyzing possible combinations of relevant carrying cost per unit per year and relevant ordering cost p...

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Q: The Knot manufactures men’s neckwear at its Spartanburg plant. The Knot

The Knot manufactures men’s neckwear at its Spartanburg plant. The Knot is considering implementing a JIT production system. The following are the estimated costs and benefits of JIT production: a. A...

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Q: Grand Devices Corporation assembles handheld computers that have scaled-down capabilities

Grand Devices Corporation assembles handheld computers that have scaled-down capabilities of laptop computers. Each handheld computer takes 6 hours to assemble. Grand Devices uses a JIT production sys...

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Q: Assume the same facts as in Exercise 20-27, except

Assume the same facts as in Exercise 20-27, except that Grand Devices now uses a backflush costing system with the following two trigger points for making entries in the accounting system: â...

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Q: Assume the same facts as in Exercise 20-27, except

Assume the same facts as in Exercise 20-27, except now Grand Devices uses only two trigger points for making entries in the accounting system: â–  Completion of good finished units of...

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Q: Yummy Candy Company is considering purchasing a second chocolate dipping machine in

Yummy Candy Company is considering purchasing a second chocolate dipping machine in order to expand their business. The information Yummy has accumulated regarding the new machine is: Cost of the mac...

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Q: The Beach Comber is a take-out food store at a

The Beach Comber is a take-out food store at a popular beach resort. Sara Miller, owner of the Beach Comber, is deciding how much refrigerator space to devote to four different drinks. Pertinent data...

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Q: City Hospital, a nonprofit organization, estimates that it can save

City Hospital, a nonprofit organization, estimates that it can save $28,000 a year in cash operating costs for the next 10 years if it buys a special-purpose eye testing machine at a cost of $110,000....

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Q: Assume the same facts as in Exercise 21-23 except that

Assume the same facts as in Exercise 21-23 except that City Hospital is a taxpaying entity. The income tax rate is 30% for all transactions that affect income taxes. Required: 1. Do requirement 1 of...

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Q: America Cola is considering the purchase of a special-purpose bottling

America Cola is considering the purchase of a special-purpose bottling machine for $65,000. It is expected to have a useful life of 4 years with no terminal disposal value. The plant manager estimates...

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Q: New Pharm Corporation is a rapidly growing biotech company that has a

New Pharm Corporation is a rapidly growing biotech company that has a required rate of return of 14%. It plans to build a new facility in Santa Clara County. The building will take 2 years to complete...

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Q: Andrews Construction is analyzing its capital expenditure proposals for the purchase of

Andrews Construction is analyzing its capital expenditure proposals for the purchase of equipment in the coming year. The capital budget is limited to $5,000,000 for the year. Lori Bart, staff analyst...

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Q: Laverty Clinic plans to purchase a new centrifuge machine for its New

Laverty Clinic plans to purchase a new centrifuge machine for its New York facility. The machine costs $94,000 and is expected to have a useful life of 6 years, with a terminal disposal value of $9,00...

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Q: Ella’s Bakery plans to purchase a new oven for its store.

Ella’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 tha...

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Q: Walker Inc. is considering the purchase of new equipment that will

Walker Inc. is considering the purchase of new equipment that will automate production and thus reduce labor costs. Walker made the following estimates related to the new machinery: Cost of the equipm...

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Q: Klein Dermatology is contemplating purchasing new laser therapy equipment. This new

Klein Dermatology is contemplating purchasing new laser therapy equipment. This new equipment would cost $300,000 to purchase and $20,000 for installation. Klein estimates that this new equipment woul...

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Q: Ortel Telecom sells telecommunication products and services to a variety of small

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...

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Q: Body Image, Inc., produces two basic types of weight-

Body Image, Inc., produces two basic types of weight-lifting equipment, Model 9 and Model 14. Pertinent data are as follows: The weight-lifting craze suggests that Body Image can sell enough of eithe...

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Q: The Cook Company is a national portable building manufacturer. Its Benton

The Cook Company is a national portable building manufacturer. Its Benton plant will become idle on December 31, 2017. Mary Carter, the corporate controller, has been asked to look at three options re...

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Q: Quick Stop operates 1,000 convenience stores throughout the United States

Quick Stop operates 1,000 convenience stores throughout the United States. The company’s slogan is “Best Stop of the Day,” and its mission is to make every customer a return customer. Quick Stop’s cor...

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Q: Fenster Corporation manufactures windows with wood and metal frames. Fenster has

Fenster Corporation manufactures windows with wood and metal frames. Fenster has three departments: glass, wood, and metal. The glass department makes the window glass and sends it to either the wood...

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Q: Host Hotels, a small chain of business hotels in the MidAtlantic

Host Hotels, a small chain of business hotels in the MidAtlantic region, is interested in gaining access to the boutique lodging market by acquiring a hotel group in that sector. Host Hotels intends t...

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Q: Calgary Lumber has a raw lumber division and a finished lumber division

Calgary Lumber has a raw lumber division and a finished lumber division. The variable costs are as follows: ■ Raw lumber division: $125 per 100 board-feet of raw lumber ■ Finished lumber division: $...

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Q: Tech Friendly Computer, Inc., with headquarters in San Francisco,

Tech Friendly Computer, Inc., with headquarters in San Francisco, manufactures and sells a desktop computer. Tech Friendly has three divisions, each of which is located in a different country: a. Chi...

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Q: Quest Motors, Inc., operates as a decentralized multidivision company.

Quest Motors, Inc., operates as a decentralized multidivision company. The Vivo division of Quest Motors purchases most of its airbags from the airbag division. The airbag division’s incremental cost...

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Q: The Burton Company manufactures chainsaws at its plant in Sandusky, Ohio

The Burton Company manufactures chainsaws at its plant in Sandusky, Ohio. The company has marketing divisions throughout the world. A Burton marketing division in Lille, France, imports 200,000 chains...

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Q: Suppose that the U.S. division could sell as many

Suppose that the U.S. division could sell as many chainsaws as it makes at $225 per unit in the U.S. market, net of all marketing and distribution costs. Required: 1. From the viewpoint of the Burto...

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Q: The Kelly-Elias Corporation, manufacturer of tractors and other heavy

The Kelly-Elias Corporation, manufacturer of tractors and other heavy farm equipment, is organized along decentralized product lines, with each manufacturing division operating as a separate profit ce...

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Q: The Denver Corporation manufactures filing cabinets in two operations: machining and

The Denver Corporation manufactures filing cabinets in two operations: machining and finishing. It provides the following information: Each cabinet sells for $75 and has direct material costs of $35...

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Q: Refer to Exercise 22-24. Assume that division A can

Refer to Exercise 22-24. Assume that division A can sell the 1,900 units to other customers at $137 per unit, with variable marketing cost of $2 per unit. Required: Determine whether Kelly-Elias wil...

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Q: Return on investment (ROI) is often expressed as follows:

Return on investment (ROI) is often expressed as follows: Required: 1. What advantages are there in the breakdown of the computation into two separate components? 2. Fill in the blanks for the follo...

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Q: Performance Aid, Inc. has two divisions: Test Preparation and

Performance Aid, Inc. has two divisions: Test Preparation and Language Arts. Results (in millions) for the past three years are partially displayed here: Required: 1. Complete the table by filling in...

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Q: The Sports Equipment Company produces a wide variety of sports equipment.

The Sports Equipment Company produces a wide variety of sports equipment. Its newest division, Golf Technology, manufactures and sells a single product— AccuDriver, a golf club that uses global positi...

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Q: Excellent Motor Company makes electric cars and has two products, the

Excellent Motor Company makes electric cars and has two products, the Simplegreen and the Excellentgreen. To produce the Simplegreen, Excellent Motor employed assets of $10,500,000 at the beginning of...

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Q: Hamilton Corp. is a reinsurance and financial services company. Hamilton

Hamilton Corp. is a reinsurance and financial services company. Hamilton strongly believes in evaluating the performance of its stand-alone divisions using financial metrics such as ROI and residual i...

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Q: Comfy Corporation manufactures furniture in several divisions, including the patio furniture

Comfy Corporation manufactures furniture in several divisions, including the patio furniture division. The manager of the patio furniture division plans to retire in two years. The manager receives a...

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Q: Performance Auto Company operates a new car division (that sells high

Performance Auto Company operates a new car division (that sells high- performance sports cars) and a performance parts division (that sells performance-improvement parts for family cars). Some divisi...

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Q: Ryan Alcoa, a new associate at Jonas Partners, has compiled

Ryan Alcoa, a new associate at Jonas Partners, has compiled the following data for a potential investment for the firm: Investment: $300,000 Annual sales revenues = $180,000 Annual cash costs = $80,0...

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Q: The Seaside Corporation manufactures similar products in the United States and Norway

The Seaside Corporation manufactures similar products in the United States and Norway. The U.S. and Norwegian operations are organized as decentralized divisions. The following information is availabl...

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Q: Sanchez Corporation runs two convenience stores, one in Connecticut and one

Sanchez Corporation runs two convenience stores, one in Connecticut and one in Rhode Island. Operating income for each store in 2017 is as follows: The equipment has a zero disposal value. In a senio...

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Q: Cora Manufacturing makes fashion products and competes on the basis of quality

Cora Manufacturing makes fashion products and competes on the basis of quality and leading-edge designs. The company has two divisions, clothing and cosmetics. Cora has $5,000,000 invested in assets i...

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Q: Wonkies, Inc. is a large company that owns fast-

Wonkies, Inc. is a large company that owns fast-food restaurants, has a soft drink division, and a snack division. Wonkies, Inc. corporate management gives its division managers considerable operating...

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Q: Doorchime Company makes doorbells. It has a weighted-average cost

Doorchime Company makes doorbells. It has a weighted-average cost of capital of 6% and total assets of $5,690,000. Doorchime has current liabilities of $550,000. Its operating income for the year was...

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Q: Saina Supplies leases and sells materials, tools, and equipment and

Saina Supplies leases and sells materials, tools, and equipment and also provides add-on services such as ground maintenance and waterproofing to construction and mining sites. The company has grown r...

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Q: The Slate Company manufactures and sells television sets. Its assembly division

The Slate Company manufactures and sells television sets. Its assembly division (AD) buys television screens from the screen division (SD) and assembles the TV sets. The SD, which is operating at capa...

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Q: Mountaineer, Inc., has two divisions, A and B,

Mountaineer, Inc., has two divisions, A and B, that manufacture expensive bicycles. Division A produces the bicycle frame, and division B assembles the rest of the bicycle onto the frame. There is a m...

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Q: Cran Health Products is a cranberry cooperative that operates two divisions,

Cran Health Products is a cranberry cooperative that operates two divisions, a harvesting division and a processing division. Currently, all of harvesting’s output is converted into...

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Q: Assume that Pat Borges, CEO of Cran Health, had mandated

Assume that Pat Borges, CEO of Cran Health, had mandated a transfer price equal to 225% of full cost. Now he decides to decentralize some management decisions and sends around a memo that states the f...

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Q: Express Grow Inc., based in Ankeny, Iowa, sells high

Express Grow Inc., based in Ankeny, Iowa, sells high-end fertilizers. Express Grow has two divisions: â–  North Italy mining division, which mines potash in northern Italy â...

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Q: Ballantine Corp. produces and sells lead crystal glassware. The firm

Ballantine Corp. produces and sells lead crystal glassware. The firm consists of two divisions, Commercial and Specialty. The Commercial division manufactures 300,000 glasses per year. It incurs varia...

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Q: Newbury Printers operates a printing press with a monthly capacity of 3

Newbury Printers operates a printing press with a monthly capacity of 3,200 machine-hours. Newbury has two main customers: Wallace Corporation and Kimberly Corporation. Data on each customer for Janua...

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Q: Beacon, a division of Libra Corporation, is located in the

Beacon, a division of Libra Corporation, is located in the United States. Its effective income tax rate is 30%. Another division of Libra, Falcon, is located in Canada, where the income tax rate is 40...

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Q: Cocoa Mill Chocolates manufactures specialty chocolates and sells them to fine candy

Cocoa Mill Chocolates manufactures specialty chocolates and sells them to fine candy stores. The company operates two divisions, cocoa and candy, as decentralized entities. The cocoa division purchase...

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Q: The Croydon division of CC Industries supplies the Hauser division with 100

The Croydon division of CC Industries supplies the Hauser division with 100,000 units per month of an infrared LED that Hauser uses in a remote control device it sells. The transfer price of the LED i...

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Q: Letang Company has three divisions (R, S, and T

Letang Company has three divisions (R, S, and T), organized as decentralized profit centers. Division R produces the basic chemical Ranbax, in multiples of 1,000 pounds, and transfers it to divisions...

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Q: Compost Systems, Inc. (CSI) operates a composting service

Compost Systems, Inc. (CSI) operates a composting service business and produces organic fertilizer that it sells to farmers in the Midwest. CSI operates with two divisions, collection and composting....

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Q: Sierra Inc. consists of a semiconductor division and a process-

Sierra Inc. consists of a semiconductor division and a process-control division, each of which operates as an independent profit center. The semiconductor division employs craftsmen who produce two di...

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Q: Nature’s Juice Corporation operates three divisions that process and bottle natural fruit

Nature’s Juice Corporation operates three divisions that process and bottle natural fruit juices. The historical-cost accounting system reports the following information for 2017: N...

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Q: Appleton’s owns and operates a variety of casual dining restaurants in three

Appleton’s owns and operates a variety of casual dining restaurants in three cities: St. Louis, Memphis, and New Orleans. Each geographic market is considered a separate division. Th...

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Q: Newmann, Inc. has divisions in the United States, France

Newmann, Inc. has divisions in the United States, France, and Australia. The U.S. division is the oldest and most established of the three and has a cost of capital of 6%. The French division was star...

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Q: News Report Group has two major divisions: Print and Internet.

News Report Group has two major divisions: Print and Internet. Summary financial data (in millions) for 2016 and 2017 are as follows: The two division managers’ annual bonuses are b...

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Q: Janet’s Bakery is thinking about replacing the convection oven with a new

Janet’s Bakery is thinking about replacing the convection oven with a new, more energy-efficient model. Information related to the old and new ovens follows: Ignore the effect of in...

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Q: John Mendenhall seeks your advice on revising the existing bonus plan for

John Mendenhall seeks your advice on revising the existing bonus plan for division managers of News Report Group. Assume division managers do not like bearing risk. Mendenhall is considering three ide...

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Q: Acme Company recently introduced a new bonus plan for its corporate executives

Acme Company recently introduced a new bonus plan for its corporate executives. The company believes that current profitability and customer satisfaction levels are equally important to the company&ac...

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Q: Precision Equipment specializes in the manufacture of medical equipment, a field

Precision Equipment specializes in the manufacture of medical equipment, a field that has become increasingly competitive. Approximately 2 years ago, Pedro Mendez, president of Precision, decided to r...

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Q: The following data refer to Clear Panes, a division of Global

The following data refer to Clear Panes, a division of Global Corporation. Clear Panes makes and sells residential windows that sell for $150 each. Clear Panes expects sales of 150,000 units in 2017....

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Q: Zuzu is a large manufacturer of snack cakes. The company operates

Zuzu is a large manufacturer of snack cakes. The company operates distribution centers in Chicago. The distribution center bakes and packages the snack cakes and ships them to grocery warehouses throu...

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Q: Refresh Resorts, Inc., operates health spas in Key West,

Refresh Resorts, Inc., operates health spas in Key West, Florida; Phoenix, Arizona; and Carmel, California. The Key West spa was the company’s first and opened in 1991. The Phoenix s...

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Q: The new CEO of Rusty Manufacturing has asked for information about the

The new CEO of Rusty Manufacturing has asked for information about the operations of the firm from last year. The CEO is given the following information, but with some data missing: Total sales revenu...

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Q: Westerly Cosmetics manufactures and sells a variety of makeup and beauty products

Westerly Cosmetics manufactures and sells a variety of makeup and beauty products. The company has developed its own patented formula for a new anti-aging cream The company president wants to make sur...

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Q: Lagoon is an amusement park that offers family-friendly entertainment and

Lagoon is an amusement park that offers family-friendly entertainment and attractions. The park boasts more than 25 acres of fun. The admission price to enter the park, which includes access to all at...

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Q: Sweet Tastings makes candy bars for vending machines and sells them to

Sweet Tastings makes candy bars for vending machines and sells them to vendors in cases of 30 bars. Although Sweet Tastings makes a variety of candy, the cost differences are insignificant, and the ca...

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Q: The TechGuide Company produces and sells 7,500 modular computer desks

The TechGuide Company produces and sells 7,500 modular computer desks per year at a selling price of $750 each. Its current production equipment, purchased for $1,800,000 and with a five-year useful l...

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Q: C & S Mechanical sells and services plumbing, heating, and

C & S Mechanical sells and services plumbing, heating, and air-conditioning systems. C & S’s cost accounting system tracks two cost categories: direct labor and direct materi...

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Q: Georgia Temps, a large labor contractor, supplies contract labor to

Georgia Temps, a large labor contractor, supplies contract labor to building-construction companies. For 2017, Georgia Temps has budgeted to supply 84,000 hours of contract labor. Its variable costs a...

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Q: Precision Laboratories evaluates the reaction of materials to extreme increases in temperature

Precision 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...

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Q: Scott Company manufactures a DVD player called Orlicon. The company sells

Scott Company manufactures a DVD player called Orlicon. The company sells the player to discount stores throughout the country. This player is significantly less expensive than similar products sold b...

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Q: Diamond Corporation produces baseball bats for kids that it sells for $

Diamond Corporation produces baseball bats for kids that it sells for $37 each. At capacity, the company can produce 54,000 bats a year. The costs of producing and selling 54,000 bats are as follows:...

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Q: Fashion Fabrics makes pants from a special material. The fabric is

Fashion Fabrics makes pants from a special material. The fabric is special because of the way it fits many body types. The pants sell for $142. A well-known retail establishment has asked Fashion Fabr...

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Q: Market Thyme, a cooperative of organic family-owned farms,

Market Thyme, a cooperative of organic family-owned farms, has recently started a fresh produce club to provide support to the group’s member farms and to promote the benefits of eat...

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Q: Catherine McCarthy, sales manager of Baxter Arenas, is checking to

Catherine McCarthy, sales manager of Baxter Arenas, is checking to see if there is any relationship between promotional costs and ticket revenues at the sports stadium. She obtains the following data...

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Q: Sleep Late, a large hotel chain, has been using activity

Sleep Late, a large hotel chain, has been using activity-based costing to determine the cost of a night’s stay at their hotels. One of the activities, “Inspection,&...

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Q: Spirit Freightways is a leader in transporting agricultural products in the western

Spirit Freightways is a leader in transporting agricultural products in the western provinces of Canada. Reese Brown, a financial analyst at Spirit Freightways, is studying the behavior of transportat...

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Q: Gianni & Sons buys T-shirts in bulk, applies its

Gianni & Sons buys T-shirts in bulk, applies its own trendsetting silk-screen designs, and then sells the T-shirts to a number of retailers. Gianni wants to be known for its trendsetting designs,...

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Q: The Pacific Boat Company, which is under contract to the U

The Pacific Boat Company, which is under contract to the U.S. Navy, assembles troop deployment boats. As part of its research program, it completes the assembly of the first of a new model (PT109) of...

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Q: Assume the same information for the Pacific Boat Company as in Problem

Assume the same information for the Pacific Boat Company as in Problem 10-40 with one exception. This exception is that Pacific Boat uses a 90% incremental unit-time learning model as a basis for pred...

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Q: Apollo Hospital specializes in outpatient surgeries for relatively minor procedures. Apollo

Apollo Hospital specializes in outpatient surgeries for relatively minor procedures. Apollo is a nonprofit institution and places great emphasis on controlling costs in order to provide services to th...

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Q: After further discussion, Julie and Rhett wonder if they should view

After further discussion, Julie and Rhett wonder if they should view both the number of procedures and number of patient-hours as cost drivers in a multiple regression estimation in order to best unde...

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Q: Hankuk Electronics started production on a sophisticated new smartphone running the Android

Hankuk Electronics started production on a sophisticated new smartphone running the Android operating system in January 2017. Given the razor-thin margins in the consumer electronics industry, Hankuk&...

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Q: Inbee is concerned that she still does not understand the relationship between

Inbee is concerned that she still does not understand the relationship between output and labor consumption. She consults with Jim Park, the head of engineering, and shares the results of her regressi...

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Q: Nandita Summers works at Modus, a store that caters to fashion

Nandita Summers works at Modus, a store that caters to fashion for young adults. Nandita is responsible for the store’s online advertising and promotion budget. For the past year, sh...

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Q: Perfect Fit operates a chain of 10 retail department stores. Each

Perfect Fit operates a chain of 10 retail department stores. Each department store makes its own purchasing decisions. Carl Hart, assistant to the president of Perfect Fit, is interested in better und...

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Q: Carl Hart decides that the simple regression analysis used in Problem 10

Carl Hart decides that the simple regression analysis used in Problem 10-47 could be extended to a multiple regression analysis. He finds the following results for two multiple regression analyses: T...

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Q: Justin Anders is the management accountant for Carey Restaurant Supply (CRS

Justin Anders is the management accountant for Carey Restaurant Supply (CRS). Sara Brinkley, the CRS sales manager, and Justin are meeting to discuss the profitability of one of the customers, Donnell...

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Q: The Magill Repair Shop repairs and services machine tools. A summary

The Magill Repair Shop repairs and services machine tools. A summary of its costs (by activity) for 2017 is as follows: a. Materials and labor for servicing machine tools………….$1,100,000 b. Rework cost...

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Q: Required: Refer to Exercise 12-21. 1

Required: Refer to Exercise 12-21. 1. Calculate Gianni‘s operating income in both 2016 and 2017. 2. Calculate the growth, price-recovery, and productivity components that explain t...

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Q: Susan Smith manages the Wexford plant of Sanchez Manufacturing. A representative

Susan Smith manages the Wexford plant of Sanchez Manufacturing. A representative of Darnell Engineering approaches Smith about replacing a large piece of manufacturing equipment that Sanchez uses in i...

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Q: Riverside Clippers Corp manufactures garden tools in a factory in Taneytown,

Riverside Clippers Corp manufactures garden tools in a factory in Taneytown, Maryland. Recently, the company designed a collection of tools for professional use rather than consumer use. Management ne...

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Q: Gavin Martin, the general manager of Oregano Software, must decide

Gavin Martin, the general manager of Oregano Software, must decide when to release the new version of Oregano’s spreadsheet package, Easyspread 2.0. Development of Easyspread 2.0 is...

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Q: Jason Wu operates Exclusive Limousines, a fleet of 10 limousines used

Jason Wu operates Exclusive Limousines, a fleet of 10 limousines used for weddings, proms, and business events in Washington, D.C. Wu charges customers a flat fee of $250 per car taken on contract plu...

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Q: The Wild Orchid Corporation is working at full production capacity producing 13

The Wild Orchid Corporation is working at full production capacity producing 13,000 units of a unique product, Everlast. Manufacturing cost per unit for Everlast is: Direct materials………………………………….$10...

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Q: Denver Engineering manufactures small engines that it sells to manufacturers who install

Denver Engineering manufactures small engines that it sells to manufacturers who install them in products such as lawn mowers. The company currently manufactures all the parts used in these engines bu...

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Q: The Lexington Company produces gas grills. This year’s expected production is

The Lexington Company produces gas grills. This year’s expected production is 20,000 units. Currently, Lexington makes the side burners for its grills. Each grill includes two side b...

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Q: Wechsler Company produces three products: A130, B324, and C587

Wechsler Company produces three products: A130, B324, and C587. All three products use the same direct material, Brac. Unit data for the three products are: The demand for the products far exceeds th...

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Q: Gormley Precision Tools makes cutting tools for metalworking operations. It makes

Gormley Precision Tools makes cutting tools for metalworking operations. It makes two types of tools: A6, a regular cutting tool, and EX4, a high precision cutting tool. A6 is manufactured on a regula...

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Q: Washington Industries manufactures electronic testing equipment. Washington also installs the equipment

Washington Industries manufactures electronic testing equipment. Washington also installs the equipment at customers’ sites and ensures that it functions smoothly. Additional informa...

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Q: Suppose that the market for silk-screened T-shirts grew

Suppose that the market for silk-screened T-shirts grew by 10% during 2017. All increases in sales greater than 10% are the result of Gianni’s strategic actions. From exercise 21:...

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Q: Damon Furniture (DF) produces fiberglass doors in two processes:

Damon Furniture (DF) produces fiberglass doors in two processes: molding and finishing. DF is currently producing two models: Masoline and Aldernite. Production in the molding department is limited by...

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Q: Ainsley Corporation has four operating divisions. The budgeted revenues and expenses

Ainsley Corporation has four operating divisions. The budgeted revenues and expenses for each division for 2017 follows: Further analysis of costs reveals the following percentages of variable costs...

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Q: Nelson River Tours, a division of Old World Travel, offers

Nelson River Tours, a division of Old World Travel, offers two types of guided fishing tours, Beginner and Advanced. Operating income for each tour type in 2017 is as follows: The equipment has a zer...

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Q: Della Simpson, Inc., sells two popular brands of cookies:

Della Simpson, Inc., sells two popular brands of cookies: Della’s Delight and Bonny’s Bourbon. Della’s Delight goes through the Mixing and Baking...

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Q: As a result of the actions taken, quality has significantly improved

As a result of the actions taken, quality has significantly improved in 2017 while rework and unit costs of the Orlicon have decreased. Scott has reduced manufacturing capacity because capacity is no...

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Q: Suppose that during 2017, the market for DVD players grew 10

Suppose that during 2017, the market for DVD players grew 10%. All increases in market share (that is, sales increases greater than 10%) and decreases in the selling price of the Orlicon are the resul...

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Q: As a result of the actions taken, quality has significantly improved

As a result of the actions taken, quality has significantly improved in 2017 while rework and unit costs of the Orlicon have decreased. Scott has reduced manufacturing capacity because capacity is no...

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Q: Following is a random-order listing of perspectives, strategic objectives

Following is a random-order listing of perspectives, strategic objectives, and performance measures for the balanced scorecard. Required: For each perspective, select those strategic objectives from...

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Q: Petrocal, Inc., refines gasoline and sells it through its own

Petrocal, Inc., refines gasoline and sells it through its own Petrocal gas stations. On the basis of market research, Petrocal determines that 60% of the overall gasoline market consists of â...

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Q: Vic Corporation manufactures various types of color laser printers in a highly

Vic Corporation manufactures various types of color laser printers in a highly automated facility with high fixed costs. The market for laser printers is competitive. The various color laser printers...

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Q: Gianni & Sons buys T-shirts in bulk, applies its

Gianni & Sons buys T-shirts in bulk, applies its own trendsetting silk-screen designs, and then sells the T-shirts to a number of retailers. Gianni wants to be known for its trendsetting designs,...

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Q: Gardini Chocolates makes c ustom-labeled, high-quality,

Gardini Chocolates makes c ustom-labeled, high-quality, specialty candy bars for special events and advertising purposes. The company employs several chocolatiers who were trained in Germany. The comp...

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Q: Comtex Company provides cable and Internet services in the greater Boston area

Comtex Company provides cable and Internet services in the greater Boston area. There are many competitors that provide similar services. Comtex believes that the key to financial success is to offer...

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Q: WrightAir is a no-frills airline that services the Midwest.

WrightAir is a no-frills airline that services the Midwest. Its mission is to be the only short-haul, low-fare, high-frequency, pointto-point carrier in the Midwest. However, there are several large c...

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Q: Gable Company manufactures wallets from fabric. In 2016, Gable made

Gable Company manufactures wallets from fabric. In 2016, Gable made 2,160,000 wallets using 1,600,000 yards of fabric. In 2016, Gable has capacity to make 2,448,000 wallets and incurs a cost of $8,568...

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Q: Assume the fabric costs $4.00 per yard in 2017

Assume the fabric costs $4.00 per yard in 2017 and $4.10 per yard in 2016. From problem 43: Gable Company manufactures wallets from fabric. In 2016, Gable made 2,160,000 wallets using 1,600,000 yard...

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Q: Maximum Metal Recycling and Salvage receives the opportunity to salvage scrap metal

Maximum Metal Recycling and Salvage receives the opportunity to salvage scrap metal and other materials from an old industrial site. The current owners of the site will sign over the site to Maximum a...

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Q: Costal Airways is about to introduce a daily round-trip flight

Costal Airways is about to introduce a daily round-trip flight from New York to Los Angeles and is determining how to price its round-trip tickets. The market research group at Costal Airways segments...

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Q: Global Airlines is a major low-price airline carrier for both

Global Airlines is a major low-price airline carrier for both domestic and international travel. The company guarantees the “lowest price” ticket for travel within the United States. The “lowest price...

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Q: Instyle Interior Designs has been requested to prepare a bid to decorate

Instyle Interior Designs has been requested to prepare a bid to decorate four model homes for a new development. Winning the bid would be a big boost for sales representative Jim Doogan, who works ent...

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Q: Sylvan Creations designs, manufactures, and sells modern wood sculptures.

Sylvan Creations designs, manufactures, and sells modern wood sculptures. Sandra Johnson is an artist for the company. Johnson has spent much of the past month working on the design of an intricate ab...

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Q: Stanmore Corporation makes a special-purpose machine, D4H, used

Stanmore Corporation makes a special-purpose machine, D4H, used in the textile industry. Stanmore has designed the D4H machine for 2017 to be distinct from its competitors. It has been generally regar...

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Q: Mary Martin recently started a job as an administrative assistant in the

Mary Martin recently started a job as an administrative assistant in the cost accounting department of Needham Manufacturing. New to the area of cost accounting, Mary is puzzled by the fact that one o...

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Q: Bracelet Delights is a new company that manufactures custom jewelry. Bracelet

Bracelet Delights is a new company that manufactures custom jewelry. Bracelet Delights currently has six customers referenced by customer number: 01, 02, 03, 04, 05, and 06. Besides the costs of makin...

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Q: Green Paper Delivery has decided to analyze the profitability of five new

Green Paper Delivery has decided to analyze the profitability of five new customers. It buys recycled paper at $20 per case and sells to retail customers at a list price of $26 per case. Data pertaini...

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Q: Mississippi Manufacturing makes a component called B2040. This component is manufactured

Mississippi Manufacturing makes a component called B2040. This component is manufactured only when ordered by a customer, so Mississippi keeps no inventory of B2040. The list price is $112 per unit, b...

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Q: Louise Newman operates Interiors by Louise, an interior design consulting and

Louise Newman operates Interiors by Louise, an interior design consulting and window treatment fabrication business. Her business is made up of two different distribution channels, a consulting busine...

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Q: Cathy Carpenter, controller of the Sweet and Salty Snacks is preparing

Cathy Carpenter, controller of the Sweet and Salty Snacks is preparing a presentation to senior executives about the performance of its four divisions. Summary data related to the four divisions for t...

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Q: Forber Bakery makes baked goods for grocery stores and has three divisions

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 i...

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Q: The Insurance Company insures homeowners in three regions of the United States

The Insurance Company insures homeowners in three regions of the United States: Eastern, Midwest, and South. In the past year, several hurricanes hit the Southern region of the United States, requirin...

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Q: Vocal Speakers makes wireless speakers that are sold to different customers in

Vocal Speakers makes wireless speakers that are sold to different customers in two main distribution channels. Recently, the company’s profitability has decreased. Management would l...

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Q: Miami Infonautics, Inc., produces handheld Windows CE™-compatible organizers

Miami Infonautics, Inc., produces handheld Windows CEâ„¢-compatible organizers. Miami Infonautics markets three different handheld models: PalmPro is a souped-up version for the execut...

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Q: Refer to Exercise 12-25. From exercise 25

Refer to Exercise 12-25. From exercise 25: Stanmore Corporation makes a special-purpose machine, D4H, used in the textile industry. Stanmore has designed the D4H machine for 2017 to be distinct from...

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Q: Miami Infonautics’ senior vice president of marketing prepared his budget at the

Miami Infonautics’ senior vice president of marketing prepared his budget at the beginning of the third quarter assuming a 25% market share based on total sales. Foolinstead Research estimated that th...

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Q: The Robin’s Basket operates a chain of Italian gelato stores. Although

The Robin’s Basket operates a chain of Italian gelato stores. Although the Robin’s Basket charges customers the same price for all flavors, production costs vary, d...

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Q: KC Corporation manufactures an air-freshening device called GoodAir, which

KC Corporation manufactures an air-freshening device called GoodAir, which it sells to six merchandising firms. The list price of a GoodAir is $30, and the full manufacturing costs are $18. Salespeopl...

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Q: Preston Department Store has a new promotional program that offers a free

Preston Department Store has a new promotional program that offers a free gift-wrapping service for its customers. Preston’s customer-service department has practical capacity to wra...

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Q: Fang Inc. produces and sells DVDs to business people and students

Fang Inc. produces and sells DVDs to business people and students who are planning extended stays in China. It has been very successful with two DVDs: Beginning Mandarin and Conversational Mandarin. I...

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Q: Central University completed construction of its newest administrative building at the end

Central University completed construction of its newest administrative building at the end of 2017. The University’s first employees moved into the building on January 1, 2018. The b...

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Q: The Eastern Summit Company has prepared department overhead budgets for budgeted-

The Eastern Summit Company has prepared department overhead budgets for budgeted-volume levels before allocations as follows: Management has decided that the most appropriate inventory costs are achi...

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Q: The Martinez Company has two products. Product 1 is manufactured entirely

The Martinez Company has two products. Product 1 is manufactured entirely in department X. Product 2 is manufactured entirely in department Y. To produce these two products, the Martinez Company has t...

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Q: Tate Inc. and Booth Inc. are two small manufacturing companies

Tate Inc. and Booth Inc. are two small manufacturing companies that are considering leasing a cutting machine together. If Tate rents the machine on its own, it will cost $26,000. If Booth rents the m...

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Q: Magic Systems, Inc., sells computer hardware to end consumers.

Magic Systems, Inc., sells computer hardware to end consumers. The CX30 is sold as a “bundle,” which includes three hardware products: a personal computer (PC) towe...

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Q: Suppose that during 2017, the market for Stanmore’s special-purpose

Suppose that during 2017, the market for Stanmore’s special-purpose machines grew by 3%. All increases in market share (that is, sales increases greater than 3%) are the result of Stanmore’s strategic...

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Q: Sportz, Inc., manufactures athletic shoes and athletic clothing for both

Sportz, Inc., manufactures athletic shoes and athletic clothing for both amateur and professional athletes. The company has two product lines (clothing and shoes), which are produced in separate manuf...

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Q: Boca Resorts (BR) operates a five-star hotel with

Boca Resorts (BR) operates a five-star hotel with a worldclass spa. BR has a decentralized management structure, with three divisions: â–  Lodging (rooms, conference facilities) &acir...

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Q: Ballantine Corporation has two operating departments: Eastern Department and Western Department

Ballantine Corporation has two operating departments: Eastern Department and Western Department. Each of the operating departments uses the services of the company’s two support depa...

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Q: Garden Labs produces a drug used for the treatment of arthritis.

Garden Labs produces a drug used for the treatment of arthritis. The drug is produced in batches. Chemicals costing $50,000 are mixed and heated, then a unique separation process extracts the drug fro...

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Q: The Chicago Oil Company buys crude vegetable oil. Refining this oil

The Chicago 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, a...

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Q: The Rich and Creamy Edibles Factory manufactures and distributes chocolate products.

The Rich and Creamy Edibles Factory manufactures and distributes chocolate products. It purchases cocoa beans and processes them into two intermediate products: chocolate-powder liquor base and milk-c...

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Q: Liverpool Sawmill, Inc. (LSI) purchases logs from independent

Liverpool Sawmill, Inc. (LSI) purchases logs from independent timber contractors and processes the logs into three types of lumber products: â–  Studs for residential buildings (walls...

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Q: SW Flour Company buys 1 input of standard flour and refines it

SW Flour Company buys 1 input of standard flour and refines it using a special sifting process to 3 cups of baking flour and 9 cups of bread flour. In May 2017, SW bought 12,000 inputs of flour for $8...

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Q: SW Flour Company has decided that their bread flour may sell better

SW Flour Company has decided that their bread flour may sell better if it was marketed for gourmet baking and sold with infused spices. This would involve additional cost for the spices of $0.80 per c...

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Q: The Seattle Recycling Company (SRC) purchases old water and soda

The Seattle Recycling Company (SRC) purchases old water and soda bottles and recycles them to produce plastic covers for outdoor furniture. The company processes the bottles in a special piece of equi...

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Q: Refer to Exercise 12-25. Required:

Refer to Exercise 12-25. Required: 1. Calculate the amount and cost of (a) unused manufacturing capacity and (b) unused selling and customer-service capacity at the beginning of 2017 based on actual...

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Q: The accountant for SRC needs to record the information about the joint

The accountant for SRC needs to record the information about the joint and byproducts in the general journal, but is not sure what the entries should be. The company has hired you as a consultant to h...

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Q: Mountainair Construction Company (MCC) crushes boulders to obtain decorative rock

Mountainair Construction Company (MCC) crushes boulders to obtain decorative rock, which they sell through various outlets. The process produces three grades of rock, which are viewed as joint product...

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Q: Newcastle Mining Company (NMC) mines coal, puts it through

Newcastle Mining Company (NMC) mines coal, puts it through a one-step crushing process, and loads the bulk raw coal onto river barges for shipment to customers. NMC’s management is...

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Q: Arnold Technologies manufactures a variety of flash memory chips at its main

Arnold Technologies manufactures a variety of flash memory chips at its main plant in Taiwan. Some chips are sold to makers of electronic equipment while others are embedded into consumer products for...

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Q: Kardash Cosmetics purchases flowers in bulk and processes them into perfume.

Kardash Cosmetics purchases flowers in bulk and processes them into perfume. From a certain mix of petals, the firm uses Process A to generate Seduction, its high-grade perfume, as well as a certain r...

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Q: Louisville Sports manufactures baseball bats for use by players in the major

Louisville Sports manufactures baseball bats for use by players in the major leagues. A critical requirement for elite players is that each bat they use have an identical look and feel. As a result, L...

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Q: Hoffman Company manufactures car seats in its Boise plant. Each car

Hoffman Company manufactures car seats in its Boise plant. Each car seat passes through the assembly department and the testing department. This problem focuses on the assembly department. The process...

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Q: Required: Prepare a set of summarized journal entries for all

Required: Prepare a set of summarized journal entries for all October 2017 transactions affecting Work in Process— Assembly. Set up a T-account for Work in Process—...

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Q: Required: 1. Do Problem 17-36 using the

Required: 1. Do Problem 17-36 using the FIFO method of process costing. Explain any difference between the cost per equivalent unit in the assembly department under the weighted-average method and the...

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Q: Hoffman Company, as you know, is a manufacturer of car

Hoffman Company, as you know, is a manufacturer of car seats. Each car seat passes through the assembly department and testing department. This problem focuses on the testing department. Direct materi...

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Q: Compton Associates is an architectural firm that has been in practice only

Compton Associates is an architectural firm that has been in practice only a few years. Because it is a relatively new firm, the market for the firm’s services is very competitive. T...

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Q: Suppose that Hoffman Company uses the FIFO method instead of the weighted

Suppose that Hoffman Company uses the FIFO method instead of the weighted-average method in all of its departments. The only changes to Problem 17-39 under the FIFO method are that total transferred-i...

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Q: McKnight Handcraft is a manufacturer of picture frames for large retailers.

McKnight Handcraft is a manufacturer of picture frames for large retailers. Every picture frame passes through two departments: the assembly department and the finishing department. This problem focus...

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Q: Required: 1. Complete Problem 17-41 using the

Required: 1. Complete Problem 17-41 using the FIFO method of process costing. 2. If you did Problem 17-41, explain any difference between the cost of work completed and transferred out and the cost o...

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Q: Spelling Sports, which produces basketballs, has two departments: cutting

Spelling Sports, which produces basketballs, has two departments: cutting and stitching. Each department has one direct-cost category (direct materials) and one indirect-cost category (conversion cost...

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Q: Suppose that Spelling Sports uses the FIFO method instead of the weighted

Suppose that Spelling Sports uses the FIFO method instead of the weighted-average method. Assume that all other information, including the cost of beginning WIP, is unchanged. From problem 43: Spell...

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Q: The Warner Company manufactures reproductions of expensive sunglasses. Warner uses the

The Warner Company manufactures reproductions of expensive sunglasses. Warner uses the standard-costing method of process costing to account for the production of the sunglasses. All materials are add...

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Q: The Sedona Company is dedicated to making products that meet the needs

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Q: Amanda McNall is the corporate controller of Scott Quarry. Scott Quarry

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Q: Refer to the information in Problem 18-35.

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Q: Refer to Exercise 12-29. Required:

Refer to Exercise 12-29. Required: 1. Calculate the operating income of Compton Associates in 2016 and 2017. 2. Calculate the growth, price-recovery, and productivity components that explain the ch...

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Q: In the shipping department of World Class Steaks, conversion costs are

In the shipping department of World Class Steaks, conversion costs are added evenly during the process, and direct materials are added at the end of the process. Spoiled units are detected upon inspec...

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Q: Refer to the information in Problem 18-37 except that the

Refer to the information in Problem 18-37 except that the transferred-in costs of beginning work in process on May 1 are $66,180 (instead of $67,397). Transferred-in costs for May equal the total cost...

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Q: SunEnergy produces solar panels. A key step in the conversion of

SunEnergy produces solar panels. A key step in the conversion of raw silicon to a completed solar panel occurs in the assembly department, where lightweight photovoltaic cells are assembled into modul...

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Q: Jellyfish Machine Shop is a manufacturer of motorized carts for vacation resorts

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Q: Assume that the 6 spoiled units of Jellyfish Machine Shop’s Job #

Assume that the 6 spoiled units of Jellyfish Machine Shop’s Job #10 can be reworked for a total cost of $1,800. A total cost of $6,600 associated with these units has already been assigned to Job #10...

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Q: Assume that Job #10 of Jellyfish Machine Shop generates normal scrap

Assume that Job #10 of Jellyfish Machine Shop generates normal scrap with a total sales value of $700 (it is assumed that the scrap returned to the storeroom is sold quickly). Required: Prepare the...

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Chemet manufactures chemicals in a continuous process. The company combines various materials in a specially configured machine at the beginning of the process, and conversion is considered uniform th...

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Q: The horsheim Company is a furniture manufacturer with two departments: molding

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Flextron Company is a contract manufacturer for a variety of pharmaceutical and over-the-counter products. It has a reputation for operational excellence and boasts a normal spoilage rate of 2% of nor...

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Q: Harvest Cereals produces a wide variety of breakfast products. The company’s

Harvest Cereals produces a wide variety of breakfast products. The company’s three best-selling breakfast cereals are Double Bran Bits, Honey Wheat Squares, and Sugar King Pops. Each...

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Q: Suppose that during 2017, the market for architectural jobs increases by

Suppose that during 2017, the market for architectural jobs increases by 10%. Assume that any increase in market share more than 10% and any decrease in selling price are the result of strategic choic...

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Q: Pauli’s Pizza has recently begun collecting data on the quality of its

Pauli’s Pizza has recently begun collecting data on the quality of its customer order processing and delivery. Pauli’s made 1,800 deliveries during the first quarte...

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Q: The Tristan Corporation sells 250,000 V262 valves to the automobile

The Tristan Corporation sells 250,000 V262 valves to the automobile and truck industry. Tristan has a capacity of 150,000 machine-hours and can produce two valves per machine-hour. V262’s contribution...

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Q: The Crimson Corporation uses multicolored molding to make plastic lamps. The

The Crimson Corporation uses multicolored molding to make plastic lamps. The molding operation has a capacity of 200,000 units per year. The demand for lamps is very strong. Crimson will be able to se...

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Q: The Sandstone Corporation uses an injection molding machine to make a plastic

The Sandstone Corporation uses an injection molding machine to make a plastic product, Z35, after receiving firm orders from its customers. Sandstone estimates that it will receive 60 orders for Z35 d...

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Q: Sandstone is still debating whether it should introduce Y21. The following

Sandstone is still debating whether it should introduce Y21. The following table provides information on selling prices, variable costs, and inventory carrying costs for Z35 and Y21: Required: Using...

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The DJ Corporation makes custom specified wire harnesses for the trucking industry only upon receiving firm orders from its customers. DJ has recently purchased a new machine to make two types of wire...

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Q: Family First Healthcare operates two medical groups, one in Philadelphia and

Family First Healthcare operates two medical groups, one in Philadelphia and one in Baltimore. The semiannual bonus plan for each medical group’s president has three components: a....

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Q: Weston Corporation manufactures auto parts for two leading Japanese automakers.

Weston Corporation manufactures auto parts for two leading Japanese automakers. Nancy Evans is the management accountant for one of Weston’s largest manufacturing plants. The plant’s general manager,...

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Q: Dover Corporation makes printed cloth in two departments: weaving and printing

Dover Corporation makes printed cloth in two departments: weaving and printing. Currently, all product first moves through the weaving department and then through the printing department before it is...

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Q: Chadwick Shoe Co. produces and sells an excellent-quality walking

Chadwick Shoe Co. produces and sells an excellent-quality walking shoe. After production, the shoes are distributed to 20 warehouses around the country. Each warehouse services approximately 100 store...

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Q: Calvert Associates prepares architectural drawings to conform to local structural-safety

Calvert Associates prepares architectural drawings to conform to local structural-safety codes. Its income statement for 2017 is as follows: Revenues…………………………………………………………………………….$701,250 Salaries of...

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Q: Refer to Exercise 12-29. Required:

Refer to Exercise 12-29. Required: 1. Calculate the amount and cost of unused architectural support capacity at the beginning of 2017, based on the number of jobs actually done in 2017. 2. Suppose...

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Phillips Corporation is a major manufacturer of food processors. It purchases motors from Viking Corporation. Annual demand is 52,000 motors per year or 1,000 motors per week. The ordering cost is $36...

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Q: Tech Works Corp. produces J-Pods, music players that

Tech Works Corp. produces J-Pods, music players that can download thousands of songs. Tech Works forecasts that demand in 2017 will be 48,000 J-Pods. The variable production cost ofeach J-Pod is $54....

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Q: Rugged Outfitters purchases one model of mountain bike at a wholesale cost

Rugged Outfitters purchases one model of mountain bike at a wholesale cost of $520 per unit and resells it to end consumers. The annual demand for the company’s product is 49,000 units. Ordering costs...

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The Gibson Corporation is a manufacturing company that uses automatic stamping machines to manufacture garage doors from rolled sheets of raw steel. Gibson’s inventory of raw steel a...

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Q: Peach Computer Co. outsources the production of motherboards for its computers

Peach Computer Co. outsources the production of motherboards for its computers. It is currently deciding which of two suppliers to use: Alpha or Beta. Due to differences in the product failure rates i...

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Q: Couture Jeans orders high-quality denim fabric from two different suppliers

Couture Jeans orders high-quality denim fabric from two different suppliers: Designer Fabrics and Cannon Cotton. Couture would like to use only one of the suppliers in the future. Due to variations in...

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Q: The Acton Corporation manufactures electrical meters. For August, there were

The Acton Corporation manufactures electrical meters. For August, there were no beginning inventories of direct materials and no beginning or ending work in process. Acton uses a JIT production system...

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Q: Assume the same facts for Acton Corporation as in Problem 20-

Assume the same facts for Acton Corporation as in Problem 20-37, except that now assume Acton uses a JIT production system and backflush costing with two trigger points for making entries in the accou...

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Q: Reliable Security Devices (RSD) has introduced a just-in

Reliable Security Devices (RSD) has introduced a just-in-time production process and is considering the adoption of lean accounting principles to support its new production philosophy. The company has...

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Q: Galveston Pump Corporation is considering implementing a JIT production system. The

Galveston Pump Corporation is considering implementing a JIT production system. The new system would reduce current average inventory levels of $2,000,000 by 75%, but it would require a much greater d...

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Q: Snappy Tiles is a small distributor of marble tiles. Snappy identifies

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...

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Q: Dublin Chips is a manufacturer of prototype chips based in Dublin,

Dublin Chips is a manufacturer of prototype chips based in Dublin, Ireland. Next year, in 2018, Dublin Chips expects to deliver 615 prototype chips at an average price of $95,000. Dublin Chipsâ&...

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Q: Assume the same facts as in Problem 21-34, except

Assume the same facts as in Problem 21-34, except that the plant is located in Buffalo, New York. Dublin Chips has no special waiver on income taxes. It pays a 35% tax rate on all income. Proceeds fro...

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Q: 21-36 DCF, sensitivity analysis, no income taxes

21-36 DCF, sensitivity analysis, no income taxes. (CMA, adapted) Sentax Corporation is an international manufacturer of fragrances for women. Management at Sentax is considering expanding the product...

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Q: Liam Mitchell, a manager of the Plate Division for the Harvest

Liam Mitchell, a manager of the Plate Division for the Harvest Manufacturing company, has the opportunity to expand the division by investing in additional machinery costing $495,000. He would depreci...

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Q: Sage Laundromat is trying to enhance the services it provides to customers

Sage Laundromat is trying to enhance the services it provides to customers, mostly college students. It is looking into the purchase of new high efficiency washing machines that will allow for the lau...

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Q: The Kuhl Brothers own a frozen custard ice cream shop. The

The Kuhl Brothers own a frozen custard ice cream shop. The brothers currently are using a machine that has been in use for the last 4 years. On January 1, 2017, the Kuhl Brothers are considering buyin...

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Q: Johnny Buster owns Entertainment World, a place that combines fast food

Johnny Buster owns Entertainment World, a place that combines fast food, innovative beverages, and arcade games. Worried about the shifting tastes of younger audiences, Johnny contemplates bringing in...

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Q: Fancy Foods is considering replacing all 12 of its meat scales

Fancy Foods is considering replacing all 12 of its meat scales with new, digital ones. The old scales are fully depreciated and have no disposal value. The new scales cost $120,000 (in total). Becaus...

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Q: Assume the same facts for Acton Corporation as in Problem 20-

Assume the same facts for Acton Corporation as in Problem 20-37, except that now assume Acton uses a JIT production system and backflush costing with two trigger points for making entries in the accou...

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Q: Neuro Instruments uses a manufacturing costing system with one direct-cost

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 tha...

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Q: Solar Energy Systems (SES) sells solar heating systems in residential

Solar Energy Systems (SES) sells solar heating systems in residential areas of eastern Pennsylvania. A successful sale results in the homeowner purchasing a solar heating system and obtaining rebates,...

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Q: Jason Brady is the managing partner of a business that has just

Jason Brady is the managing partner of a business that has just finished building a 60-room motel. Brady anticipates that he will rent these rooms for 15,000 nights next year (or 15,000 room-nights)....

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Q: KidsPlay, Inc., manufactures and sells table sets. In 2016

KidsPlay, Inc., manufactures and sells table sets. In 2016, it reported the following: Units produced and sold 3,000 Investment…………………………………..$3,000,000 Markup percentage on full cost…………………10% Rate o...

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Q: Arnold Manufacturing, Inc., plans to develop a new industrial powered

Arnold Manufacturing, Inc., plans to develop a new industrial powered vacuum cleaner for household use that runs exclusively on rechargeable batteries. The product will take 6 months to design and tes...

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Q: Happy Times Hotel operates a 100-room hotel near a busy

Happy Times Hotel operates a 100-room hotel near a busy amusement park. During June, a 30-day month, Happy Times Hotel experiences a 70% occupancy rate from Monday evening through Thursday evening (we...

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Q: Harold Monette vacationed at Lake Tahoe last winter. Unfortunately, he

Harold Monette vacationed at Lake Tahoe last winter. Unfortunately, he broke his ankle while skiing and spent two days at the Sierra University Hospital. Monette’s insurance company received a $4,950...

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Q: Enviro-Tech has only two retail and two wholesale customers.

Enviro-Tech has only two retail and two wholesale customers. Information relating to each customer for 2017 follows (in thousands): Enviro-Tech’s annual distribution-channel costs a...

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Q: Pineway Electric manufactures electric motors. It competes and plans to grow

Pineway Electric manufactures electric motors. It competes and plans to grow by selling high-quality motors at a low price and by delivering them to customers in a reasonable time after receiving cust...

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Q: Instant Service (IS) repairs printers and photocopiers for five multisite

Instant Service (IS) repairs printers and photocopiers for five multisite companies in a tristate area. IS’s costs consist of the cost of technicians and equipment that are directly...

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Q: Best Drugs is a distributor of pharmaceutical products. Its ABC system

Best Drugs is a distributor of pharmaceutical products. Its ABC system has five activities: Activity Area Cost Driver Rate in 2017 1. Order processing……â...

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Q: Reidland Manufacturing has four divisions: Acme, Dune, Stark,

Reidland Manufacturing has four divisions: Acme, Dune, Stark, and Brothers. Corporate headquarters is in Minnesota. Reidland corporate headquarters incurs costs of $16,800,000 per period, which is an...

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Q: Rembrandt Hotel & Casino is situated on beautiful Lake Tahoe in Nevada

Rembrandt Hotel & Casino is situated on beautiful Lake Tahoe in Nevada. The complex includes a 300-room hotel, a casino, and a restaurant. As Rembrandt’s new controller, your man...

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Q: Bergen Corporation has three divisions: pulp, paper, and fibers

Bergen Corporation has three divisions: pulp, paper, and fibers. Bergen’s new controller, David Fisher, is reviewing the allocation of fixed corporate-overhead costs to the three div...

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Q: The Chicago Tigers play in the American Ice Hockey League. The

The Chicago Tigers play in the American Ice Hockey League. The Tigers play in the Downtown Arena, which is owned and managed by the City of Chicago. The arena has a capacity of 15,000 seats (5,500 low...

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Q: The Hiro Corporation sells two brands of wine glasses: Plain and

The Hiro Corporation sells two brands of wine glasses: Plain and Chic. Hiro provides the following information for sales in the month of June 2017: Static-budget total contribution margin…………………………$15...

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Q: Emcee Inc. manufactures and sells two fruit drinks: Kostor and

Emcee Inc. manufactures and sells two fruit drinks: Kostor and Limba. Budgeted and actual results for 2017 are as follows: Required: 1. Compute the total sales-volume variance, the total sales-mix va...

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Q: Emcee Inc. prepared the budget for 2017 assuming a 20%

Emcee Inc. prepared the budget for 2017 assuming a 20% market share based on total sales in the Midwest region of the United States. The total fruit drinks market was estimated to reach sales of 1.25...

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Q: Chocolat Inc. is a producer of premium chocolate based in Palo

Chocolat Inc. is a producer of premium chocolate based in Palo Alto. The company has a separate division for each of its two products: dark chocolate and milk chocolate. Chocolat purchases ingredients...

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Q: An analysis of Pineway’s operating-income changes between 2016 and 2017

An analysis of Pineway’s operating-income changes between 2016 and 2017 shows the following: Operating income for 2016…………………….$1, 500,000 Add growth component……………………………….91,000 Deduct price-recovery...

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Q: Chocolat Inc. decides to examine the effect of using the dual

Chocolat Inc. decides to examine the effect of using the dual-rate method for allocating truck costs to each roundtrip. At the start of 2017, the budgeted costs were: Variable cost per round-trip&aci...

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Q: Phoenix Partners provides management consulting services to government and corporate clients.

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

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Q: E-books, an online book retailer, has two operating

E-books, an online book retailer, has two operating departments— corporate sales and consumer sales—and two support departments—human resources an...

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Q: Consider E-books again. The controller of E-books

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

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Q: Evan and Brett are students at Berkeley College. They share an

Evan and Brett are students at Berkeley College. They share an apartment that is owned by Brett. Brett is considering subscribing to an Internet provider that has the following packages available: Pa...

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Q: Gordon Grimes, a self-employed consultant near Atlanta, received

Gordon Grimes, a self-employed consultant near Atlanta, received an invitation to visit a prospective client in Seattle. A few days later, he received an invitation to make a presentation to a prospec...

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Q: Couture Corp sells Samsung 7 cases. It has a Men’s Division

Couture Corp sells Samsung 7 cases. It has a Men’s Division and a Women’s Division. Couture is now considering the sale of a bundled product called Dynamic Duo cons...

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Q: Jim Dandy Auto Sales uses all types of media to advertise its

Jim Dandy Auto Sales uses all types of media to advertise its products (television, radio, newspaper, Internet, and so on). At the end of 2016, the company president, Jim McKinnley, decided that all a...

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Q: Quality Chicken grows and processes chickens. Each chicken is disassembled into

Quality Chicken grows and processes chickens. Each chicken is disassembled into five main parts. Information pertaining to production in July 2017 is as follows: Joint cost of production in July 2017...

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Q: Answer the following questions. 1. A company has an

Answer the following questions. 1. A company has an inventory of 1,300 assorted parts for a line of missiles that has been discontinued. The inventory cost is $71,000. The parts can be either (a) rem...

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Q: Quality Chicken is computing the ending inventory values for its July 31

Quality Chicken is computing the ending inventory values for its July 31, 2017, balance sheet. Ending inventory amounts on July 31 are 15 pounds of breasts, 4 pounds of wings, 6 pounds of thighs, 5 po...

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Q: Sweeney Company is one of the world’s leading corn refiners. It

Sweeney Company is one of the world’s leading corn refiners. It produces two joint products—corn syrup and corn starch—using a common production p...

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Q: The Tempura Spirits Company produces two products—methanol (wood alcohol

The Tempura Spirits Company produces two products—methanol (wood alcohol) and turpentine—by a joint process. Joint costs amount to $124,000 per batch of output. Each batch totals 9,500 gallons: 25% me...

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Q: The Cook Company operates a simple chemical process to convert a single

The Cook Company operates a simple chemical process to convert a single material into three separate items, referred to here as X, Y, and Z. All three end products are separated simultaneously at a si...

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Q: Sinclair Oil & Gas, a large energy conglomerate, jointly processes

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...

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Q: Tasty Foods produces two types of microwavable products: beef-flavored

Tasty 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...

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Q: Nervana Soy Products (NSP) buys soybeans and processes them into

Nervana Soy Products (NSP) buys soybeans and processes them into other soy products. Each ton of soybeans that NSP purchases for $350 can be converted for an additional $210 into 650 pounds of soy mea...

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Q: (Cheatham and Green, adapted) Crispy, Inc., is

(Cheatham and Green, adapted) Crispy, Inc., is a producer of potato chips. A single production process at Crispy, Inc., yields potato chips as the main product, as well as a byproduct that can be sold...

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Q: Jack Bibby is a prospector in the Texas Panhandle. He has

Jack Bibby 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...

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Q: Royston, Inc., is a large food-processing company.

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...

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Q: Answer the following questions. 1. Robinson Computers makes 5,

Answer the following questions. 1. Robinson Computers makes 5,700 units of a circuit board, CB76, at a cost of $230 each. Variable cost per unit is $180 and fixed cost per unit is $50. Peach Electroni...

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Q: Candid, Inc. is a manufacturer of digital cameras. It

Candid, Inc. is a manufacturer of digital cameras. It has two departments: assembly and testing. In January 2017, the company incurred $800,000 on direct materials and $805,000 on conversion costs, fo...

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Q: Refer to requirement 2 of Exercise 17-21. Prepare summary

Refer to requirement 2 of Exercise 17-21. Prepare summary journal entries for the use of direct materials and incurrence of conversion costs. Also prepare a journal entry to transfer out the cost of g...

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Q: Dot and Ken Ice Cream uses a mixing department and a freezing

Dot and Ken Ice Cream uses a mixing department and a freezing department in producing its ice cream. Its process-costing system in the mixing department has two direct materials cost categories (ice c...

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Q: The assembly division of Quality Time Pieces, Inc. uses the

The assembly division of Quality Time Pieces, Inc. uses the weighted-average method of process costing. Consider the following data for the month of May 2017: Required: Compute equivalent units for d...

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Q: Required: For the data in Exercise 17-24,

Required: For the data in Exercise 17-24, 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 comp...

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Q: Suppose the assembly division at Quality Time Pieces, Inc. uses

Suppose the assembly division at Quality Time Pieces, Inc. uses the FIFO method of process costing instead of the weighted average method. From exercise 24: The assembly division of Quality Time Pie...

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Q: Required: For the data in Exercise 17-24,

Required: For the data in Exercise 17-24, 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...

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Q: The Carter Furniture Company needs to determine the cost of two

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Q: ZanyBrainy Corporation makes interlocking children’s blocks in a single processing department.

ZanyBrainy Corporation makes interlocking children’s blocks in a single processing department. Direct materials are added at the start of production. Conversion costs are added evenl...

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Q: Required: 1. Do Exercise 17-29 using the

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Q: 1. The Cozy Company manufactures slippers and sells them at $

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Q: Trendy Clothing, Inc. is a manufacturer of winter clothes.

Trendy Clothing, Inc. is a manufacturer of winter clothes. It has a knitting department and a finishing department. This exercise focuses on the finishing department. Direct materials are added at the...

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Q: Suppose that Trendy uses the FIFO method instead of the weighted-

Suppose that Trendy uses the FIFO method instead of the weighted-average method in all of its departments. The only changes to Exercise 17-31 under the FIFO method are that total transferred-in costs...

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Q: Egyptian Spa produces two different spa products: Relax and Refresh.

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Q: Lawrence Company is a manufacturer of contemporary door handles. The

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Q: The following data, in physical units, describe a grinding process

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Q: Consider the following data for November 2017 from MacLean Manufacturing Company,

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Q: For the data in Exercise 18-21, summarize the total

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Q: Refer to the information in Exercise 18-21. Suppose MacLean

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Q: Required: For the data in Exercise 18-21,

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Q: LaCroix Company produces handbags from leather of moderate quality. It distributes

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Q: The Reward One Company manufactures windows. Its manufacturing plant has the

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Q: Required: 1. Do Exercise 18-25 using the

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Q: Plastique produces parts for use in various industries. Plastique uses a

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Q: Spheres Toys manufactures globes at its San Fernando facility. The company

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Q: LogicCo is a fast-growing manufacturer of computer chips. Direct

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Q: Refer to the information in Exercise 18-29.

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Q: Suppose LogicCo determines standard costs of $215 per equivalent unit for

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Q: Barrett Kitchens produces a variety of items in accordance with special job

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Q: Heyer Appliances assembles dishwashers at its plant in Tuscaloosa, Alabama.

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Q: The Russell Company has an extensive job-costing facility that uses

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Q: Osborn, Inc., produces cell phone equipment. Amanda Westerly,

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Q: Clemson Company prepares its budgets on the basis of standard

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Q: Kitchen Supply, Inc. (KSI), manufactures three types of flatware: institutional,

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Q: The following information is available for year 1 for Dancer

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Q: Pickle Motorcycles, Inc. (PMI), manufactures three motorcycle models: a cruising

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Q: Huron Furniture is considering updating its cost system to an

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Q: House Station, Inc., is a nationwide hardware and furnishings chain.

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Q: Pharmaceutical firms, oil and gas companies, and other ventures inevitably

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Q: Cameron Parts has the following data from year 1 operations,

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Q: Chander, Inc., manufactures cloth shopping bags. The controller is preparing

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Q: MTI makes three types of lawn tractors: M3100, M4100, and

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Q: Panther Corporation appeared to be experiencing a good year. Sales

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Q: Amazon Beverages produces and bottles a line of soft drinks

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Q: The following transactions occurred in January at Dungan Cabinetry, a

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Q: A tornado struck the only manufacturing plant of Toledo Farm

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Q: Chelsea Household Renovations (CHR) is a rapidly growing company that

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Q: Refer to Exercise 10-38.

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Q: Leidenheimer Corporation manufactures small airplane propellers. Sales for year 2

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Q: Allcott Computer Services (ACS) provides computer training and repair services

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Q: Model, Inc., produces model automobiles made from metal. It operates

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Q: GB Service Corporation has two service departments, Administration and Accounting,

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Q: Steamco Corporation is reviewing its operations to see what additional

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Q: A new accounting intern at Gibson Corporation lost the only

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Q: Doug’s Diner is planning to expand operations and is concerned

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Q: Find the values of the missing items (a) through (q).

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Q: The following information is provided concerning the operations of Tolstoy

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Q: Valencia Products is a decentralized organization that evaluates divisional management

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Q: Pacific Hotels operates a centralized call center for the reservation

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Q: Peninsula Candy Company makes three types of candy bars: Chewy,

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Q: Oscar Clemente is the manager of Forbes Division of Pitt,

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Q: Midwest Entertainment has four operating divisions: Bus Charters, Lodging, Concerts,

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Q: Houston Corporation manufactures a wide variety of chemical compounds and

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Q: Jill Haas is a divisional manager within Tulsa GPS Guidance

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Q: Birmingham Bolt, Inc., has been approached by one of its

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Q: Use the information in Exercise 12 to compute total cost

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Q: You are considering buying one of two local firms (Olson

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Q: Dim Witt is the county commissioner of Clueless County. He

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Q: The following chart indicates the percentage of support department services

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Q: Prosperous Bank has three support areas (administration, human resources, and

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Q: Weinberg Canning produces fillet, smoked salmon, and salmon remnants in

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Q: Use the information for Prosperous Bank in Exercise 12 to

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Q: Just Nuts, a macadamia nut cannery, is analyzing its throughput

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Q: High Flight Toys manufactures frisbees. The following information is available

High Flight Toys manufactures frisbees. The following information is available for 2010, the company’s first year in business when it produced 300,000 units. Revenue of $480,000 was...

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Q: La Maya Corp. wants to compute its throughput for August

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Q: Management at Southeast Crafts has decided to begin using throughput

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Q: San Fran Cycles manually manufactures three unique bicycle models: racing,

San Fran Cycles manually manufactures three unique bicycle models: racing, touring, and basic. All of the skilled craftspeople employed at San Fran can make each of the three models. Because it takes...

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Q: Lombardi Printing has two support departments (administration and editorial) and

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Q: Wakowski Company’s annual budget for its three support departments (administration,

Wakowski Company’s annual budget for its three support departments (administration, legal/accounting, and maintenance/engineering) and its two production departments (processing and...

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Q: Stephenville Bank & Trust offers two primary financial services: commercial

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Q: Fred’s Freight employs three drivers who are paid $20 per

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Q: Management at Robo Weld Inc. has estimated that each quality

Management at Robo Weld Inc. has estimated that each quality control inspector should be able to make an average of 24 inspections per hour. Retired factory supervisors are excellent quality control i...

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Q: Cost control in the Human Resources Office of Eastern Wholesale

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Q: Durham Denim uses backflush costing to account for production costs

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Q: Evergreen Industries operates a chain of lumber stores. In 2010,

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Q: During 2010 (the first year of operations), Ridenour Company produced

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Q: Managers at Schubert Corp. want to determine the company’s cost

Managers at Schubert Corp. want to determine the company’s cost of quality. The following information has been gathered from the records for August 2010:Defective units ……………………………..6000Units reworked...

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Q: Promotional Products produces commercial calendars in a two-department operation: Department

Promotional Products produces commercial calendars in a two-department operation: Department 1 is labor intensive and Department 2 is automated. The average output of Department 1 is 45 units per hour...

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Q: Gourmet Grade has just completed its work on a new

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Q: Westside Warehouse is considering reengineering some production operations with automated

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Q: Itawa Appliances identified the following failure costs during 2010:

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Q: Seattle Leisure Designs has designed a new athletic suit. The

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Q: Fibre Technologies manufactures fiberglass housings for portable generators. One part

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Q: The Scent of Money makes three products that can be

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Q: Thurton Industrial is considering the installation of a $1,800,000 production

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Q: Tilda Manufacturing is a manufacturer of electronics components. Income data for

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Q: Why do management accountants need to understand financial accounting?

Why do management accountants need to understand financial accounting?

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Q: Marron, Inc. produces the basic fillings used in many popular

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Q: Sol Electronics, a fast-growing electronic device producer, uses

Sol Electronics, a fast-growing electronic device producer, uses a standard costing system, with standards set at the beginning of each year. In the second quarter of 2015, Sol faced two challenges: i...

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Q: Trustex Printers Inc. produces luxury chequebooks with three cheques and stubs

Trustex Printers Inc. produces luxury chequebooks with three cheques and stubs per page. Each chequebook is designed for an individual customer and is ordered through the customer’s bank. The company’...

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Q: The Clarkson Company produces engine parts for car manufacturers. A new

The Clarkson Company produces engine parts for car manufacturers. A new accountant intern at Clarkson has accidentally deleted the calculations on the company’s variance analysis cal...

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Q: Katharine Stanley is the owner of Better Bikes, a company that

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Q: Yates Inc. is a privately held furniture manufacturer. For August

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Q: Prepare journal entries and post them to T-accounts for all

Prepare journal entries and post them to T-accounts for all transactions in Exercise 7-25, including requirement 2. Summarize how these journal entries differ from normal costing entries. Data from E...

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Q: Suppose the static budget was for 2,500 units of output

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Q: The Energy Products Company produces a gasoline additive, Gas Gain,

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Q: Niagara Inc. manufactures apple products such as apple jelly and applesauce

Niagara Inc. manufactures apple products such as apple jelly and applesauce. It makes applesauce by blending Tolman, Golden Delicious, and Ribston apples. Budgeted costs to produce 100,000 kilograms o...

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Q: Describe sensitivity analysis. How has spreadsheet software affected its use?

Describe sensitivity analysis. How has spreadsheet software affected its use?

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Q: The list of representative cost drivers in the right column of this

The list of representative cost drivers in the right column of this table are randomized with respect to the list of functions in the left column. That is, they do not match. Function ………………………………………...

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Q: Thomas Inc. is considering three countries for the sole manufacturing site

Thomas Inc. is considering three countries for the sole manufacturing site of its new product: India, China, and Canada. The product will be sold to retail outlets in Canada at $47.50 per unit. These...

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Q: The Sunrise Group (SG) is an environmentally conscious organization that

The Sunrise Group (SG) is an environmentally conscious organization that buys land with the objective of preserving the natural environment. SG receives private contributions and takes no assistance f...

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Q: Zyrcon Ltd. is a computer games manufacturer. It currently has

Zyrcon Ltd. is a computer games manufacturer. It currently has two games on the market: Alien Predators and Vegas Pokermatch. Data regarding the two products are as follows: The fixed costs of Zyrco...

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Q: Edible Bouquets (EB) makes and sells flower bouquets. EB

Edible Bouquets (EB) makes and sells flower bouquets. EB is considering opening a new store in the local mall. The mall has several empty shops and EB is unsure of the demand for its product. The mall...

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Q: Clarke Ltd. is a manufacturer of promotional items. The majority

Clarke Ltd. is a manufacturer of promotional items. The majority of its revenues is from the production of promotional pens. Clarke imports these pens from China and then imprints them with corporate...

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Q: Angela King is the Las Vegas promoter for professional fighter Randy Couture

Angela King is the Las Vegas promoter for professional fighter Randy Couture. King is promoting a new Octagon world championship fight for Couture. The key area of uncertainty is the size of the cable...

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Q: In each of the following situations, determine whether job costing or

In each of the following situations, determine whether job costing or process costing would be more appropriate. a. A public acccounting firm b. An oil refinery c. A custom furniture manufacturer d. A...

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Q: Destin Products uses a job-costing system with two direct cost

Destin Products uses a job-costing system with two direct cost categories (direct materials and direct manufacturing labour) and one manufacturing overhead cost pool. Destin allocates manufacturing ov...

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Q: Chirac & Partners is a Quebec based public accounting partnership specializing in

Chirac & Partners is a Quebec based public accounting partnership specializing in audit services. Its job-costing system has a single direct cost category (professional labour) and a single indirect c...

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Q: What is the benefit of creating more than one manufacturing overhead cost

What is the benefit of creating more than one manufacturing overhead cost pool?

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Q: Michael and Gabitel (MG) is a law firm that specializes

Michael and Gabitel (MG) is a law firm that specializes in writing wills. Its job-costing system has one direct cost pool, professional labour, and a single indirect cost pool that includes all suppor...

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Q: Anderson Construction assembles residential homes. It uses a job-costing

Anderson Construction assembles residential homes. It uses a job-costing system with two direct cost categories (direct materials and direct labour) and one indirect cost pool (assembly support). The...

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Q: The University of Toronto Press is wholly owned by the university.

The University of Toronto Press is wholly owned by the university. It performs the bulk of its work for other university departments, which pay as though the Press were an outside business enterprise....

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Q: Two products are manufactured by the Fraser Corporation: Widgets and Thingamajigs

Two products are manufactured by the Fraser Corporation: Widgets and Thingamajigs. In July 2015, the controller of Fraser, upon instructions from senior management, had the budgeting department gather...

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Q: Easecom Company is a manufacturer of videoconferencing products. Regular units are

Easecom Company is a manufacturer of videoconferencing products. Regular units are manufactured to meet marketing projections, and specialized units are made after an order is received. Maintaining th...

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Q: Len Lippart is a line worker in the assembly department of Maxart

Len Lippart is a line worker in the assembly department of Maxart Manufacturing. He normally earns $12 per hour, but gets time and a half ($18 per hour) for overtime, over 40 hours per week. He earns...

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Q: Gwen Benson, Ian Blacklaw, and Eduardo Cabrera are sales representatives

Gwen Benson, Ian Blacklaw, and Eduardo Cabrera are sales representatives for Electronic Manufacturing Inc. (EMI). EMI specializes in low-volume production orders for the research groups of major compa...

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Q: Soo Office Equipment manufactures and sells metal shelving. It began operations

Soo Office Equipment manufactures and sells metal shelving. It began operations on January 1, 2016. Costs incurred for 2016 are as follows (V stands for variable; F stands for fixed): Direct material...

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Q: Assume management predicts that the selling price per unit and variable cost

Assume management predicts that the selling price per unit and variable cost per unit will be the same in 2017 as in 2016. Fixed manufacturing costs and marketing, distribution, and customer-service c...

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Q: Consider the following account balances (in thousands) for the Canseco

Consider the following account balances (in thousands) for the Canseco Company: Required: 1. Prepare a schedule of cost of goods manufactured for 2016. 2. Revenues in 2016 were $300 million. Prepare...

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Q: The following partial information is available. Complete the table by filling

The following partial information is available. Complete the table by filling in all the blanks. Each case is independent.

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Q: Hofstra Plastics Inc.’s selected data for the month of August

Hofstra Plastics Inc.’s selected data for the month of August 2016 are presented below (in millions): Work-in-process inventory, August 1, 2016 ……………………………………$ 200 Direct materials inventory, August...

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Q: The Powell Corporation has the following account balances (in millions):

The Powell Corporation has the following account balances (in millions): Required: Prepare an statement of comprehensive income and a supporting schedule of cost of goods manufactured for the...

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Q: 1. How would the answer to the preceding problem be modified

1. How would the answer to the preceding problem be modified if you were asked for a schedule of cost of goods manufactured and sold instead of a schedule of cost of goods manufactured? Be specific. 2...

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Q: The following items (in millions) pertain to the Chan Corporation

The following items (in millions) pertain to the Chan Corporation: Chan’s manufacturing cost system uses a three-part classification of manufacturing costs. There are two prime co...

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Q: Foxwood Company is a metal- and wood-cutting manufacturer selling

Foxwood Company is a metal- and wood-cutting manufacturer selling products to the home construction market. Consider the following data for the year 2016: Required: 1. Prepare a statement of compreh...

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Q: Lawnox, a manufacturer of lawn mowers, predicts that it will

Lawnox, a manufacturer of lawn mowers, predicts that it will purchase 240,000 spark plugs next year. Lawnox estimates that 20,000 spark plugs will be required each month. A supplier quotes a price of...

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Q: Dawmart Corp., an international retail giant, is considering implementing a

Dawmart Corp., an international retail giant, is considering implementing a new business-to-business (B2B) information system for processing purchase orders. The current system costs Dawmart $1,000,00...

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Q: (M. Rajan, adapted) Tocchet Company manufactures C B1

(M. Rajan, adapted) Tocchet Company manufactures C B1, a citizens’ band radio that is sold mainly to truck drivers. The company’s plant in Camden has an annual capacity of 75,000 units. Tocchet curren...

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Q: The Goldman Company retails two products, a standard and a deluxe

The Goldman Company retails two products, a standard and a deluxe version of a luggage carrier. The budgeted statement of comprehensive income is as follows: Required: 1.Compute the breakeven point...

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Q: Panther Productions has just finished production of the most recent sequel in

Panther Productions has just finished production of the most recent sequel in its Illinois Jones series. The film cost $22 million to produce. Most production personnel and actors were paid a fixed sa...

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Q: CVP computations. Patel Manufacturing sold 200,000 units of its

CVP computations. Patel Manufacturing sold 200,000 units of its product for $30 per unit. Variable cost per unit is $25 and total fixed costs are $800,000. Required: 1.Calculate (a) contribution marg...

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Q: Panther Productions is negotiating the next sequel to its Illinois Jones series

Panther Productions is negotiating the next sequel to its Illinois Jones series. This negotiation is proving more difficult than for the original movie. There is a risk that the series may have peaked...

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Q: Bonavista Cribs manufactures baby cribs. It currently produces one model,

Bonavista Cribs manufactures baby cribs. It currently produces one model, the Surrey crib, and it is priced at $600. Variable manufacturing costs are $210 per unit and variable shipping costs are $60...

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Q: (CMA, adapted) Marston Corporation manufactures pharmaceutical products that are

(CMA, adapted) Marston Corporation manufactures pharmaceutical products that are sold through a network of sales agents. The agents are paid a commission of 18% of sales. The statement of comprehensiv...

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Q: Manitoba Production Corporation (MPC) specializes in the manufacture of one

Manitoba Production Corporation (MPC) specializes in the manufacture of one-litre plastic bottles. The plastic moulding machines are capable of producing 100 bottles per hour. The firm estimates that...

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Q: Technology of the Past (TOP) produces old-fashioned simple

Technology of the Past (TOP) produces old-fashioned simple corkscrews. Last year was not a good year for sales but TOP expects the market to pick up this year. Last year’s statement of comprehensive i...

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Q: The City of Vancouver makes an $850,000 lump-

The City of Vancouver makes an $850,000 lump-sum budget appropriation to run a safe injection site for a year. All the appropriation is to be spent. The variable costs average $16 per patient visit. F...

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Q: The Windsor Chamber of Commerce is planning its annual event. There

The Windsor Chamber of Commerce is planning its annual event. There are two possible plans: a. Hold the event at a local hotel. The fixed rental cost would be $2,700 and the charge for meals would be...

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Q: David Hutchinson is an internationally known Canadian professor specializing in consumer marketing

David Hutchinson is an internationally known Canadian professor specializing in consumer marketing. In 2015, Hutchinson and United Kingdom Business School (UKBS) agreed to conduct a one-day seminar at...

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Q: Athabaska Ltd. produces a lens used for webcams. Summary data

Athabaska Ltd. produces a lens used for webcams. Summary data from its year 2014 statement of comprehensive income are as follows: Revenues …………………………………..$8,000,000 Variable costs ………………………………4,320,...

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Q: Ahmed Diba is the controller of the Body Products Division of World

Ahmed Diba is the controller of the Body Products Division of World Wide Drugs (WWD). It is located in Winnipeg, which is also the headquarters of WWD. Diba is helping develop a proposal for a new pro...

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Q: Diego Motors is a small car dealership. On average it sells

Diego Motors is a small car dealership. On average it sells a car for $26,000, which it purchases from the manufacturer for $22,000. Each month, Diego Motors pays $60,000 in rent and utilities and $70...

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Q: Domestic Engines Company produces the same power generators in two plants,

Domestic Engines Company produces the same power generators in two plants, a newly renovated, automated plant in Peona, and an older, less automated plant in Modine. The following data are available f...

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Q: Hoot Washington is the newly elected charismatic leader of the Western Party

Hoot Washington is the newly elected charismatic leader of the Western Party. He is the darling of the right-wing media. His “take no prisoners” attitude has left many an opponent on a talk show feeli...

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Q: Wildlife Escapes generates average revenue of $9,200 per person

Wildlife Escapes generates average revenue of $9,200 per person on its five-day package tours to wildlife parks in Kenya. The variable costs per person are Airfare ……………………………………………………….$3,500 Hotel...

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Q: Carumba Inc.’s 2015 budget includes the following items:

Carumba Inc.’s 2015 budget includes the following items: Sales ……………………………………………………..80,000 units Production …………………………………………….80,000 units Direct materials used………………………………… $600,000 Direct labour …...

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Q: Teddy Bear Daycare provides daycare for children Mondays through Fridays. Its

Teddy Bear Daycare provides daycare for children Mondays through Fridays. Its monthly variable costs per child are Lunch and snacks……………………………………………………..$100 Educational supplies ……………………………………………………...

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Q: R.A. Ro and Company, a manufacturer of quality

R.A. Ro and Company, a manufacturer of quality handmade walnut bowls, has experienced a steady growth in sales for the past five years. However, increased competition has led Ro, the president, to bel...

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Q: Prairie Ltd. currently manufactures a single product in its Saskatoon factory

Prairie Ltd. currently manufactures a single product in its Saskatoon factory. Last year’s results (based on sales volume of 25,000 units) were Required: 1.Using last yearâ&#...

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Q: The Walk Rite Shoe Company operates a chain of shoe stores.

The Walk Rite Shoe Company operates a chain of shoe stores. The stores sell ten different styles of inexpensive men’s shoes with identical unit costs and selling prices. A unit is defined as a pair of...

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Q: Refer to requirement 3 of 3-40. In this problem

Refer to requirement 3 of 3-40. In this problem assume the role of the owner of Walk Rite. Required: 1. Calculate the number of units sold where the operating income under (a) a fixed-salary plan and...

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Q: Delcour Manufacturing budgeted $325,000 and incurred $337,

Delcour Manufacturing budgeted $325,000 and incurred $337,000 of overhead costs in the past year. During the year, it allocated $302,000 to its production. An extract from the company’s financial reco...

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Q: Orillia Equipment sells riding lawn mowers. The average price for a

Orillia Equipment sells riding lawn mowers. The average price for a lawn mower is $16,000. Orillia purchases these mowers from the manufacturers at an average cost of $12,200. Orillia’s monthly fixed...

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Q: Keating & Partners is a law firm specializing in labour relations and

Keating & Partners is a law firm specializing in labour relations and employee-related work. It employs 25 professionals (5 partners and 20 managers) who work directly with its clients. The average bu...

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Q: Keating has just completed a review of its job-costing system

Keating has just completed a review of its job-costing system. This review included a detailed analysis of how past jobs used the firm’s resources and interviews with personnel about...

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Q: Gaston Ltd. uses a normal job- costing system with two

Gaston Ltd. uses a normal job- costing system with two direct cost categories—direct materials and direct manufacturing labour—and one indirect cost category—manufacturing overhead. At the beginning o...

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Q: Corporation manufactures precision equipment made to order for the semiconductor industry.

Corporation manufactures precision equipment made to order for the semiconductor industry. Glavine uses two manufacturing overhead cost pools—one for the overhead costs incurred in i...

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Q: The following information relates to the activities of King Ltd. for

The following information relates to the activities of King Ltd. for the year 2016: The company uses normal costing and applies overhead on the basis of machine-hours (MH). The company had calculate...

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Q: Jack Halpern is the owner and CEO of Aerospace Comfort, a

Jack Halpern is the owner and CEO of Aerospace Comfort, a firm specializing in the manufacture of seats for air transport. He has just received a copy of a letter written to the Auditor General of the...

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Q: Nicole Limited is a company that produces machinery to customer order.

Nicole Limited is a company that produces machinery to customer order. Its job-costing system (using normal costing) has two direct cost categories (direct materials and direct manufacturing labour) a...

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Q: S. Sridhar, adapted Northley Industries is a manufacturer of sailboats

S. Sridhar, adapted Northley Industries is a manufacturer of sailboats. The following partial information for 2016 is available: Additional Information 1. Direct manufacturing labour wage rate was $...

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Q: J. Watson Kalor Ltd. uses a normal job-costing

J. Watson Kalor Ltd. uses a normal job-costing system with two direct cost categories, direct materials and direct labour, and one indirect cost pool. Manufacturing overhead is allocated based on dire...

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Q: Naf Radiator Company uses a normal costing system with a single manufacturing

Naf Radiator Company uses a normal costing system with a single manufacturing overhead (MOH) cost pool and machine-hours (MH) as the cost allocation base. The following data are for 2016: Budgeted ma...

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Q: Financial accountants use estimates of financial value differently than either cost or

Financial accountants use estimates of financial value differently than either cost or management accountants. Required: 1. Identify two differences in use. 2. Identify a similarity among accountants...

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Q: Wigan Associates is a recently formed law partnership. Ellery Hanley,

Wigan Associates is a recently formed law partnership. Ellery Hanley, the managing partner of Wigan Associates, has just finished a tense phone call with Martin Offiah, president of Widnes Coal. Offia...

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Q: Hanley asks his assistant to collect details on those costs included in

Hanley asks his assistant to collect details on those costs included in the $21,000 indirect-cost pool that can be traced to each individual case. After further analysis, Wigan is able to reclassify $...

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Q: Wigan Associates has two classifications of professional staff—partners and managers

Wigan Associates has two classifications of professional staff—partners and managers. Hanley asks his assistant to examine the relative use of partners and managers on the recent Wid...

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Q: Halifax Test Laboratories does heat testing (HT) and stress testing

Halifax Test Laboratories does heat testing (HT) and stress testing (ST) on materials. Under its current costing system, Halifax aggregates all operating costs of $1,440,000 into a single overhead cos...

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Q: Family Supermarkets (FS) found that its ABC analysis (see

Family Supermarkets (FS) found that its ABC analysis (see the Pulling It All Together problem in this chapter) provided important insights. FS extends the analysis to cover three more product lines: b...

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Q: Radhika’s Radiology Centre (RRC) performs X-rays, ultrasounds

Radhika’s Radiology Centre (RRC) performs X-rays, ultrasounds, CT scans, and MRIs. RRC has developed a reputation as a top radiology centre in the area. RRC has achieved this status...

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Q: Pharmacare Inc. specializes in the distribution of pharmaceutical products. Pharmacare

Pharmacare Inc. specializes in the distribution of pharmaceutical products. Pharmacare operates at capacity and has three main market segments: a. General supermarket chains b. Drugstore chains c. &ac...

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Q: Cartwright Ltd. manufactures two models of saddles, the Jordan and

Cartwright Ltd. manufactures two models of saddles, the Jordan and the Shenandoah. The Jordan is a more basic model and sells for $900. The Shenandoah is a professional-model saddle and sells for $1,5...

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Q: Pumpkin Bags (PB) is a designer of high-quality

Pumpkin Bags (PB) is a designer of high-quality backpacks and purses. Each design is made in small batches. Each spring, PB comes out with new designs for the backpack and for the purse. They use thes...

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Q: Ace Bicycle Company produces bicycles. This year’s expected production is 10

Ace Bicycle Company produces bicycles. This year’s expected production is 10,000 units. Currently, Ace makes the chains for its bicycles. Ace’s accountant reports t...

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Q: Strategy usually includes some formal processes. Required:

Strategy usually includes some formal processes. Required: 1. How can managers choose between different strategies? 2. How is strategy different from an operating decision?

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Q: Applewood Electronics, a division of Elgin Corporation, manufactures two large

Applewood Electronics, a division of Elgin Corporation, manufactures two large-screen television models: the Monarch, which has been produced since 2012 and sells for $1,700, and the Regal, a new mode...

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Q: Tofino Furniture is an elite desk manufacturer. It manufactures two products

Tofino Furniture is an elite desk manufacturer. It manufactures two products: ■ Executive desks: 0.91 m × 1.5 m oak desks = 1.365 m 2 ■ Director desks...

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Q: Dinettes Inc. operates at capacity and makes glass-topped dining

Dinettes Inc. operates at capacity and makes glass-topped dining tables and wooden chairs that are typically sold as sets of four chairs with one table. However, some customers purchase replacement or...

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Q: The following information is for the Newport Stationery Store.

The following information is for the Newport Stationery Store. Balance Sheet Information as of September 30 Current assets: Cash ………â...

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Q: On December 1, 2015, the Basma Wholesale Company is attempting

On December 1, 2015, the Basma Wholesale Company is attempting to project cash receipts and disbursements through January 31, 2016. On January 31, 2016, a note will be payable in the amount of $120,00...

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Q: Korna Company manufactures a product, gizmo, that uses the following

Korna Company manufactures a product, gizmo, that uses the following direct inputs: Korna has no direct materials inventory. All manufacturing overhead costs are variable costs. The manufacturing ov...

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Q: Pet Transport Company makes two pet carriers, the Cat-allac

Pet Transport Company makes two pet carriers, the Cat-allac and the Dog-eriffic. They are both made of plastic with metal doors, but the Cat-allac is smaller. Information for the two products for the...

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Q: Assume the following: Pet Transport (PT) does not make

Assume the following: Pet Transport (PT) does not make any sales on credit. PT sells only to the public, and accepts cash and credit cards. Of its sales, 90% are to customers using credit cards, for w...

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Q: Francois Chenier is the purchasing agent for Highlight Manufacturing Company. Marge

Francois Chenier is the purchasing agent for Highlight Manufacturing Company. Marge Belvedere is head of the production planning and control department. Every six months, Belvedere gives Chenier a gen...

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Q: Duncan Company manufactures a variety of products in a variety of departments

Duncan Company manufactures a variety of products in a variety of departments, and evaluates departments and departmental managers by comparing actual costs and outputs relative to their budgets. Depa...

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Q: Home Entertainment Centre (HEC) operates a large store in Halifax

Home Entertainment Centre (HEC) operates a large store in Halifax. The store has both a DVD section and a music section (compact discs, MP3 players, etc.). HEC reports revenues for the DVD section sep...

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Q: Slopes Inc. manufactures and sells snowboards. Slopes manufactures a single

Slopes Inc. manufactures and sells snowboards. Slopes manufactures a single model, the Pipex. In the summer of 2015, Slopes’s accountant gathered the following data to prepare budget...

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Q: The city of Riverside hired its first city manager four years ago

The city of Riverside hired its first city manager four years ago. She favoured a “management by objectives” philosophy and accordingly set up many profit responsibility centres, including a sanitatio...

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Q: Stevie McQueen has run Lightning Car Detailing for the past 10 years

Stevie McQueen has run Lightning Car Detailing for the past 10 years. His static-budget and actual results for June 2015 are provided below. Stevie has one employee who has been with him for all 10 ye...

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Q: For its manufacturing facility in Montreal, Quebec, Metalmoulder has a

For its manufacturing facility in Montreal, Quebec, Metalmoulder has a long-term contract with Osaka Metals. Metalmoulder manufactures large-scale machining systems that are sold to other industrial c...

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Q: Grant Electric Inc. manufactures lamps. It has set up the

Grant Electric Inc. manufactures lamps. It has set up the following standards per finished unit for direct materials and direct manufacturing labour: Direct materials: 10 kg at $4.50/kg …………………………………...

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Q: On May 1, 2015, Terra Company began the manufacture of

On May 1, 2015, Terra Company began the manufacture of a new internet paging device known as Flare. The company installed a standard costing system to account for manufacturing costs. The standard cos...

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Q: Morro Bay Surfboards is a California company that manufactures fibreglass surfboards.

Morro Bay Surfboards is a California company that manufactures fibreglass surfboards. The standard cost of direct materials and direct manufacturing labour is $100 per board. This includes 20 kilogram...

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Q: Shayna’s Smart Shawls Inc. is a small business that Shayna developed

Shayna’s Smart Shawls Inc. is a small business that Shayna developed while in college. She began hand-knitting shawls for her dorm friends to wear while studying. As demand grew, she hired some worker...

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Q: Aunt Molly’s Old Fashioned Cookies bakes cookies for a chain of retail

Aunt Molly’s Old Fashioned Cookies bakes cookies for a chain of retail stores. The company’s best-selling cookie is Chocolate Nut Supreme, which is marketed as a go...

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Q: Styles Inc. manufactures a full line of well-known sunglasses

Styles Inc. manufactures a full line of well-known sunglasses frames and lenses. Styles uses a standard costing system to set attainable standards for direct materials, labour, and overhead costs. Sty...

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Q: Your new position as supervisor of product introduction, you have to

Your new position as supervisor of product introduction, you have to decide on a pricing strategy for a talking doll specialty product with the following cost structure: Variable costs per unit &acir...

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Q: The Fremont, California, plant of NUMMI (New United Motor

The Fremont, California, plant of NUMMI (New United Motor Manufacturing, Inc.), a joint venture of General Motors and Toyota, assembles two types of cars (Corollas and Geo Prisms). A separate assembly...

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Q: Memflash Inc. manufactures 4 gigabyte flash drives that are compatible with

Memflash Inc. manufactures 4 gigabyte flash drives that are compatible with a popular portable storage device. Memflash sells flash drives directly to computer retail chains and to direct marketing or...

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Q: MFD Manufacturing makes wooden furniture. One of their products is a

MFD Manufacturing makes wooden furniture. One of their products is a wooden dresser. The exterior and some of the shelves are made of oak, a highquality wood, but the interior drawers are made of pine...

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Q: Tropical Fruits Inc. processes tropical fruit into a fruit salad mix

Tropical Fruits Inc. processes tropical fruit into a fruit salad mix, which it sells to a food-service company. Tropical Fruits has in its budget the following standards for the direct materials input...

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Q: You are a student preparing for a job interview with a large

You are a student preparing for a job interview with a large Canadian consumer products manufacturer. You are applying for a job in the finance department. This company is known for its rigorous case-...

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Q: Electric Eels Company produces high-quality electric eels for Museums and

Electric Eels Company produces high-quality electric eels for Museums and Aquaria to sell in their gift shops. It accounts for the production of these eels with an ABC system. For 2015, Electric Eels...

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Q: Coast Finance helps prospective homeowners of substantial means to find low-

Coast Finance helps prospective homeowners of substantial means to find low-cost financing and assists existing homeowners in refinancing their current loans at lower interest rates. Coast works only...

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Q: Julie Leung is the newly appointed president of Northern University. Northern

Julie Leung is the newly appointed president of Northern University. Northern University Hospital (NUH) is a major problem for her because it is running large deficits. While it is not-for-profit, the...

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Q: A series of independent situations in which a firm is about to

A series of independent situations in which a firm is about to make a strategic decision follow. a. Yello Phones is about to decide whether to launch production and sale of a cell phone with standard...

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Q: Softmoc is a shoe retailing company. The majority of its sales

Softmoc is a shoe retailing company. The majority of its sales are made at its own stores. These stores are often located in shopping malls or in the downtown shopping districts of cities. A small but...

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Q: Stephen Bergstrom is the new corporate controller of a multinational company that

Stephen Bergstrom is the new corporate controller of a multinational company that has just overhauled its organizational structure. The company is now decentralized. Each division is under an operatin...

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Q: Ana Compo is getting ready to open a small restaurant. She

Ana Compo is getting ready to open a small restaurant. She is on a tight budget and must choose between the following long-distance phone plans: Plan A: Pay 10 cents per minute of long-distance callin...

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Q: Janet Taylor is the new division controller of the snack-foods

Janet Taylor is the new division controller of the snack-foods division of Gourmet Foods. Gourmet Foods has reported a minimum 15% growth in annual earnings for each of the past five years. The snack-...

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Q: Harvest Day Corporation is a publishing company that produces trade magazines.

Harvest Day Corporation is a publishing company that produces trade magazines. The company’s shareholders are awaiting the announcement of Harvest Day’s earnings for the fiscal year, which ends on Dec...

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Q: Janet Segato is division controller and Tom Maloney is division manager of

Janet Segato is division controller and Tom Maloney is division manager of the Sports Shoe Company. Segato has line responsibility to Maloney, but she also has staff responsibility to the company cont...

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Q: Jorge Michaels is the Winnipeg-based controller of SXSW Foods,

Jorge Michaels is the Winnipeg-based controller of SXSW Foods, a rapidly growing manufacturer and marketer of Mexican food products. Michaels is currently considering the purchase of a new cost manage...

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Q: Describe the three major source documents used in job-costing systems

Describe the three major source documents used in job-costing systems.

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Q: What is the main concern about source documents used to prepare job

What is the main concern about source documents used to prepare job-cost records?

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Q: How does actual costing differ from normal costing?

How does actual costing differ from normal costing?

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Q: Comment on the following statement: “In a normal costing system

Comment on the following statement: “In a normal costing system, the amounts in the Manufacturing Overhead Control account will always equal the amounts in the Manufacturing Overhead Allocated account...

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Q: Describe three alternative ways to dispose of underallocated or overallocated indirect costs

Describe three alternative ways to dispose of underallocated or overallocated indirect costs.

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Q: What is an activity-based approach to refining a cost assignment

What is an activity-based approach to refining a cost assignment system?

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Q: A student association has hired a musical group for a graduation party

A student association has hired a musical group for a graduation party. The cost will be a fixed amount of $4,800. Required: 1. Suppose 500 people attend the party. What will be the total cost of the...

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Q: What are the key reasons for product cost differences between traditional costing

What are the key reasons for product cost differences between traditional costing systems and ABC systems?

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Q: Department indirect cost rates are never activity cost rates.” Do you

Department indirect cost rates are never activity cost rates.” Do you agree? Explain.

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Q: Describe four ways that help indicate when ABC systems are likely to

Describe four ways that help indicate when ABC systems are likely to provide the most benefits.

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Q: Increasing the number of indirect cost pools is guaranteed to sizably increase

Increasing the number of indirect cost pools is guaranteed to sizably increase the accuracy of product or service costs.” Do you agree? Why?

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Q: The controller of a retailer has just had a $50,

The controller of a retailer has just had a $50,000 request to implement an ABC system quickly turned down. A senior vice-president involved in rejecting the request noted, “Given a choice, I will alw...

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Q: Strategy, plans, and budgets are unrelated to one another.”

Strategy, plans, and budgets are unrelated to one another.” Do you agree? Explain.

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Q: How might a company benefit by sharing its own internal budget information

How might a company benefit by sharing its own internal budget information with other companies?

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Q: Define rolling budget. Give an example.

Define rolling budget. Give an example.

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Q: Explain “padding” and why managers might be motivated to employ

Explain “padding” and why managers might be motivated to employ this negative budget behaviour. What are some of senior management’s options to address this behaviour?

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Q: Describe how non-output-based cost drivers can be incorporated

Describe how non-output-based cost drivers can be incorporated into budgeting.

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Q: Graham’s Glassworks makes glass flanges for scientific use. Materials cost $

Graham’s Glassworks makes glass flanges for scientific use. Materials cost $1 per flange, and the glass blowers are paid a wage rate of $20 per hour. A glass blower blows 10 flanges per hour. Fixed ma...

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Q: Explain how the choice of the responsibility centre type (cost,

Explain how the choice of the responsibility centre type (cost, revenue, profit, or investment) affects budgeting.

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Q: How does static-budget variance analysis mislead those assessing actual performance

How does static-budget variance analysis mislead those assessing actual performance against pro forma performance indicators?

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Q: What is the key difference between a static budget and a flexible

What is the key difference between a static budget and a flexible budget ?

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Q: List three causes of a favourable materials rate variance.

List three causes of a favourable materials rate variance.

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Q: Describe three reasons for an unfavourable direct manufacturing labour efficiency variance.

Describe three reasons for an unfavourable direct manufacturing labour efficiency variance.

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Q: Explain how the direct materials mix and direct materials yield variances provide

Explain how the direct materials mix and direct materials yield variances provide additional information about the direct materials efficiency variance.

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Q: Comment on the following statement made by a plant supervisor: “

Comment on the following statement made by a plant supervisor: “Meetings with my plant accountant are frustrating. All he wants to do is pin the blame for the many variances he reports.

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Q: When governments reduce their funding to hospitals and universities, often the

When governments reduce their funding to hospitals and universities, often the executives respond with a demand for an equal percentage reduction in costs by all business functions. Is this the best s...

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Q: Define master budget.

Define master budget.

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Q: If actual results do not match the budget, what should managers

If actual results do not match the budget, what should managers do?

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Q: Maximum Office Products (MOP) produces three different paper products at

Maximum Office Products (MOP) produces three different paper products at its Vernon lumber plant—Supreme, Deluxe, and Regular. Each product has its own dedicated production line at t...

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Q: The revenue budget is the cornerstone for budgeting.” Why?

The revenue budget is the cornerstone for budgeting.” Why?

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Q: A number of terms are listed below: contribution margin

A number of terms are listed below: contribution margin ………………………cost–volume–profit analysis capital intensive …………………………………………..operating leverage gross margin …………………………………………………………….sales mix cont...

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Q: Knowledge of technical issues such as computer technology is necessary but not

Knowledge of technical issues such as computer technology is necessary but not sufficient to becoming a successful accountant.” Do you agree? Why?

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Q: Describe three different debit entries in the Work-in-Process

Describe three different debit entries in the Work-in-Process Control general ledger T-account.

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Q: Describe briefly why modern technology such as Electronic Data Interchange (EDI

Describe briefly why modern technology such as Electronic Data Interchange (EDI) is helpful to managers.

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Q: A number of terms are listed below: timely ………………………………..

A number of terms are listed below: timely ………………………………..management accounting ethical …………………………………guidelines cost–benefit technical ………………………………………………………control value chain ………………………………………………….reli...

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Q: Burger King, a hamburger fast food restaurant, incurs the following

Burger King, a hamburger fast food restaurant, incurs the following costs: 1. Cost of oil for the deep fryer. 2. Wages of the counter help who give customers the food they order. 3. Cost of the costum...

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Q: A Canadian biopharmaceutical company incurs the following costs: 1.

A Canadian biopharmaceutical company incurs the following costs: 1. Cost of redesigning blister packs to make drug containers more tamper-proof. 2. Cost of videos sent to doctors to promote sales of a...

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Q: Conner Company makes and sells brooms and mops. It takes the

Conner Company makes and sells brooms and mops. It takes the following actions, not necessarily in the order given below. Required: For each action (1–5 below), state whether it is a planning decisi...

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Q: Honel Foods makes frozen dinners that it sells through grocery stores.

Honel Foods makes frozen dinners that it sells through grocery stores. Typical products include turkey dinners, pot roast, fried chicken, and meatloaf. The managers at Honel have recently introduced a...

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Q: Consolidated Minerals (CM) owns the rights to extract minerals from

Consolidated Minerals (CM) owns the rights to extract minerals from beach sands on Fraser Island. CM has costs in three areas: a.Payment to a mining subcontractor who charges $80 per tonne of beach sa...

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Q: Brite Exteriors is a firm that provides house painting services. Robert

Brite Exteriors is a firm that provides house painting services. Robert Brite, the owner, is trying to find new ways to increase revenues. Mr. Brite performs the following actions, not in the order li...

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Q: A number of terms are listed below: prime costs

A number of terms are listed below: prime costs…………………………………………….fixed cost inventoriable costs………………………………period costs indirect………………………………………..conversion costs variable cost……………………………………….relevant...

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Q: A number of terms are listed below: source document

A number of terms are listed below: source document ………………………………………………..actual cost tracing ……………………………………..cost allocation rate proration ……………………………………………..opportunity cost cost pool Requi...

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Q: How can the use of sensitivity analysis increase the benefits of budgeting

How can the use of sensitivity analysis increase the benefits of budgeting?

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Q: ABC systems apply only to manufacturing companies.” Do you agree?

ABC systems apply only to manufacturing companies.” Do you agree? Explain.

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Q: What is the relationship between management by exception and variance analysis ?

What is the relationship between management by exception and variance analysis ?

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Q: Distinguish between a favourable variance and an unfavourable variance .

Distinguish between a favourable variance and an unfavourable variance .

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Q: Describe why direct materials rate variance and direct materials efficiency variance may

Describe why direct materials rate variance and direct materials efficiency variance may be computed with reference to different points in time.

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Q: Distinguish between processes where the inputs are non-substitutable and where

Distinguish between processes where the inputs are non-substitutable and where they are substitutable.

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Q: Define cost object and give three examples.

Define cost object and give three examples.

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Q: Yumball Candies manufactures jaw-breaker candies in a fully automated process

Yumball Candies manufactures jaw-breaker candies in a fully automated process. The machine that produces candies was purchased recently and can make 5,000 per month. The machine costs $6,000 and is de...

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Q: Name three factors that affect the classification of a cost as direct

Name three factors that affect the classification of a cost as direct or indirect.

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Q: Do service-sector companies have inventoriable costs? Explain.

Do service-sector companies have inventoriable costs? Explain.

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Q: CVP is both simple and simplistic. If you want realistic analysis

CVP is both simple and simplistic. If you want realistic analysis to underpin your decisions, look beyond CVP.” Do you agree? Explain.

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Q: What are the two major types of organizational elements that managers focus

What are the two major types of organizational elements that managers focus on in companies using job costing?

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Q: Rhonda Heninger is a well-known software engineer. Her specialty

Rhonda Heninger is a well-known software engineer. Her specialty is writing software code used in maintaining the security of credit card information. Heninger is approached by the Electronic Commerce...

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Q: The following are account balances relating to 2016 (in thousands):

The following are account balances relating to 2016 (in thousands): Property tax on plant building………………………………………………..$ 3,800 Marketing, distribution, and customer-service costs ………………44,400 Finished...

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Q: The following are account balances relating to 2016 (in thousands):

The following are account balances relating to 2016 (in thousands): Property tax on plant building ……………………………………………..$4,200 Marketing, distribution, and customer-service costs …………….44,400 Finished...

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Q: Define cost smoothing and describe the consequences it can have on costs

Define cost smoothing and describe the consequences it can have on costs.

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Q: The data below are for Marvin Department Store. The account balances

The data below are for Marvin Department Store. The account balances (in thousands) are for 2016. Marketing, distribution, and customer-service costs …………….$ 37,000 Merchandise inventory, January 1,...

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Q: In June 2016, the government of Vartan invited bids for the

In June 2016, the government of Vartan invited bids for the construction of a cellular telephone network. ZenTel, an experienced communications company, was eager to enter the growing field of cellula...

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Q: Each of the following cost items pertains to one of the following

Each of the following cost items pertains to one of the following companies: Toyota (a manufacturing-sector company), Sobeys (a merchandising-sector company), and Google (a service-sector company): 1....

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Q: Buger Research (BR) is a marketing research firm that organizes

Buger Research (BR) is a marketing research firm that organizes focus groups for consumer-product companies. Each focus group has eight individuals who are paid $50 per session to provide comments on...

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Q: The Rapid Meal has two restaurants that are open 24 hours a

The Rapid Meal has two restaurants that are open 24 hours a day. Fixed costs for the two restaurants together total $450,000 per year. Service varies from a cup of coffee to full meals. The average sa...

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Q: The National Symphony is preparing for its annual appreciation dinner for contributing

The National Symphony is preparing for its annual appreciation dinner for contributing members. Last year, 500 members attended the dinner. Tickets for the dinner were $20 per attendee. Last year’s st...

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Q: Huron University is committed to improving access to higher education. Each

Huron University is committed to improving access to higher education. Each year it makes $4,500,000 available for scholarships for students based on financial needs and academic achievement. The scho...

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Q: Sunshine Tours is a travel agency specializing in cruises between Miami and

Sunshine Tours is a travel agency specializing in cruises between Miami and Jamaica. It books passengers on Carib Cruises. Sunshine’s fixed costs are $22,000 per month. Carib charges passengers $1,000...

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Q: Mirabel Cosmetics manufactures and sells a face cream to small family-

Mirabel Cosmetics manufactures and sells a face cream to small family-run stores in the greater Montreal area. It presents the monthly operating statement of comprehensive income shown here to Fran&At...

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Q: The Chorus Company manufactures and sells pens. Present sales output is

The Chorus Company manufactures and sells pens. Present sales output is 5,000,000 units per year at a selling price of $0.60 per unit. Fixed costs are $1,080,000 per year. Variable costs are $0.36 per...

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Q: Management accounting should not fit the straitjacket of financial accounting.” Explain

Management accounting should not fit the straitjacket of financial accounting.” Explain and give an example.

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Q: Beans Unlimited sells specialty coffees in 1-kilogram packages. Fixed

Beans Unlimited sells specialty coffees in 1-kilogram packages. Fixed costs are budgeted at $730,000 per year. For the upcoming year, revenues are forecasted to be $3,240,000 (selling price is $36 per...

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Q: Charles Rothman is an importer of silver cuff bracelets from Mexico.

Charles Rothman is an importer of silver cuff bracelets from Mexico. He has a three-month agreement with the local coffee shop, Dellano’s, to set up a booth to exhibit the jewellery. Rothman is under...

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Q: Saunders’ Electronics had the following results for the year just ended:

Saunders’ Electronics had the following results for the year just ended: Jeff Saunders, the owner of the store, is unhappy with the operating results. An analysis of other operat...

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Q: Durdon Snowboards sells two models of snowboards: the Men’s Dominator and

Durdon Snowboards sells two models of snowboards: the Men’s Dominator and the Ladies’ Luxury. Information on the two models of snowboards follows: Durdonâ&...

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Q: An auditor for Canada Revenue Agency is trying to reconstruct some partially

An auditor for Canada Revenue Agency is trying to reconstruct some partially destroyed records of two taxpayers. For each case in the accompanying list, find the unknowns designated by capital letters...

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Q: XKY Manufacturing has recently opened a plant in Costa Melon in order

XKY Manufacturing has recently opened a plant in Costa Melon in order to take advantage of certain tax benefits. In order to qualify for these tax benefits, the company’s direct manufacturing labour c...

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Q: Kamal Diamond is the owner of the Galaxy chain of four-

Kamal Diamond is the owner of the Galaxy chain of four-star prestige hotels. These hotels are in Chicago, London, Los Angeles, Montreal, New York, Seattle, Tokyo, and Vancouver. Diamond is currently s...

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Q: Sam Nash is the head of new product development of Forever Young

Sam Nash is the head of new product development of Forever Young (FY). Nash is currently considering Enhance, which would be FY’s next major product in its beauty/cosmetics line and its estimated unit...

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Q: (J. Watson) Pearson Ltd. uses a normal job

(J. Watson) Pearson Ltd. uses a normal job-costing system and applies overhead on the basis of direct labour-hours. At the beginning of the year, the company estimated that total overhead costs for th...

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Q: Michael Scott books tours for new bands, and arranges to print

Michael Scott books tours for new bands, and arranges to print T-shirts and produce demo CDs to sell on the tour. Scott’s agency uses a normal costing system with two direct cost poo...

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Q: How can management accountants help formulate strategy?

How can management accountants help formulate strategy?

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Q: Activity-based costing (ABC) systems are useful in helping

Activity-based costing (ABC) systems are useful in helping companies make better decisions about pricing, product mix, and cost management related to product design and efficiency. In fact, General Mi...

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Q: Yummi-Lik makes really big lollipops in two sizes, large

Yummi-Lik makes really big lollipops in two sizes, large and giant. Yummi-Lik sells these lollipops to convenience stores, at fairs, and to schools for fundraisers, and in bulk on the internet. Summer...

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Q: David Tax is the athletics director of Maritime University (MU).

David Tax is the athletics director of Maritime University (MU). He has been director for more than 10 years. MU is a men’s football and basketball powerhouse. The womenâ€...

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Q: Rashid Daley is the manager of the athletic shoe division of Raider

Rashid Daley is the manager of the athletic shoe division of Raider Products. Raider is a European-based company that has just purchased Fastfoot, a leading European shoe company. Fastfoot has long-te...

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Q: New Fashions Inc. manufactures shirts for retail chains. Andy Jorgenson

New Fashions Inc. manufactures shirts for retail chains. Andy Jorgenson, the controller, is becoming increasingly disenchanted with New Fashions’ standard costing system. The budgete...

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Q: Trenton Ltd. uses a normal job-costing system and applies

Trenton Ltd. uses a normal job-costing system and applies manufacturing overhead to products on the basis of machine-hours. At the beginning of 2015, the company controller budgeted annual overhead at...

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Q: Lynn Company uses a job-costing system at its Mississauga plant

Lynn Company uses a job-costing system at its Mississauga plant. The plant has a Machining Department and an Assembly Department. Its job-costing system has two direct cost categories (direct material...

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Q: Lytton Ltd. uses a normal job-costing system with two

Lytton Ltd. uses a normal job-costing system with two direct cost categories (direct materials and direct labour) and one indirect cost pool. It allocates manufacturing overhead to jobs using a predet...

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Q: Mike Rotundo, the president of Tax Assist, is examining alternative

Mike Rotundo, the president of Tax Assist, is examining alternative ways to compute indirect cost rates. He collects the following information from the budget for 2016: Budgeted variable indirect cost...

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Q: Ronowski Company has three product lines of belts, A, B

Ronowski Company has three product lines of belts, A, B, and C, with contribution margins of $3.60, $2.40, and $1.20 respectively. The president forecasts sales of 200,000 units in the coming period,...

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Q: Explain the term supply chain and its importance to cost management.

Explain the term supply chain and its importance to cost management.

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Q: Duchess Ltd. manufactures and installs kitchen cabinetry. It uses normal

Duchess Ltd. manufactures and installs kitchen cabinetry. It uses normal job costing with two direct cost categories (direct materials and direct manufacturing labour) and one indirect cost pool for m...

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Q: Coakwell Company worked on only two jobs during May. Information on

Coakwell Company worked on only two jobs during May. Information on the jobs is given below: At the beginning of the year, annual manufacturing overhead (MOH) was budgeted at $3,780,000 and Coakwell...

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Q: (J. Watson) Rochester Ltd. has budgeted $435

(J. Watson) Rochester Ltd. has budgeted $435,000 for manufacturing overhead for the upcoming year. It forecast that 72,500 machine-hours will be used in the factory, and budgeted direct labour-hours w...

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Q: Production Company produces gadgets for the coveted small appliance market. The

Production Company produces gadgets for the coveted small appliance market. The following data reflect activity for the most recent year, 2015: Costs incurred Purchases of direct materials (net) on a...

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Q: Consider the following selected cost data for KYM Inc. for 2016

Consider the following selected cost data for KYM Inc. for 2016: Budgeted manufacturing overhead (MOH) ……………………………….$4,180,000 Budgeted machine-hours (MH)…………………………………………………….. 190,000 Actual manufac...

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Q: The Ride-On-Water (ROW) Company produces a

The Ride-On-Water (ROW) Company produces a line of non-motorized boats. ROW uses a normal job-costing system and allocates manufacturing overhead costs using direct manufacturing labour cost. The foll...

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Q: / Select the terms from the above list to complete

Select the terms from the above list to complete the following sentences. One common _____________to a traditional or _ ____________costing system is called an_____________ . The single MOH cost pool...

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Q: Teledor Inc. manufactures boomboxes (music systems with radio, MP3

Teledor Inc. manufactures boomboxes (music systems with radio, MP3, and compact disc players) for different well-known companies. The boomboxes differ significantly in their complexity and the batch s...

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Q: The following outlines a number of activities related to operations at Nordan

The following outlines a number of activities related to operations at Nordan Manufacturing Ltd.: a. Engineers design new products. b. Production workers set up machines. c. Completed goods are inspec...

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Q: Huey Parker produces mathematical and financial calculators. Data related to the

Huey Parker produces mathematical and financial calculators. Data related to the two products are presented below Both products pass through Department 1 and Department 2. The departmentsâ ...

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Q: Management accounting deals only with costs.” Do you agree?

Management accounting deals only with costs.” Do you agree?

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Q: Car Parts (CP) designs, manufactures, and sells automotive

Car Parts (CP) designs, manufactures, and sells automotive parts. Actual variable manufacturing overhead costs for 2015 were $308,600. CP’s simple costing system allocates variable m...

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Q: Noble Industries manufactures two models of tiffany-style lamps: a

Noble Industries manufactures two models of tiffany-style lamps: a table-top model and a floor model. Summary data for the two products for the most recent fiscal year showed the following: Under th...

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Q: The Wolfson Group (WG) provides tax advice to multinational firms

The Wolfson Group (WG) provides tax advice to multinational firms. WG charges clients for (a) direct professional time (at an hourly rate), and (b) support services (at 30% of the direct professional...

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Q: Niagara Winery makes two different grades of wine—regular wines and

Niagara Winery makes two different grades of wine—regular wines and specialty wines. Recently, Niagara has shown small profits on its regular wines and large profits on its specialty wines. As a resul...

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Q: Heights Academy, a private school, serves 500 students: 200

Heights Academy, a private school, serves 500 students: 200 in the middle school (Grades 6 to 8) and 300 in the high school (Grades 9 to 12). Each school group has its own assistant principal, and the...

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Q: The Medal Plus Company manufactures medals for winners of athletic events and

The Medal Plus Company manufactures medals for winners of athletic events and other contests. Its manufacturing plant has the capacity to produce 12,000 medals each month; current production and sales...

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Q: PEI Potatoes processes potatoes into potato cuts at its highly automated plant

PEI Potatoes processes potatoes into potato cuts at its highly automated plant. For many years, it processed potatoes for only the retail consumer market where it had a superb reputation for quality....

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Q: Ames Wholesalers sells furniture items to four department store chains. Sharon

Ames Wholesalers sells furniture items to four department store chains. Sharon Ames commented, “We apply ABC to determine profit line profitability. The same ideas apply to customer...

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Q: PTech Ltd. manufactures two models of cordless phones. The Family

PTech Ltd. manufactures two models of cordless phones. The Family Friend model has features designed for a multiple-user family, including the ability to have multiple ringtones and caller ID. The Off...

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Q: International Trust (IT) is examining the profitability of its Premier

International Trust (IT) is examining the profitability of its Premier Account, a combined savings and chequing account. Depositors receive a 6% annual interest rate on their average deposit. IT earns...

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Q: Define direct costs and indirect costs .

Define direct costs and indirect costs .

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Q: Stanford Industries currently uses a normal job-costing system with a

Stanford Industries currently uses a normal job-costing system with a single overhead cost pool. It supplies parts to the aeronautic industry and, as a result, quality control is paramount. It current...

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Q: A number of terms are listed below: budget constraint

A number of terms are listed below: budget constraint(s) …………………………………..budgetary slack cash cycle …………………………………………………controllable cost investment budget ……………………………………..operating cycle rolling budge...

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Q: Consider each of the following independent situations: 1. A

Consider each of the following independent situations: 1. A very successful salesperson at Amcorp Computers regularly ignores the published sales catalogue and offers lowered prices to customers in or...

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Q: In 2015, McGrath & Sons, a small environmental-testing

In 2015, McGrath & Sons, a small environmental-testing firm, performed 11,000 radon tests for $250 each and 15,200 lead tests for $200 each. Because newer homes are being built with lead-free pipes, l...

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Q: The Russell Company expects 2016 sales of 135,000 units of

The Russell Company expects 2016 sales of 135,000 units of serving trays. Russell’s beginning inventory for 2016 is 9,700 trays; target ending inventory: 16,300 trays. Required: Compute the number of...

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Q: The wine-producing company Lebeau Vineyard expects to produce 2.

The wine-producing company Lebeau Vineyard expects to produce 2.1 million 3-litre bottles of Chablis in 2016. Lebeau purchases empty glass bottles from a reliable supplier. The target ending inventory...

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Q: In the preparation of the sales budget for the next three-

In the preparation of the sales budget for the next three-month period, the Westing Company determined that 52,250 finished units would be needed to fulfill sales obligations. The company has an inven...

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Q: From its company-owned natural spring in northern Ontario, Fountain

From its company-owned natural spring in northern Ontario, Fountain Springs Inc. bottles and distributes mineral water worldwide. Fountain Springs markets its product in 1-litre disposable plastic bot...

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Q: Sheryl Blake, the owner of a small gift and souvenir shop

Sheryl Blake, the owner of a small gift and souvenir shop, expects cash sales of $14,000 for October, $16,300 for November, and $21,100 for December. In addition, she expects credit card sales of $9,8...

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Q: What is the relevant range? What role does the relevant-

What is the relevant range? What role does the relevant-range concept play in explaining how costs behave?

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Q: The Suzuki Company in Japan has a division that manufactures two-

The Suzuki Company in Japan has a division that manufactures two-wheel motorcycles. Its budgeted sales for Model G in 2016 are 985,000 units. Suzuki’s target ending inventory is 115,000 units, and its...

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Q: The All Frame Company makes and sells artistic frames for pictures of

The All Frame Company makes and sells artistic frames for pictures of weddings, graduations, and other special events. Martin Flack, the company controller, is responsible for preparing the master bud...

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Q: TabComp Inc. is a retail distributor for MZB-33 computer

TabComp Inc. is a retail distributor for MZB-33 computer hardware and related software and support services. TabComp prepares annual sales forecasts of which the first six months for 2016 are presente...

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Q: The Parksville location of Your Mart (YM), a chain of

The Parksville location of Your Mart (YM), a chain of small neighborhood grocery stores, is preparing its activity-based budget for January 2016. YM has three product categories: soft drinks, fresh pr...

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Q: Your Mart (YM) has a Kaizen (continuous improvement)

Your Mart (YM) has a Kaizen (continuous improvement) approach to budgeting activity area costs for each month of 2016. Each successive month, the budgeted cost driver rate decreases by 0.2% relative t...

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Q: A number of terms are listed below: /

A number of terms are listed below: Required: Select the terms from the above list to complete the following sentences. The question is whether or not the actual results met expectations, exceeded e...

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Q: Brabham Enterprises manufactures tires for the Formula I motor racing circuit.

Brabham Enterprises manufactures tires for the Formula I motor racing circuit. For August 2015, it budgeted to manufacture and sell 3,000 tires at a variable cost of $74 per tire and total fixed costs...

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Q: Connor Company’s budgeted prices for direct materials, direct manufacturing labour,

Connor Company’s budgeted prices for direct materials, direct manufacturing labour, and direct marketing (distribution) labour per attaché case are $40, $8, and $12, res...

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Q: Consider the following data collected for Blakes Construction Trailers:

Consider the following data collected for Blakes Construction Trailers: Required: Compute the rate, efficiency, and flexible-budget variances for direct materials and direct manufacturing labour.

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Q: Peterson Foods manufactures pumpkin scones. For January 2015, it budgeted

Peterson Foods manufactures pumpkin scones. For January 2015, it budgeted to purchase and use 16,000 kilograms of pumpkin at $1.11 per kilogram; budgeted output was 60,000 scones. Actual purchases and...

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Q: Differences in operating income between variable and absorption costing are due solely

Differences in operating income between variable and absorption costing are due solely to accounting for fixed costs.” Do you agree? Explain.

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Q: What are the factors that affect the breakeven point under (a

What are the factors that affect the breakeven point under (a) variable costing and (b) absorption costing?

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Q: Convad Company is one of the world’s leading corn refiners. It

Convad 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 2015, Convad report...

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Q: Instant Foods produces two types of microwavable products—beef-flavoured

Instant Foods produces two types of microwavable products—beef-flavoured ramen and shrimp-flavoured ramen. The two products share common inputs such as noodles and spices. The produc...

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Q: Sinclair Oil & Gas, a large energy conglomerate, jointly processes

Sinclair Oil & Gas, a large energy conglomerate, jointly processes purchased hydrocarbons to generate three nonsaleable intermediate products: ICR8, ING4, and XGE3. These intermediate products are...

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Q: The Klein Company operates a simple chemical process to convert a single

The Klein Company operates a simple chemical process to convert a single material into three separate items, referred to here as X, Y, and Z. All three end products are separated simultaneously at a s...

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Q: Crisps Inc. is a producer of potato chips. A single

Crisps Inc. is a producer of potato chips. A single production process at Crisps Inc. yields potato chips as the main product and a byproduct that can also be sold as a snack. Both products are fully...

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Q: Royston Inc. is a large food processing company. It processes

Royston Inc. is a large food processing company. It processes 120,000 kilograms of peanuts in the Peanuts Department at a cost of $160,000 to yield 10,000 kilograms of product A, 60,000 kilograms of p...

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Q: Chemtech Chemicals, a multinational company, has a subsidiary located in

Chemtech Chemicals, a multinational company, has a subsidiary located in a small Eastern European country. The country has only a few environmental protection laws, and even those that exist are not s...

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Q: Sooke Sawmill Inc. (SSI) purchases logs from independent timber

Sooke Sawmill Inc. (SSI) purchases logs from independent timber contractors and processes the logs into three types of lumber products: â–  Studs for residential buildings (walls, ceil...

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Q: A number of terms are listed below: /

A number of terms are listed below: Required: Select the terms from the above list to complete the following sentences. To satisfy their customers’ value proposition and benefit f...

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Q: The cities of St. Anne, St. Teresa, and

The cities of St. Anne, St. Teresa, and St. Steven are considering the implementation of a new program to handle disposal of hazardous waste to comply with a new, more stringent provincial law. Becaus...

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Q: What is a linear cost function? Describe three alternative linear cost

What is a linear cost function? Describe three alternative linear cost functions.

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Q: Lee Shu-yu Inc. produces and sells DVDs to business

Lee Shu-yu Inc. produces and sells DVDs to business people and students who are planning extended stays in China. It has been very successful with two DVDs: Beginning Mandarin and Conversational Manda...

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Q: The Penguins play in the North American Ice Hockey League. The

The Penguins play in the North American Ice Hockey League. The Penguins play in the Downtown Arena (owned and managed by the City of Downtown), which has a capacity of 15,000 seats (5,000 lower-tier s...

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Q: The Guangzhou Corporation (GC) sells two brands of wine glasses

The Guangzhou Corporation (GC) sells two brands of wine glasses, Plain and Chic. GC provides the following information for sales in the month of June 2015: Static-budget total contribution margin ………...

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Q: SodaKing manufactures and sells three soft drinks: Kola, Limor,

SodaKing manufactures and sells three soft drinks: Kola, Limor, and Orlem. Budgeted and actual results for 2015 are as follows: Required: 1. Compute the total sales-volume variance, the total sales-...

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Q: SodaKing prepared the budget for 2015 assuming a 10% market share

SodaKing prepared the budget for 2015 assuming a 10% market share based on total sales in the western region of Canada. The total soft-drinks market was estimated to reach sales of 25 million cases in...

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Q: Instant Service (IS) repairs printers and photocopiers for five multisite

Instant Service (IS) repairs printers and photocopiers for five multisite companies in a tri-city area. IS’s costs consist of the cost of technicians and equipment that are directly...

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Q: Generic Inc. is a distributor of pharmaceutical products. Its ABC

Generic Inc. is a distributor of pharmaceutical products. Its ABC system has five activities: Activity Area …………â...

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Q: A&A Inc. is a manufacturer of digital cameras.

A&A Inc. is a manufacturer of digital cameras. It has two departments: assembly and testing. In January 2015, the company incurred $750,000 on direct materials and $798,000 on conversion costs, for a...

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Q: Journal entries (continuation of Exercise 17-13). Refer to

Journal entries (continuation of Exercise 17-13). Refer to requirement 2 of Exercise 17-13. Required: Prepare summary journal entries for the use of direct materials and incurrence of conversion cost...

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Q: Roary Chemicals has a mixing department and a refining department. Its

Roary 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 conv...

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Q: A number of terms are listed below: equivalent unit

A number of terms are listed below: equivalent unit (EU)………………………………………………….first-in, first-out (FIFO) weighted-average process-costing method………………standard-costing method Required: Select the terms...

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Q: Bio Doc Corporation is a biotech company that makes a cancer-

Bio Doc Corporation is a biotech company that 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...

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Q: Refer to the information in Exercise 17-16.

Refer to the information in Exercise 17-16. Required: Do Exercise 17-16 using the FIFO method. Note that you first need to calculate the equivalent units of work done in the current period (for direc...

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Q: Refer to the information in Exercise 17-16. Suppose Bio

Refer to the information in Exercise 17-16. Suppose Bio Doc determines standard costs of $6.60 per equivalent unit for direct materials and $10.40 per equivalent unit for conversion costs for both beg...

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Q: Consider the following data for the assembly division of a satellite manufacturer

Consider the following data for the assembly division of a satellite manufacturer: The assembly division uses the weighted-average method of process costing. Required: 1. Compute equivalent units f...

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Q: For the data in Exercise 17-19, summarize total costs

For the data in Exercise 17-19, summarize total costs to account for, and assign these costs to units completed (and transferred out) and to units in ending work in process. Data from Exercise 17-19:...

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Q: Refer to the information in Exercise 17-19. Suppose the

Refer to the information in Exercise 17-19. Suppose the assembly division uses the FIFO method of process costing instead of the weighted-average method. Required: 1. Compute equivalent units for dir...

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Q: For the data in Exercise 17-19, use the FIFO

For the data in Exercise 17-19, use the FIFO method to summarize total costs to account for, and assign these costs to units completed and transferred out, and to units in ending work in process. Dat...

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Q: Refer to the information in Exercise 17-19. Suppose the

Refer to the information in Exercise 17-19. Suppose the assembly division uses the standard-costing method of process costing. Suppose further that the assembly division determines standard costs of $...

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Q: Asaya Clothing Inc. is a manufacturer of winter clothes. It

Asaya Clothing Inc. is a manufacturer of winter clothes. It has a knitting department and a finishing department. This exercise focuses on the finishing department. Direct materials are added at the e...

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Q: Refer to the information in Exercise 17-24. Suppose that

Refer to the information in Exercise 17-24. Suppose that Asaya uses the FIFO method instead of the weighted-average method in all of its departments. The only changes to Exercise 17-24 under the FIFO...

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Q: A number of terms are listed below: target pricing

A number of terms are listed below: target pricing …………………………………target cost per unit value engineering …………………………………value analysis price discrimination ………………………….peak-load pricing life-cycle pricing...

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Q: Consider the following data for the assembly division of Fenton Watches Inc

Consider the following data for the assembly division of Fenton Watches Inc.: The assembly division uses the weighted-average method of process costing. Required: Compute equivalent units for direc...

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Q: For the data in Exercise 17-26, summarize total costs

For the data in Exercise 17-26, summarize total costs to account for, calculate cost per equivalent unit for direct materials and conversion costs, and assign total costs to units completed (and trans...

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Q: Refer to the information in Exercise 17-26. Suppose the

Refer to the information in Exercise 17-26. Suppose the assembly division at Fenton Watches Inc. uses the FIFO method of process costing instead of the weighted-average method. Required: Compute equi...

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Q: For the data in Exercise 17-26, use the FIFO

For the data in Exercise 17-26, use the FIFO method to summarize total costs to account for, calculate cost per equivalent unit for direct materials and conversion costs, and assign total costs to uni...

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Q: Bucky’s Boxes makes boxes for moving. It sells its boxes to

Bucky’s Boxes makes boxes for moving. It sells its boxes to major national moving companies. Because of the simple nature of the production process, Bucky’s uses st...

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Q: A number of terms are listed below: abnormal spoilage

A number of terms are listed below: abnormal spoilage ………………………….inspection point normal spoilage …………………………………………..rework scrap Required: Select the terms from the above list to complete...

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Q: The following data, in physical units, describe a grinding process

The following data, in physical units, describe a grinding process for January: Work-in-process, beginning …………………………………..19,000 Started during current period ……………………………..150,000 To account for …………...

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Q: Consider the following data for November 2015 from Grey Manufacturing Company,

Consider the following data for November 2015 from Grey Manufacturing Company, which makes silk pennants and uses a process costing system. All direct materials are added at the beginning of the proce...

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Q: For the data in Exercise 18-17, summarize total costs

For the data in Exercise 18-17, summarize total costs to account for, calculate the cost per equivalent unit for direct materials and conversion costs, and assign total costs to units completed and tr...

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Q: Refer to the information in Exercise 18-17. Suppose Grey

Refer to the information in Exercise 18-17. Suppose Grey Manufacturing Company uses the FIFO method of process costing instead of the weighted-average method. Required: Compute equivalent units for d...

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Q: A number of terms are listed below: /

A number of terms are listed below: Required: Select the terms from the above list to complete the following sentences. A full absorption cost refers to all manufacturing costs including all MOH, wh...

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Q: For the data in Exercise 18-19, use the FIFO

For the data in Exercise 18-19, use the FIFO method to summarize total costs to account for, calculate the cost per equivalent unit for direct materials and conversion costs, and assign total costs to...

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Q: Millstream Company makes wooden toys in its forming department, and it

Millstream Company makes wooden toys in its forming department, and it uses the weighted-average method of process costing. All direct materials are added at the beginning of the process, and conversi...

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Q: Aaron Inc. is a manufacturer of vents for water heaters.

Aaron Inc. is a manufacturer of vents for water heaters. The company uses a process-costing system to account for its work-in-process inventories. When Job 512 was being processed in the machining dep...

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Q: Arokia Electronics manufactures cell phone models in its Saskatoon plant. Suppose

Arokia Electronics manufactures cell phone models in its Saskatoon plant. Suppose the company provides you with the following information regarding operations for September 2015: Total cell phones ma...

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Q: Chipcity Inc. is a fast-growing manufacturer of computer chips

Chipcity Inc. 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 t...

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Q: Refer to the information in Exercise 18-24.

Refer to the information in Exercise 18-24. Required: Do Exercise 18-24 using the FIFO method of process costing. Data from Exercise 18-24: Chipcity Inc. is a fast-growing manufacturer of computer...

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Q: Refer to the information in Exercise 18-23. Suppose Chipcity

Refer to the information in Exercise 18-23. Suppose Chipcity determines standard costs of $200 per equivalent unit for direct materials and $75 per equivalent unit for conversion costs for both beginn...

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Q: Bamber Kitchens produces a variety of items in accordance with special job

Bamber Kitchens produces a variety of items in accordance with special job orders from hospitals, plant cafeterias, and university dormitories. An order for 2,500 cases of mixed vegetables costs $6 pe...

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Q: Bright Goods assembles washing machines at its Cambridge plant. In February

Bright Goods assembles washing machines at its Cambridge plant. In February 2015, 60 tumbler units that cost $44 each from a new supplier were defective and had to be disposed of at zero disposal pric...

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Q: Mendola Corp. has an extensive job-costing facility that uses

Mendola Corp. 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...

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Q: A number of terms are listed below: Agility………………………………………………………..………………..

A number of terms are listed below: Agility………………………………………………………..………………..value-added cost Capacity…………………………………………………………………………….capacity cost non-value-added cost…………………………..……..denominator-level va...

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Q: A number of terms are listed below: /

A number of terms are listed below: Required: Select the terms from the above list to complete the following sentences. Supply-chain strategy decisions determine __________________ activities. Manag...

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Q: Fan Base (FB) operates a megastore featuring sports merchandise.

Fan Base (FB) operates a megastore featuring sports merchandise. It uses an EOQ decision model to make inventory decisions. It is now considering inventory decisions for its soccer jerseys product lin...

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Q: Athletic Textiles (AT) manufactures the soccer jerseys that Fan Base

Athletic Textiles (AT) manufactures the soccer jerseys that Fan Base (FB) sells to its customers. AT has recently installed computer software that enables its customers to conduct “one-stop” purchasin...

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Q: The Cloth Centre sells fabrics to a wide range of industrial and

The Cloth Centre sells fabrics to a wide range of industrial and consumer users. One of the products it carries is denim cloth, used in the manufacture of jeans and carrying bags. The supplier for the...

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Q: Lakeland Company, which produces lawn mowers, purchases 18,000

Lakeland Company, which produces lawn mowers, purchases 18,000 units of a rotor blade part each year at a cost of $60 per unit. Lakeland requires a 15% annual rate of return on investment. In addition...

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Q: Morgan Company’s annual demand for Model X253 is 10,000 units

Morgan Company’s annual demand for Model X253 is 10,000 units. Morgan is unsure about the relevant carrying cost per unit per year and the relevant ordering cost per purchase order....

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Q: Devin Sports Cars (DSC) has implemented a balanced scorecard to

Devin Sports Cars (DSC) has implemented a balanced scorecard to measure and support its just-in-time production system. In the learning and growth category, DSC measures the percentage of employees wh...

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Q: The Champion Hardware Company manufactures specialty brass door handles at its Kitchener

The Champion Hardware Company manufactures specialty brass door handles at its Kitchener plant. Champion is considering implementing a JIT production system. The following are the estimated costs and...

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Q: Road Warrior Corporation assembles handheld computers that have scaled-down capabilities

Road Warrior Corporation assembles handheld computers that have scaled-down capabilities of laptop computers. Each handheld computer takes 6 hours to assemble. Road Warrior uses a JIT production syste...

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Q: Assume the same facts as in Exercise 19-23, except

Assume the same facts as in Exercise 19-23, except that Road Warrior now uses a backflush costing system with the following two trigger points: ■ Purchase of direct materials. ■ Sale of finished goods...

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Q: Young Clothing is a manufacturer of designer suits. The cost of

Young Clothing is a manufacturer of designer suits. The cost of each suit is the sum of three variable costs (direct materials costs, direct manufacturing labour costs, and manufacturing overhead cost...

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Q: Assume the same facts as in Exercise 19-24, except

Assume the same facts as in Exercise 19-24, except now Road Warrior uses only two trigger points, the completion of good finished units of product and the sale of finished goods. Any under- or overall...

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Q: BigScreen Corporation manufactures and sells 50-inch television sets and uses

BigScreen Corporation manufactures and sells 50-inch television sets and uses standard costing. Actual data relating to January, February, and March of 2015 are: Required: 1. Present statements of c...

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Q: The variable manufacturing costs per unit of BigScreen Corporation are:

The variable manufacturing costs per unit of BigScreen Corporation are: Required: 1. Prepare operating statements of comprehensive income for BigScreen Corporation in January, February, and March of...

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Q: Osawa Inc. planned and actually manufactured 200,000 units of

Osawa Inc. planned and actually manufactured 200,000 units of its single product in 2015, its first year of operation. Variable manufacturing cost was $20 per unit produced. Variable operating (non-ma...

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Q: Rehe Company sells its razors at $3 per unit. The

Rehe Company sells its razors at $3 per unit. The company uses a first-in, first-out actual costing system. A fixed manufacturing cost rate is computed at the end of each year by dividing the actual f...

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Q: A number of terms are listed below: /

A number of terms are listed below: Required: Select the terms from the above list to complete the following sentences. There are several methods of quantitative analysis that a management team ca...

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Q: Lorenzo operates a brushless car wash. Incoming cars are put on

Lorenzo operates a brushless car wash. Incoming cars are put on an automatic, continuously moving conveyor belt. Cars are washed as the conveyor belt carries the car from the start station to the fini...

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Q: Gower Inc., a manufacturer of plastic products, reports the following

Gower Inc., a manufacturer of plastic products, reports the following manufacturing costs and account analysis classification for the year ended December 31, 2016 Gower Inc., produced 75,000 units o...

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Q: Sandy Smith, managing director of the Calgary Consulting Group, is

Sandy Smith, managing director of the Calgary Consulting Group, is examining how overhead costs behave with changes in monthly professional labour-hours billed to clients. Assume the following histori...

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Q: Garvin Corporation manufactures a children’s bicycle, model CT8. Garvin currently

Garvin Corporation manufactures a children’s bicycle, model CT8. Garvin currently manufactures the bicycle frame. During 2016, Garvin made 30,000 frames at a total cost of $900,000. Ryan Corporation h...

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Q: Young Clothing allocates fixed manufacturing overhead to each suit using budgeted direct

Young Clothing allocates fixed manufacturing overhead to each suit using budgeted direct manufacturing labour-hours (DMLH) per suit. Data pertaining to fixed manufacturing overhead costs for June 2015...

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Q: Dave Ladouceur owns a catering company that prepares banquets and parties for

Dave Ladouceur owns a catering company that prepares banquets and parties for both individual and business functions throughout the year. His business is seasonal, with a heavy schedule during the sum...

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Q: Jill Goldstein has been collecting data over the last year in an

Jill Goldstein has been collecting data over the last year in an effort to understand the cost drivers of distribution costs at Waterloo Corporation, a manufacturer of brass door handles. Distribution...

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Q: Answer the following questions. 1. A company has an

Answer the following questions. 1. A company has an inventory of 1,000 assorted parts for a line of missiles that has been discontinued. The inventory cost is $88,000. The parts can be either (a) rema...

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Q: 1. Ewing Computers makes 5,000 units of a circuit

1. Ewing Computers makes 5,000 units of a circuit board, CB76, at a cost of $230 each. Variable cost per unit is $180 and fixed cost per unit is $50. HT Electronics offers to supply 5,000 units of CB7...

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Q: An employee in the accounting department of a certain business was moving

An employee in the accounting department of a certain business was moving a personal computer from one room to another. As he came alongside an open stairway, he slipped and let the computer get away...

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Q: Sanchez Corporation runs two convenience stores, one in Vancouver and one

Sanchez Corporation runs two convenience stores, one in Vancouver and one in Surrey. Operating income for each store in 2015 is as follows: The equipment has a zero disposal value. In a senior manag...

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Q: The Auto Wash Company has just today paid for and installed a

The Auto Wash Company has just today paid for and installed a special machine for polishing cars at one of its several outlets. It is the first day of the company’s fiscal year. The machine costs $20,...

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Q: Taylor Furniture produces and sells specialty mattresses. Production is a machine

Taylor Furniture produces and sells specialty mattresses. Production is a machine-intensive process. Taylor’s variable costs are direct material costs, variable machining costs, and...

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Q: The Mayfield Corporation manufactures filing cabinets in two operations: machining and

The Mayfield Corporation manufactures filing cabinets in two operations: machining and finishing. It provides the following information: Required: 1. Mayfield is considering using some modern jigs a...

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Q: Xylon Processing Limited is a chemical manufacturer. Two chemicals, Aardyn

Xylon Processing Limited is a chemical manufacturer. Two chemicals, Aardyn and Gargaton, are produced from the common chemical xylon. The joint process requires 15,000 litres of xylon to be processed...

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Q: French Bread Company has two direct-cost categories: direct materials

French Bread Company has two direct-cost categories: direct materials and direct manufacturing labour. Variable manufacturing overhead is allocated to products on the basis of standard direct manufact...

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Q: The Award Plus Company manufactures medals for winners of athletic events and

The Award Plus Company manufactures medals for winners of athletic events and other contests. Its manufacturing plant has the capacity to produce 10,000 medals each month. Current production and sales...

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Q: Manufacturing companies participating in a supply chain initiative linking manufacturers and retailers

Manufacturing companies participating in a supply chain initiative linking manufacturers and retailers recently made the following comments on the benefits of the initiative: ■ “Receiving better infor...

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Q: ShiraHonig, the chief financial officer of Silicon Valley Computer (SVC

ShiraHonig, the chief financial officer of Silicon Valley Computer (SVC), is an enthusiastic advocate of JIT production. The SVC keyboard division that produces keyboards for personal computers has ma...

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Q: The 24-Hour Mart operates a chain of supermarkets. Its

The 24-Hour Mart operates a chain of supermarkets. Its best-selling soft drink is Fruitslice. Demand ( D ) in April for Fruitslice at its Regina supermarket is estimated to be 7,200 cases (24 cans in...

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Q: Earth Light First (ELF), a producer of energy-efficient

Earth Light First (ELF), a producer of energy-efficient light bulbs, expects that demand will increase markedly over the next decade. Due to the high fixed costs involved in the business, ELF has deci...

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Q: 1. I f ELF sells all 220,000 bulbs produced

1. I f ELF sells all 220,000 bulbs produced, what would be the effect on operating income of using each type of capacity as a basis for calculating manufacturing cost per unit? 2. Compare the results...

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Q: Byrd Company is a manufacturer of appliances for both residential and commercial

Byrd Company is a manufacturer of appliances for both residential and commercial use. The company’s accounting and financial reporting system is primarily designed to meet external r...

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Q: Magic Dice manufactures premium food processors. The following is some manufacturing

Magic Dice manufactures premium food processors. The following is some manufacturing overhead data for Magic Dice for the year ended December 31, 2015. Required: Calculate the following quantities (...

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Q: Refer to Problem 8-29. Required:

Refer to Problem 8-29. Required: 1.Prepare journal entries for variable and fixed manufacturing overhead (you will need to calculate the various variances to accomplish this). 2.Overhead variances ar...

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Q: Fresh Inc. is a manufacturer of vacuums and uses standard costing

Fresh Inc. is a manufacturer of vacuums and uses standard costing. Manufacturing overhead (both variable and fixed) is allocated to products on the basis of budgeted machine-hours. In 2015, budgeted f...

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Q: French Bread Company also allocates fixed manufacturing overhead to products on the

French Bread Company also allocates fixed manufacturing overhead to products on the basis of standard direct manufacturing labour-hours. For 2015, fixed manufacturing overhead was budgeted at $4.00 pe...

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Q: Consider each of the following situations—cases A, B,

Consider each of the following situations—cases A, B, and C—independently. Data refer to operations for April 2015. For each situation, assume standard costing. Als...

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Q: Nolton Products uses standard costing. It allocates manufacturing overhead (both

Nolton Products uses standard costing. It allocates manufacturing overhead (both variable and fixed) to products on the basis of standard direct manufacturing labour-hours (DMLH). Nolton develops its...

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Q: The Art Supply Company produces various types of paints. Actual direct

The Art Supply Company produces various types of paints. Actual direct manufacturing labour-hours (DMLH) in the factory that produces paint have been higher than budgeted hours for the last few months...

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Q: Heather’s Horse Spa (HHS) is an establishment that boards,

Heather’s Horse Spa (HHS) is an establishment that boards, trains, and pampers horses while their owners are on vacation. Heather sells her service as an “enchanting vacation experience for your horse...

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Q: Amir’s Fleet Feet Inc. produces dance shoes for stores all over

Amir’s Fleet Feet Inc. produces dance shoes for stores all over the world. While the pairs of shoes are boxed individually, they are crated and shipped in batches. The shipping depar...

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Q: Jo Nathan Publishing Company specializes in printing specialty textbooks for a small

Jo Nathan Publishing Company specializes in printing specialty textbooks for a small but profitable college market. Due to the high setup costs for each batch printed, Jo Nathan holds the book request...

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Q: Yan Floral Creations Inc. makes jewellery in the shape of flowers

Yan Floral Creations Inc. makes jewellery in the shape of flowers. Each piece is hand-made and takes an average of 1.5 hours to produce because of the intricate design and scrollwork. Yan uses direct...

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Q: Mancusco Company uses a flexible budget and standard costs to aid planning

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 (d...

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Q: Beal Manufacturing Company’s costing system has two direct cost categories: direct

Beal Manufacturing Company’s costing system has two direct cost categories: direct materials and direct manufacturing labour. Manufacturing overhead (both variable and fixed) is allo...

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Q: Belle’s Treats produces high-quality dog food distributed only through veterinary

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 proce...

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Q: How does the planning of fixed overhead costs differ from the planning

How does the planning of fixed overhead costs differ from the planning of variable overhead costs?

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Q: G-Force Corporation is a manufacturer of centrifuges. Fixed and

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...

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Q: Rollie Manufacturing makes, among other things, wheels for roller skates

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 so...

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Q: Levie Company uses standard costing. The company prepared its static budget

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...

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Q: Klein Surgical Instruments Inc. makes a special line of forceps,

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...

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Q: CellOne is a cellular phone service reseller, contracting with major cellular

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, Cell...

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Q: FlatScreen manufactures flat-panel LCD displays. The displays are sold

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:...

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Q: 1. Prepare appropriate journal entries for variable and fixed manufacturing overhead

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 reconc...

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Q: The following information for 2015 is for Morgan Corporation, which uses

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 Fix...

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Q: Corporation is a manufacturer of computer accessories. It uses absorption costing

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 o...

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Q: Headsmart, a three-year-old company, has been

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 fir...

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Q: AJG Inc. is a manufacturer of the very popular G36 motorcycles

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 motorcycle...

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Q: Pandom Inc. produces chemicals for large biotech companies. It has

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...

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Q: Deli One operates a chain of 10 retirement homes in the Toronto

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 u...

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Q: University Press produces textbooks for university courses. They recently hired a

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 c...

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Q: It is the end of 2015. The All-Fixed Company

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...

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Q: Shasta Hills, a winery in British Columbia, manufactures a premium

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,...

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Q: Four Sheets (FS) Company uses standard costing. Kate King

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 th...

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Q: The Robertson Company uses an absorption-costing system based on standard

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 u...

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Q: Shen Company is a manufacturer of MP3 players. It implemented standard

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 alloc...

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Q: In 2016, only 806,840 Deliman meals were produced and

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....

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Q: Tammy Cat Tree Co. (TCTC) builds luxury cat trees

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 n...

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Q: Ken Howard, financial analyst at JVR Corporation, a manufacturer of

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-h...

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Q: Singh Company uses a standard cost system in its manufacturing plant for

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...

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Q: OLS simple linear regression analysis. (CIMA, heavily adapted)

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...

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Q: Below are the input and results of an OLS linear regression.

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 mont...

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Q: Martin Goretsky examines the output and data from an OLS simple linear

Martin Goretsky examines the output and data from an OLS simple linear regression, what does the plot of the residuals tell Mr. Goretsky?

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Q: The following are the Class Company’s unit costs of manufacturing and marketing

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&ac...

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Q: 6. The company has an inventory of 1,000 units

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...

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Q: The Beach Comber is a take-out food store at a

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...

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Q: Wolverine Corporation is working at full production capacity producing 10,000

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 …………………………………...

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Q: Information Technology, Inc. assembles and sells two products: printers

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...

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Q: Della Simpson Inc. sells two popular brands of cookies, Della’s

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 D...

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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...

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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 infor...

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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 as...

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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 20...

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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 variabl...

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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...

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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 cont...

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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 Hei...

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Dransfield Company manufactures an electronic component, ZP98. This component is significantly less expensive than similar products sold by Dransfield’s competitors. Order-processing...

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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....

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Q: Dvent budgets 18,000 machine hours for the production of computer

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...

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Q: Suppose that during 2016, the market for ZP98 grew 8%.

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 h...

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Q: Refer to the information for Dransfield Company in Exercise 13-31

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 y...

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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 “...

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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...

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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 printer...

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Q: Refer to the data for Exercise 13-37. Assume the

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. Compa...

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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 orga...

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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...

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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...

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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...

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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-t...

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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 leg...

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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...

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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,...

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Q: Consider the following scenario. Each day, a butcher buys a

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 co...

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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 ma...

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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 Mar...

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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 cou...

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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...

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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...

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Q: The Princess Corporation grows, processes, packages, and sells three

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Q: Movement Athletics (MA) sells exercise DVDs through television infomercials.

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Q: Blank Slate Inc. (BSI) produces tablet computers. BSI

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Q: Debbie’s Delight attains a 10% market share based on total sales

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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 cost...

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Q: Lee Manufacturing makes a component they call P14-31. This

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 customer...

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Q: Joliver, a renowned pastry chef employed at a four-star

Joliver, a renowned pastry chef employed at a four-star hotel, has decided to open his own exclusive pastry shop. He has $100,000 to invest and the information he has obtained is as follows: ■ There i...

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Q: Larsen Corp. manufactures car seats in its Sarnia plant. Each

Larsen Corp. manufactures car seats in its Sarnia plant. Each car seat passes through the assembly department and the testing department. This problem focuses on the assembly department. The process-c...

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Q: Prepare a set of summarized journal entries for all October 2015 transactions

Prepare a set of summarized journal entries for all October 2015 transactions affecting Work in Process— Assembly. Set up a T-account for Work in Process—Assembly, and post the entries to it.

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Q: Do Problem 17-31 using the FIFO method of process costing

Do Problem 17-31 using the FIFO method of process costing. Explain any difference between the cost per equivalent unit in the assembly department under the weighted-average method and the FIFO method....

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Q: Larsen Corp., as you know, is a manufacturer of car

Larsen Corp., as you know, is a manufacturer of car seats. Each car seat passes through the assembly department and testing department. This problem focuses on the testing department. Direct materials...

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Q: Refer to the information in Problem 17-34. Suppose that

Refer to the information in Problem 17-34. Suppose that Larsen Corp. uses the FIFO method instead of the weighted average method in all of its departments. The only changes to Problem 17-34 under the...

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Q: How do standard and actual costing differ?

How do standard and actual costing differ?

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Q: The variable manufacturing costs per unit of TC Motors are:

The variable manufacturing costs per unit of TC Motors are: Required: 1. Prepare operating statements of comprehensive income for TC Motors in April and May of 2015 under throughput costing. 2. Cont...

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Porter Handcraft is a manufacturer of picture frames for large retailers. Every picture frame passes through two departments: assembly and finishing. This problem focuses on the assembly department. T...

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Q: Prepare a set of summarized journal entries for all April transactions affecting

Prepare a set of summarized journal entries for all April transactions affecting Work in Process—Assembly. Set up a T-account for Work in Process—Assembly, and post the entries to it.

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Q: Do Problem 17-36 using the FIFO method of process costing

Do Problem 17-36 using the FIFO method of process costing. If you did Problem 17-36, explain any difference between the cost of work completed and transferred out and the cost of ending work in proces...

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Q: Publish Inc. has two departments: printing and binding. Each

Publish Inc. has two departments: printing and binding. Each department has one direct cost category (direct materials) and one indirect cost category (conversion costs). This problem focuses on the b...

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Q: Refer to the information in Problem 17-39. Suppose that

Refer to the information in Problem 17-39. Suppose that Publish Inc. uses the FIFO method instead of the weighted-average method in all of its departments. The only changes to Problem 17-39 under the...

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Two styles of men’s shoes are manufactured by the Comfort Fit Shoe Company: designer and regular. Designer style is made from leather, and regular style uses synthetic materials. Thr...

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Plastco Industries manufactures a variety of plastic products, including a series of moulded chairs. The three models of moulded chairs, which are all variations of the same design, are standard (can...

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Q: The Red Deer Company is a food-processing company based in

The Red Deer Company is a food-processing company based in Alberta. It operates under the weighted-average method of process costing and has two departments: cleaning and packaging. For the cleaning d...

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Q: Two graduates of the university run M&S Java, and

Two graduates of the university run M&S Java, and they have just opened their take-out coffee and snack bar on the university campus. At the end of their first month of operations they want to und...

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Q: Refer to the information in Problem 18-30.

Refer to the information in Problem 18-30. Required: Do Problem 18-30 using the FIFO method of process costing. (Problem 18-33 explores additional facets of this problem.) Data from Problem 18-30...

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Q: In Red Deer Company’s packaging department, conversion costs are added evenly

In Red Deer Company’s packaging department, conversion costs are added evenly during the process, and direct materials are added at the end of the process. Spoiled units are detected...

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Q: Refer to the information in Problem 18-32 except for the

Refer to the information in Problem 18-32 except for the transferred-in costs for May, which equal the total cost of good units completed and transferred out in May from the cleaning department, which...

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Q: Hamilton Metal Fabricators Inc. has a large job, No.

Hamilton Metal Fabricators Inc. has a large job, No. 2734, that calls for producing various ore bins, chutes, and metal boxes for enlarging a copper concentrator. The following charges were made to th...

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Q: Rounder specializes in the manufacture of ball bearings for aircraft. Direct

Rounder specializes in the manufacture of ball bearings for aircraft. Direct materials are added at the start of the production process. Conversion costs are added evenly during the process. Some unit...

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Q: Refer to the information in Problem 18-35.

Refer to the information in Problem 18-35. Required: Repeat question 1 from Problem 18-35 using the FIFO method of process costing. Data from Problem 18-35: Rounder specializes in the manufacture o...

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Q: Refer to the information in Problem 18-35. Suppose Rounder

Refer to the information in Problem 18-35. Suppose Rounder determines standard costs of $246 per (equivalent) unit for direct materials and $96 per (equivalent) unit for conversion costs for both begi...

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Q: Normal spoilage is 6% of the good units passing inspection in

Normal spoilage is 6% of the good units passing inspection in a forging process. In March, a total of 10,000 units were spoiled. Other data include units started during March, 120,000; work-in-process...

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Q: Ottawa Manufacturing is a furniture manufacturer with two departments: moulding and

Ottawa Manufacturing is a furniture manufacturer with two departments: moulding and finishing. The company uses the weighted-average method of process costing. In August, the following data were recor...

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Q: Tee Time Machine Shop is a manufacturer of motorized carts for vacation

Tee Time Machine Shop is a manufacturer of motorized carts for vacation resorts. Pat Cruz, the plant manager of Tee Time, obtains the following information for Job #10 in August 2015. A total of 40 un...

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Q: Kathy Hanks, executive assistant to the president of Eastern University,

Kathy Hanks, executive assistant to the president of Eastern University, is concerned about the overhead costs at her university. Cost pressures are severe, so controlling and reducing overhead is ver...

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Q: Assume that the five spoiled units of Tee Time Machine Shop’s Job

Assume that the five spoiled units of Tee Time Machine Shop’s Job #10 can be reworked for a total cost of $1,800. A total cost of $5,000 associated with these units has already been assigned to Job #1...

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Q: Assume that Job #10 of Tee Time Machine Shop generates normal

Assume that Job #10 of Tee Time Machine Shop generates normal scrap with a total sales value of $300 (it is assumed that the scrap returned to the storeroom is sold quickly). Required: Prepare the jo...

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Q: Blue Titanium (BT)Corporation is a manufacturer of computer chips

Blue Titanium (BT)Corporation is a manufacturer of computer chips based in Nepean. It manufactures two types of computer chips, CS1 and CS2. The costs of manufacturing each CS1 chip, excluding rework...

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Q: Richmond Company manufactures products that often require specification changes or modifications to

Richmond Company manufactures products that often require specification changes or modifications to meet customers’ needs. Still, Richmond has been able to establish a normal spoilage rate of 2.5% of...

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Q: Normal spoilage is 7% of the good units passing inspection in

Normal spoilage is 7% of the good units passing inspection in a forging process. In March, a total of 12,000 units were spoiled. Other data include units started during March, 129,000; work-in-process...

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Q: Buckwold Corporation makes two different types of hubcaps for cars–HM3

Buckwold Corporation makes two different types of hubcaps for cars–HM3 and JB4. Circular pieces of metal are stamped out of steel sheets (leaving the edges as scrap), formed, and fin...

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Q: Koala Blue, a retailer of bed and bath linen, sells

Koala Blue, a retailer of bed and bath linen, sells 234,000 packages of Mona Lisa designer sheets each year. Koala Blue incurs an ordering cost of $81 per purchase order placed with Mona Lisa Enterpri...

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Q: Clarkson Shoe Co. produces and sells excellent quality walking shoes.

Clarkson Shoe Co. produces and sells excellent quality walking shoes. After production, the shoes are distributed to 20 warehouses around the country. Each warehouse services approximately 100 stores...

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Q: MacroHard Corp. produces J-Pods, music players that can

MacroHard Corp. produces J-Pods, music players that can download thousands of songs. MacroHard forecasts that demand in 2017 will be 48,000 J-Pods. The variable production cost of each J-Pod is $50. D...

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Q: Online C is an online company that sells computers to individual consumers

Online C is an online company that sells computers to individual consumers. The annual demand for one model that will be shipped from the northeast distribution centre is estimated to be 500,000 compu...

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Q: Instructions Form groups of two or more students to complete the following

Instructions Form groups of two or more students to complete the following requirements: Required: 1. Given your findings in Problem 10-32, should Hanks use multiple regression analysis to better und...

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Q: IMBest Computers supplies computers to Online C. Terry Moore, the

IMBest Computers supplies computers to Online C. Terry Moore, the president of IMBest, is pleased to hear that Online C will be ordering 500,000 computers. Moore has asked his accounting and productio...

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Q: The Margro Corporation is an automotive supplier that uses automatic turning machines

The Margro Corporation is an automotive supplier that uses automatic turning machines to manufacture precision parts from steel bars. Margro’s inventory of raw steel averages $600,00...

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Q: Cow Spot Computer Co. outsources the production of motherboards for its

Cow Spot Computer Co. outsources the production of motherboards for its computers. It has narrowed down its choice of suppliers to two companies: Maji and Induk. Maji is an older company with a good r...

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Q: Assume that the second trigger point for Acton Corporation is the sale

Assume that the second trigger point for Acton Corporation is the sale—rather than the completion—of finished goods. Also, the inventory account is confined solely to direct materials, whether these m...

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Q: Assume the same facts as in Problem 19-33 except now

Assume the same facts as in Problem 19-33 except now there are only two trigger points: the completion of good finished units of product and the sale of finished goods. Required: 1. Prepare summary j...

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Q: LockTite (LT) has introduced a just-in-time

LockTite (LT) has introduced a just-in-time production process and is considering the adoption of lean accounting principles to support its new production philosophy. The company has two product lines...

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Q: Ralph Menard is the owner of a truck repair shop. He

Ralph Menard is the owner of a truck repair shop. He uses an EOQ model for each of his truck parts. He initially predicts the annual demand for heavy-duty tires to be 2,000. Each tire has a purchase p...

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Q: The Ronowski Company produces telephones. For June, there were no

The Ronowski Company produces telephones. For June, there were no beginning inventories of raw materials and no beginning and ending work in process. Ronowski uses a JIT production system and backflus...

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Q: Copeland Sporting Goods is evaluating two suppliers of footballs: Big Red

Copeland Sporting Goods is evaluating two suppliers of footballs: Big Red and Quality Sports. Pertinent information about each potential supplier follows: Required: Calculate the relevant costs of p...

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Q: Industrial Fluids Ltd. (IFL) manufactures and sells fluids used

Industrial Fluids Ltd. (IFL) manufactures and sells fluids used by metal-cutting plants. These fluids enable metal-cutting to be done more accurately and more safely. IFL has more than 1,000 customers...

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Q: Worldwide Cell Phones (WCP) has developed a cell phone that

Worldwide Cell Phones (WCP) has developed a cell phone that can be used anywhere in the world (even in countries such as Japan that have a relatively unique cell phone system). WCP has been receiving...

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Q: Orca Company is a large manufacturer of optical storage systems based in

Orca Company is a large manufacturer of optical storage systems based in British Columbia. Its practical annual capacity is 7,500 units, and, for the past few years, its budgeted and actual sales and...

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Q: Patterson Corporation has four operating divisions. During the first quarter of

Patterson Corporation has four operating divisions. During the first quarter of 2015, the company reported total income from operations of $55,000 and the following results for each division: Furthe...

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Q: Ring Delights is a new company that manufactures custom jewellery. Ring

Ring Delights is a new company that manufactures custom jewellery. Ring Delights currently has six customers referenced by customer number: 01, 02, 03, 04, 05, and 06. Besides the costs of making the...

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Q: An analysis of La Flamme’s operating income changes between 2015 and 2016

An analysis of La Flamme’s operating income changes between 2015 and 2016 shows the following: Operating income for 2016 ………………………………$1,700,000 Add growth component …………………………………………70,000 Deduct pri...

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Q: The Singapore division of a Canadian telecommunications company uses a standard cost

The Singapore division of a Canadian telecommunications company uses a standard cost system for its machine-based production of telephone equipment. Data regarding production during June are as follow...

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Q: What is a linear cost function? Describe three alternative linear cost

What is a linear cost function? Describe three alternative linear cost functions.

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Q: What is a discontinuous linear cost function? What types of analyses

What is a discontinuous linear cost function? What types of analyses can be done to improve cost control when the data sets indicate a discontinuous linear cost function?

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Q: Discuss the conference method for estimating a cost function. What are

Discuss the conference method for estimating a cost function. What are advantages of this method?

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Q: When using the high–low method, should you base the

When using the high–low method, should you base the high and low observations on the outcome variable or on the predictor variable?

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Q: What is the difference between the coefficient of determination, r 2

What is the difference between the coefficient of determination, r 2 , and the goodness of fit?

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Q: Electron Inc. is a semiconductor company based in Winnipeg. In

Electron Inc. is a semiconductor company based in Winnipeg. In 2015, it produced a new router system for its corporate clients. The average wholesale selling price of the system is $1,200 each. For 20...

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Q: Provide examples of interdependencies and relate them to the decision framework.

Provide examples of interdependencies and relate them to the decision framework.

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Q: Distinguish between quantitative and qualitative factors in decision making.

Distinguish between quantitative and qualitative factors in decision making.

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Q: Describe the four key steps in managing bottleneck resources.

Describe the four key steps in managing bottleneck resources.

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Q: When might a company price below full cost?

When might a company price below full cost?

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Q: Describe two alternative approaches to long-run pricing decisions.

Describe two alternative approaches to long-run pricing decisions.

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Q: What does product life cycle mean?

What does product life cycle mean?

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Q: How does collusive pricing differ from predatory pricing?

How does collusive pricing differ from predatory pricing?

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Q: Give two examples where the difference in the costs of two products

Give two examples where the difference in the costs of two products or services is much smaller than the difference in their prices.

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Q: Describe three key components of a strategic analysis of operating income.

Describe three key components of a strategic analysis of operating income.

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Q: What criteria might be used to justify cost allocation decisions? Which

What criteria might be used to justify cost allocation decisions? Which are the dominant criteria?

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Q: The Zwatch Company manufactures trendy, high-quality moderately priced watches

The Zwatch Company manufactures trendy, high-quality moderately priced watches. As Zwatch’s senior financial analyst, you are asked to recommend a method of inventory costing. The CF...

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Q: How do cost–benefit considerations affect choices by a company about

How do cost–benefit considerations affect choices by a company about the allocation of indirect criteria?

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Q: Give examples of bases used to allocate corporate cost pools to the

Give examples of bases used to allocate corporate cost pools to the operating divisions of an organization

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Q: Why might a manager prefer that budgeted rather than actual indirect cost

Why might a manager prefer that budgeted rather than actual indirect cost allocation rates be used for costs being allocated to her division from another division?

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Q: Specify the strengths and weaknesses among the three methods of allocating the

Specify the strengths and weaknesses among the three methods of allocating the costs of service divisions to production divisions.

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Q: Distinguish between two methods of allocating common costs.

Distinguish between two methods of allocating common costs.

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Q: Why might the number of products in a joint cost setting differ

Why might the number of products in a joint cost setting differ from the number of outputs? Give an example.

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Q: Distinguish between the sales value at split off method and the estimated

Distinguish between the sales value at split off method and the estimated NRV method.

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Q: Give two limitations of the physical measure method of joint cost allocation

Give two limitations of the physical measure method of joint cost allocation.

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Q: Distinguish between the stand-alone revenue-allocation method and the

Distinguish between the stand-alone revenue-allocation method and the incremental revenue allocation method.

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Q: Distinguish between a market-size variance and a market-share

Distinguish between a market-size variance and a market-share variance.

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Q: Avery, Inc., manufactures two component parts for the television industry

Avery, Inc., manufactures two component parts for the television industry: â–  Tvez: Annual production and sales of 50,000 units at a selling price of $48.72 per unit. â–&nb...

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Q: A customer profitability profile highlights those customers that should be dropped to

A customer profitability profile highlights those customers that should be dropped to improve profitability.” Do you agree? Explain.

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Q: Give an example of three types of different levels of costs in

Give an example of three types of different levels of costs in a customer cost hierarchy.

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Q: Describe the distinctive characteristic of FIFO computations in assigning costs to units

Describe the distinctive characteristic of FIFO computations in assigning costs to units completed and ending work in process.

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Q: Standard-cost procedures are particularly applicable to process-costing situations

Standard-cost procedures are particularly applicable to process-costing situations.” Do you agree? Why?

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Q: Why should the accountant distinguish between transferred-in costs and additional

Why should the accountant distinguish between transferred-in costs and additional direct materials costs for each subsequent department in a process-costing system?

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Q: Distinguish among spoilage, reworked units, and scrap.

Distinguish among spoilage, reworked units, and scrap.

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Q: In job costing, the costs of normal spoilage that occur while

In job costing, the costs of normal spoilage that occur while a specific job is being done are charged to the specific job.” Do you agree? Explain.

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Q: What five assumptions are made when using the simplest version of the

What five assumptions are made when using the simplest version of the economic order quantity (EOQ) decision model?

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Q: Why might goal-congruence issues arise when an EOQ model is

Why might goal-congruence issues arise when an EOQ model is used to guide decisions on how much to order?

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Q: What is supply-chain analysis and how can it benefit manufacturers

What is supply-chain analysis and how can it benefit manufacturers and retailers?

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Q: The controller of the Ijiri Company wants you to estimate a cost

The controller of the Ijiri Company wants you to estimate a cost function from the following two observations in a general ledger account called Maintenance: Required: 1. Estimate the cost function...

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Q: What are some obstacles to companies adopting a supply-chain approach

What are some obstacles to companies adopting a supply-chain approach?

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Q: What are the main features in a JIT production system?

What are the main features in a JIT production system?

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Q: Distinguish job-costing systems using sequential tracking from backflush costing.

Distinguish job-costing systems using sequential tracking from backflush costing.

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Q: Match each of the following numbered items with one or more of

Match each of the following numbered items with one or more of the denominator-level capacity concepts by putting the appropriate letter(s) by each item: a. Theoretical capacity b. Practical capacity...

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Q: I am going to focus on the customers of my business and

I am going to focus on the customers of my business and leave cost allocation issues to my accountant.” Do you agree with this comment by a division president?

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Q: Define relevant cost. Why are historical costs irrelevant?

Define relevant cost. Why are historical costs irrelevant?

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Q: Do companies in either the service sector or the merchandising sector make

Do companies in either the service sector or the merchandising sector make choices about absorption costing versus variable costing?

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Q: The main trouble with variable costing is that it ignores the increasing

The main trouble with variable costing is that it ignores the increasing importance of fixed costs in modern manufacturing.” Do you agree? Why?

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Q: The rate variance for variable manufacturing overhead is affected by several factors

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

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Q: Explain how the analysis of fixed overhead costs differs for (a

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.

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Q: Select the graph that matches the numbered manufacturing cost data. Indicate

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 represen...

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Q: Explain how four-variance analysis differs from one-, two-,

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

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Q: Which denominator-level concepts emphasize what a plant can supply?

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

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Q: The difference between practical capacity and master-budget capacity utilization is

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 capa...

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Q: All independent variables in a cost function estimated with regression analysis are

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

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Q: What is the goal of an ordinary least squares (OLS)

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

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Q: Define opportunity cost .

Define opportunity cost .

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

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

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Q: Give two examples of pricing decisions with a short-run focus

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

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Q: It is not important for a firm to distinguish between cost incurrence

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

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Q: Describe three alternative cost-plus methods.

Describe three alternative cost-plus methods.

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Q: Assume variable manufacturing overhead is allocated using machine-hours. Give

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

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Q: Halsey Company sells women’s clothing. Halsey’s strategy is to offer a

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. Halse...

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Q: What is a customer preference map and why is it useful?

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

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Q: What is a strategy map?

What is a strategy map?

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Q: What is the difference between a stakeholder and a shareholder?

What is the difference between a stakeholder and a shareholder?

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Q: What are four purposes of cost allocation?

What are four purposes of cost allocation?

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Q: What are two basic reasons for a management team to select one

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

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Q: Name three decisions managers face when designing the cost allocation component of

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

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Q: To ensure unbiased cost allocations, fixed indirect costs should be allocated

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?

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Q: What is theoretically the most defensible method for allocating service division costs

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

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Q: What is one key method to avoid disputes over allocation of support

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

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Q: How might a company simplify its use of the estimated NRV method

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 s...

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Q: EnRG Inc. produces trail mix packaged for sale in convenience stores

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...

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Q: Why is the constant gross margin percentage NRV method sometimes called a

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

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Q: How might a dispute over the allocation of revenues of a bundled

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

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Q: Explain why a favourable sales-quantity variance occurs.

Explain why a favourable sales-quantity variance occurs.

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Q: Why might some companies choose not to compute market-size and

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

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

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

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Q: Are for-profit businesses the only users of revenue allocation?

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

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Q: How can the extent of price discounting be tracked on a customer

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

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Q: Give three examples of industries that often use process-costing systems

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

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Q: State two conditions under which computing equivalent units will make a material

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

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Q: Identify the main difference between journal entries in process costing and the

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

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Q: Sooke Ale recently purchased a brewing plant from a bankrupt company.

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...

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Q: Transferred-in costs are those incurred in the preceding accounting period

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

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Q: What has been regarded as normal spoilage in the past is not

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

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Q: In accounting for spoiled goods, we are dealing with cost assignment

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

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Q: The point of inspection is the key to the allocation of spoilage

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

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Q: The costs of reworking defective units are always charged to the specific

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

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Q: Name five cost categories that are important in managing goods for sale

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

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Q: Describe just-in-time (JIT) purchasing and its

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

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Q: Nost Vineyards is a wine manufacturer. It distributes its products to

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 agains...

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Q: Lynn Hardt, a management accountant with the Paibec Corporation, is

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...

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Q: Hernandez Corporation is bidding on a new construction contract, here called

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 specia...

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Q: In the United States, organ procurement organizations (OPOs), transplant

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...

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Q: Flash Chip Company (FCC) produces memory modules i n a

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 d...

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Q: As a producer of wine in the Niagara region, you have

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...

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Q: A large metropolitan health-care complex, General Hospital, has

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...

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Q: Why is the flexible-budget variance the same amount as the

Why is the flexible-budget variance the same amount as the rate variance for fixed manufacturing overhead?

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Q: Ira Stone, the president of General Hospital, has a meeting

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...

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Q: Margaret Major is the corporate controller of Leisure Suits. Leisure Suits

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...

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Q: Farkas Shoes, a high-end shoe manufacturer, produces two

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...

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Q: The cooking department of Deli Inc. uses a processcosting system.

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. Cons...

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Q: The following conversation occurred between Brian Richardson, plant manager at Glendale

The following conversation occurred between Brian Richardson, plant manager at Glendale Engineering, and Charles Cheng, plant controller. Glendale manufactures automotive component parts, such as gear...

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Q: The Svenson Corporation manufactures cellular modems. It manufactures its own cellular

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 a...

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Q: Westford Company produces three products, A110, B382, and C657

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 exc...

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Q: Nevada Industries manufactures electronic testing equipment. Nevada also installs the equipment

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...

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Q: Body-Builders, Inc., produces two basic types of weightlifting

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...

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Q: Waterbury, Inc. manufactures and sells RF17, a specialty raft

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 percentag...

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Q: John Beck is the managing partner of a business that has just

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...

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Q: Manitoba Dairy, maker of specialty cheeses, produces a soft cheese

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 $...

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Q: Medical Instruments uses a manufacturing costing system with one direct cost category

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 th...

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Q: Bradshaw Repair Shop repairs and services machine tools. A summary of

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...

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Q: Digital Arts Inc. manufactures game systems. Digital Arts has decided

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 a...

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Q: Snappy Tiles is a small distributor of marble tiles. Snappy identifies

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...

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Q: Executive Power (EP) manufactures and sells computers and computer peripherals

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 printe...

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Q: The Montreal Company is an electronics business with eight product lines.

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...

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Q: Screen Games (SG) distributes DVD games to retail stores and

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 prov...

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Q: The production-volume variance should always be written off to “

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

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Q: The following financial data apply to the DVD production plant of the

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 labo...

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Q: Carson Associates prepares architectural drawings to conform to local structural-safety

Carson Associates prepares architectural drawings to conform to local structural-safety codes. Its statement of comprehensive income for 2015 is: Revenue ……………………………………………………………………………………..$680,000 Sa...

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Q: A number of terms are listed below: /

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...

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Q: La Flamme Corporation manufactures corrugated cardboard boxes. It competes and plans

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 oth...

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Q: Grey Corporation makes a special-purpose D4H machine used in the

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 s...

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Q: Refer to the information in Exercise 13-18.

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 compo...

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Q: Suppose that between 2015 and 2016 the market for Grey’s special-

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 strategi...

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Q: Refer to the Grey Corporation information in Exercise 13-18.

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...

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Q: Snyder Corporation is a small information systems consulting firm that specializes in

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...

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Q: Refer to the information in Exercise 13-23.

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 com...

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Q: Why is the term direct costing a misnomer for variable costing?

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

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Q: Suppose that during 2016 the market for implementing sales management software increased

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...

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Q: Refer to the Snyder Corporation information in Exercise 13-23.

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 d...

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Q: Lakeside T-Shirt Company sells a variety of T-shirts

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...

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Q: Refer to Exercise 13-27. Required:

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...

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Q: A number of terms are listed below: /

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 wh...

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Q: Dave Meltzer went to Lake Tahoe for his annual winter vacation.

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 com...

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Q: The Saskatchewan power plant that services all manufacturing divisions of Sask Engineering

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 expect...

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Q: Chocolat Inc. is a producer of premium chocolate based in Owen

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 ingredient...

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Q: Chocolat Inc. decides to examine the effect of using the dual

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 &a...

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Q: Phoenix Partners provides management consulting services to government and corporate clients.

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

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Q: Explain the main conceptual issue under variable and absorption costing regarding the

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

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Q: Refer to the data given in Exercise 14-20.

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...

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Q: The Bow River Company has prepared division overhead budgets for budgeted-

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...

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Q: Three restaurants in a downtown area of a large city have decided

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...

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Q: E-books, an online book retailer, has two operating

E-books, an online book retailer, has two operating divisions— corporate sales and consumer sales—and two support divisions—human resources and in...

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Q: Consider E-books again. The controller of E-books

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...

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Q: A number of terms are listed below: byproduct …………………….

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

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Q: Quality Chicken is computing the ending inventory values for its July 31

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,...

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Q: Roundtree Chocolates manufactures and distributes chocolate products. It purchases cocoa beans

Roundtree Chocolates manufactures and distributes chocolate products. It purchases cocoa beans and processes them into two intermediate products: â–  Chocolate powder liquor base. &aci...

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Q: The Vapor Company produces two products, turpentine and methanol (wood

The Vapor Company produces two products, turpentine and methanol (wood alcohol), by a joint process. Joint costs amount to $144,000 per batch of output. Each batch totals 40,000 litres: 25% methanol a...

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Q: Manitoba Soy Products (MSP) buys soy beans and processes them

Manitoba Soy Products (MSP) buys soy beans and processes them into other soy products. Each tonne of soy beans that MSP purchases for $300 can be converted for an additional $200 into 500 lbs of soy m...

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Q: Give two examples of financial performance measures and two examples of nonfinancial

Give two examples of financial performance measures and two examples of nonfinancial performance measures.

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Q: What are the six steps in designing an accounting-based performance

What are the six steps in designing an accounting-based performance measure?

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Q: Fluffy Cupcake Company is considering expanding by buying a new (additional

Fluffy Cupcake Company is considering expanding by buying a new (additional) machine that costs $42,000, has zero terminal disposal value, and has a 10-year useful life. It expects the annual increase...

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Q: The Strubel Company currently makes as many units of Part No.

The Strubel Company currently makes as many units of Part No. 789 as it needs. David Lin, general manager of the Strubel Company, has received a bid from the Gabriella Company for making Part No. 789....

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Q: Describe three criteria you would use to evaluate whether a management control

Describe three criteria you would use to evaluate whether a management control system is effective.

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Q: What are the three general methods for determining transfer prices?

What are the three general methods for determining transfer prices?

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Q: Why should managers consider income tax issues when choosing a transfer-

Why should managers consider income tax issues when choosing a transfer-pricing method?

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Q: Describe economic value added.

Describe economic value added.

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Q: What factors affecting ROI does the DuPont method highlight?

What factors affecting ROI does the DuPont method highlight?

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Q: Residual income is not identical to ROI, although both measures incorporate

Residual income is not identical to ROI, although both measures incorporate income and investment into their computations.” Do you agree? Explain.

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Q: Managers’ control of job projects generally focuses on four critical success factors

Managers’ control of job projects generally focuses on four critical success factors.” Identify those factors.

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Q: The net present value method is the preferred method for capital budgeting

The net present value method is the preferred method for capital budgeting decisions. Therefore, managers will always use it.” Do you agree? Explain.

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Q: Distinguish among measuring assets based on present value, current cost,

Distinguish among measuring assets based on present value, current cost, and historical cost.

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Q: Explain the management accountant’s role in helping organizations design stronger incentive systems

Explain the management accountant’s role in helping organizations design stronger incentive systems for their employees.

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Q: Explain the incentive problems that can arise when employees have to perform

Explain the incentive problems that can arise when employees have to perform multiple tasks as part of their jobs.

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Q: Describe each of the levers of control and their interrelation with strategy

Describe each of the levers of control and their interrelation with strategy.

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Q: A number of terms are listed below: /

A number of terms are listed below: Select the terms from the above list to complete the following sentences. The goal of ________________ is to provide capacity in a planned and orderly manner that...

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Q: Lethbridge Company runs hardware stores in Alberta. Lethbridge’s management estimates that

Lethbridge Company runs hardware stores in Alberta. Lethbridge’s management estimates that if it invests $160,000 in a new computer system, it can save $60,000 in annual cash operating costs. The syst...

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Q: Panayiotis, the owner and manager of Micos Ltd., is evaluating

Panayiotis, the owner and manager of Micos Ltd., is evaluating the acquisition of new equipment needed to attend a new line of business. He has two alternatives: either buy two small machines or one l...

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Q: Norberto Garcia, general manager of the Argentinean subsidiary of Innovation Inc

Norberto Garcia, general manager of the Argentinean subsidiary of Innovation Inc., is considering the purchase of new industrial equipment to improve efficiency at its Cordoba plant. The equipment has...

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Q: Southern Cola is considering the purchase of a special-purpose bottling

Southern Cola is considering the purchase of a special-purpose bottling machine for $23,000. It is expected to have a useful life of four years with no terminal disposal value. The plant manager estim...

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Q: List and briefly describe each of the six parts in the capital

List and briefly describe each of the six parts in the capital budgeting decision process.

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Q: New Bio Corporation is a rapidly growing biotech company that has a

New Bio Corporation is a rapidly growing biotech company that has a required rate of return of 12%. It plans to build a new facility in Mississauga, Ontario. The building will take two years to comple...

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Q: Andrews Construction is analyzing its capital expenditure proposals for the purchase of

Andrews Construction is analyzing its capital expenditure proposals for the purchase of equipment in the coming year. The capital budget is limited to $6,000,000 for the year. Lori Bart, staff analyst...

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Q: Presentation Graphics prepares slides and other aids for individuals making presentations.

Presentation Graphics prepares slides and other aids for individuals making presentations. It estimates it can save $42,000 a year in cash operating costs for the next five years if it buys a special-...

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Q: Century Lab plans to purchase a new centrifuge machine for its Manitoba

Century Lab plans to purchase a new centrifuge machine for its Manitoba facility. The machine costs $137,500 and is expected to have a useful life of eight years, with a terminal disposal value of $37...

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Q: Muskoka Landscaping Ltd. is planning to buy equipment costing $25

Muskoka Landscaping Ltd. is planning to buy equipment costing $25,000 to improve its services. The equipment is expected to save $8,000 in cash operating costs per year. Its estimated useful life is f...

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Q: Homer Inc. plans to purchase a new rendering machine for its

Homer Inc. plans to purchase a new rendering machine for its animation facility. The machine costs $102,500 and is expected to have a useful life of eight years, with a terminal disposal value of $22,...

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Q: Edilcan Inc. has been offered an automated special-purpose welder

Edilcan Inc. has been offered an automated special-purpose welder (robot) for $60,000. The machine is expected to have a useful life of eight years with a terminal disposal price of $12,000. Savings i...

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Q: Windsor Hospital is a non-tax paying not for profit entity

Windsor Hospital is a non-tax paying not for profit entity. It estimates that it can save $28,000 a year in cash operating costs for the next 10 years if it buys a special-purpose eye-testing machine...

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Q: Edgeley Inc., a logistics operator located in Concord, Ontario,

Edgeley Inc., a logistics operator located in Concord, Ontario, is considering replacing one of its tractor trailers (informally known as a 53’ truck). The truck was purchased for $64,800 two years ag...

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Q: Microdot Inc. sells and distributes computer networking equipment; its overall

Microdot Inc. sells and distributes computer networking equipment; its overall margin on sales is 10%. Microdot has customers of two kinds: low and high volume. Lowvolume customers on average generate...

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Q: Describe the accrual accounting rate of return method. What are its

Describe the accrual accounting rate of return method. What are its main strengths and weaknesses?

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Q: KopiPro is considering the purchase of a photocopying machine for $5

KopiPro is considering the purchase of a photocopying machine for $5,500 on December 31, 2016. It has a useful life of five years and a zero residual disposal price. Depreciation will be applied on a...

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Q: StrengthCo is considering an investment of $254,200 in special

StrengthCo is considering an investment of $254,200 in special tools, with a life expectancy of four years and a residual price of $24,000. The tools would be purchased on December 31, 2016, and would...

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Q: Anna’s Bakery plans to purchase a new oven with an estimated useful

Anna’s Bakery plans to purchase a new oven with an estimated useful life of four years. The estimated pretax cash flows for the oven are as shown in the table that follows, with no a...

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Q: A number of terms are listed below: /

A number of terms are listed below: Required: Select the terms from the above list to complete the following sentences. The CRA constrains global transfer-pricing choices, and provincial tax authori...

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Q: Greystone Corporation manufactures stone tiles for kitchen counters and floors. Its

Greystone Corporation manufactures stone tiles for kitchen counters and floors. Its strategy is to manufacture high-quality products at reasonable prices, and to rapidly deliver products following sal...

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Q: Berry Chemicals consists of seven independent operating divisions. The operating divisions

Berry Chemicals consists of seven independent operating divisions. The operating divisions are assisted by a number of support groups, such as R&D, human resources, and environmental management. The e...

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Q: Fenster Corporation manufactures windows with wood and metal frames. Fenster has

Fenster Corporation manufactures windows with wood and metal frames. Fenster has three departments: glass, wood, and metal. The glass department makes the window glass and sends it to either the wood...

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Q: User Friendly Computer Inc., with headquarters in Nepean, Ontario,

User Friendly Computer Inc., with headquarters in Nepean, Ontario, manufactures and sells a premium desktop computer system. User Friendly has three divisions, each of which is located in a different...

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Q: The Orsilo Corporation makes and sells 10,000 multisystem music players

The Orsilo Corporation makes and sells 10,000 multisystem music players each year. Its assembly division purchases components from other divisions of Orsilo or from external suppliers and assembles th...

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Q: TECA Halifax makes kids’ bicycles. The frames division makes and paints

TECA Halifax makes kids’ bicycles. The frames division makes and paints the frames and supplies them to the assembly division where the bicycles are assembled. TECA is a successful and profitable corp...

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Q: The trouble with discounted cash flow techniques is that they ignore depreciation

The trouble with discounted cash flow techniques is that they ignore depreciation costs.” Do you agree? Explain.

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Q: Quest Motors Inc. operates as a decentralized multidivision company. The

Quest Motors Inc. operates as a decentralized multidivision company. The tivo division of Quest Motors purchases most of its airbags from the airbag division. The airbag division’s incremental cost fo...

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Q: The Handit Company manufactures telecommunications equipment at its plant in Ottawa,

The Handit Company manufactures telecommunications equipment at its plant in Ottawa, Ontario. The company has marketing divisions throughout the world. A Handit marketing division in Vienna, Austria,...

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Q: Industrial Diamonds, Inc., based in Montreal, Quebec, has

Industrial Diamonds, Inc., based in Montreal, Quebec, has two divisions: â–  South African mining division, which mines a rich diamond vein in South Africa. â–  Canadia...

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Q: The Allison Corporation, manufacturer of tractors and other heavy farm equipment

The Allison Corporation, manufacturer of tractors and other heavy farm equipment, is organized along decentralized product lines, with each manufacturing division operating as a separate profit centre...

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Q: Francesca Freed wants a Burg-NFry franchise. The buy-

Francesca Freed wants a Burg-NFry franchise. The buy-in is $500,000. Burg-N-Fry headquarters tells Francesca that typical annual operating costs are $160,000 (cash) and that she can bring in “as much...

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Q: Wilcox is a familyowned company that has been making microwaves for almost

Wilcox is a familyowned company that has been making microwaves for almost 20 years. The company’s production line includes 10 models, ranging from a basic model to a deluxe stainles...

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Q: Home Appliance (HA) builds coffeemakers and battery-powered small

Home Appliance (HA) builds coffeemakers and battery-powered small tools. For a long time, HA held a reputation for strong, durable, and reliable appliances. This reputation began to decline, however,...

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Q: In 2015, the Mandarin Division of Key Products Corporation generated an

In 2015, the Mandarin Division of Key Products Corporation generated an operating income of $3,000,000 from $20,000,000 of sales revenues and using assets worth $15,000,000. Mandarin managers are eval...

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Q: A number of terms are listed below: /

A number of terms are listed below: Required: Select the terms from the above list to complete the following sentences. Governance, or the management stewardship of assets management does not own, a...

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Q: Return on investment (ROI) is often expressed as follows:

Return on investment (ROI) is often expressed as follows: Required: 1. What advantages are there in the breakdown of the computation into two separate components? 2. Fill in the following blanks:...

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Q: List and briefly describe the five major categories of cash flows included

List and briefly describe the five major categories of cash flows included in capital investment projects.

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Q: Learning World Inc. has two divisions: Test Preparation and Language

Learning World Inc. has two divisions: Test Preparation and Language Arts. Results (in millions) for the past three years are partially displayed here: Required: 1. Complete the table by filling in...

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Q: The Outdoor Sports Company produces a wide variety of outdoor sports equipment

The Outdoor Sports Company produces a wide variety of outdoor sports equipment. Its newest division, Golf Technology, manufactures and sells a single product: AccuDriver, a golf club that uses global...

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Q: Ohms Motor Company makes electric cars and has only two products,

Ohms Motor Company makes electric cars and has only two products, the Simplegreen and the Superiorgreen. To produce the Simplegreen, Ohms Motor employed assets of $13,500,000 at the beginning of the p...

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Q: Summit Equipment specializes in the manufacture of medical equipment, a field

Summit Equipment specializes in the manufacture of medical equipment, a field that has become increasingly competitive. Approximately two years ago, Ben Harrington, president of Summit, decided to rev...

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Q: YardScapes Corporation manufactures furniture in several divisions, including the Patio Furniture

YardScapes Corporation manufactures furniture in several divisions, including the Patio Furniture division. The manager of the Patio Furniture division plans to retire in two years. The manager receiv...

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Q: Performance Auto Company operates a New Car Division (that sells high

Performance Auto Company operates a New Car Division (that sells high-performance sports cars) and a Performance Parts Division (that sells performance improvement parts for family cars). Some divisio...

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Q: Bailey Corporation recently announced a bonus plan to be awarded to the

Bailey Corporation recently announced a bonus plan to be awarded to the manager of the most profitable division. The three division managers are to choose whether ROI or RI will be used to measure pro...

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Q: The Grandlund Corporation manufactures similar products in Canada and Norway. The

The Grandlund Corporation manufactures similar products in Canada and Norway. The Canadian and Norwegian operations are organized as decentralized divisions. The following information is available for...

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Q: Lada Manufacturing makes fashion products and competes on the basis of quality

Lada Manufacturing makes fashion products and competes on the basis of quality and leading-edge designs. The company has $3,000,000 invested in assets in its clothing manufacturing division. After-tax...

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Q: The Dexter Division of AMCO sells car batteries. AMCO’s corporate management

The Dexter Division of AMCO sells car batteries. AMCO’s corporate management gives Dexter management considerable operating and investment autonomy in running the division. AMCO is considering how it...

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Q: Bill Watts, president of Western Publications, accepts a capital-

Bill Watts, president of Western Publications, accepts a capital-budgeting project advocated by Division X. This is the division in which the president spent his first 10 years with the company. On th...

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Q: Brasskey (BK) Company makes doorbells. It has a weighted

Brasskey (BK) Company makes doorbells. It has a weighted-average cost of capital of 8%, and total assets of $5,690,000. BK has current liabilities of $700,000. Its operating income for the year was $6...

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Q: Nature’s Elixir Corporation operates three divisions that process and bottle natural fruit

Nature’s Elixir Corporation operates three divisions that process and bottle natural fruit juices. The historical-cost accounting system reports the following information for 2015:...

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Q: Peach Computer Corporation is the largest personal computer company in the world

Peach Computer Corporation is the largest personal computer company in the world. The CEO of Peach is retiring, and the board of directors is considering external candidates to fill the position. The...

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Q: Konekopf Corporation has a division in Canada and another in France.

Konekopf Corporation has a division in Canada and another in France. The investment in the French assets was made when the exchange rate was $1.20 per euro. The average exchange rate for the year was...

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Q: Zzwuig Multinational Inc. has divisions in Canada, Germany, and

Zzwuig Multinational Inc. has divisions in Canada, Germany, and New Zealand. The Canadian division is the oldest and most established of the three, and has a cost of capital of 6%. The German division...

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Q: British Columbia Lumber has a raw lumber division and a finished lumber

British Columbia Lumber has a raw lumber division and a finished lumber division. The variable costs are: ■ Raw lumber division: $100 per 100 board feet of raw lumber. ■ Finished lumber division: $125...

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Q: Ajax Corporation has two divisions. The mining division makes toldine,

Ajax Corporation has two divisions. The mining division makes toldine, which is then transferred to the metals division. The toldine is further processed by the metals division and sold to customers a...

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Q: Refer to Exercise 21-25. Assume that Division A can

Refer to Exercise 21-25. Assume that Division A can sell the 2,000 units to other customers at $155 per unit, with variable marketing cost of $5 per unit. Required: 1. Determine whether Allison-Chamb...

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Q: Clover Inc. manufactures and sells television sets. Its assembly division

Clover Inc. manufactures and sells television sets. Its assembly division (AD) buys television screens from the screen division (SD) and assembles the TV sets. The SD, which is operating at capacity,...

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Q: Europa Inc., has two divisions, A and B, which

Europa Inc., has two divisions, A and B, which manufacture expensive bicycles. Division A produces the bicycle frame, and Division B assembles the rest of the bicycle onto the frame. There is a market...

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Q: Give two reasons why a dual-price approach to transfer pricing

Give two reasons why a dual-price approach to transfer pricing is not widely used.

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Q: Refer to Exercise 21-28. Required:

Refer to Exercise 21-28. Required: 1. Suppose the manager of Division A has the option of (a) cutting the external price to $195, with the certainty that sales will rise to 1,000 units or (b) maintai...

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Q: Christen Granite sells granite counter tops to the construction industry. Christen

Christen Granite sells granite counter tops to the construction industry. Christen Granite has three customers: Homebuilders, a small construction company that builds private luxury homes; Kitchen Con...

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Q: You have the opportunity to expand your business b y purchasing new

You have the opportunity to expand your business b y purchasing new equipment for $189,000. You expect to incur fixed costs of $96,000 per year to use this new equipment, and you expect to incur varia...

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Q: Nate Stately, a manager of the Plate division for the Great

Nate Stately, a manager of the Plate division for the Great Slate Manufacturing Company, has the opportunity to expand the division by investing in additional machinery costing $320,000. He would depr...

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Q: Met-All Manufacturing manufactures over 20,000 different products made

Met-All Manufacturing manufactures over 20,000 different products made from metal, including building materials, tools, and furniture parts. The manager of the Furniture Parts division has proposed th...

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Q: LudmillaQuagg owns a fitness centre and is thinking of replacing the old

LudmillaQuagg owns a fitness centre and is thinking of replacing the old Fit-O-Matic machine with a brand new Flab-Buster 3000. The old FitO-Matic has a historical cost of $50,000 and accumulated depr...

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Q: The management of Kleinburg Industrial Bakery is analyzing two competing investment projects

The management of Kleinburg Industrial Bakery is analyzing two competing investment projects and they must decide which one can be done immediately and which one can be postponed for at least a year....

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Q: Whengon Manufacturing makes electronic hearing aids. Department A manufactures 10,

Whengon Manufacturing makes electronic hearing aids. Department A manufactures 10,000 units of part HR-7 and Department B uses this part to make the finished product. HR-7 is a specific part for a pat...

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Q: Blue Ribbon Fisheries is a fishing company located on the Canadian Pacific

Blue Ribbon Fisheries is a fishing company located on the Canadian Pacific coast. It has three divisions: 1. Harvesting—operates a fleet of 20 trawling vessels. 2. Processing—processes the raw fish in...

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Q: Mark’s division has been judged on the basis of its profit and

Mark’s division has been judged on the basis of its profit and return on investment. Top management has been working to gain effective results from a policy of decentralizing responsibility for all de...

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Q: Under the general transfer-pricing guideline, the minimum transfer price

Under the general transfer-pricing guideline, the minimum transfer price will vary depending on whether or not the supplying division has idle capacity.” Do you agree? Explain.

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Q: Italian Sausages Inc. is still a family-owned company located

Italian Sausages Inc. is still a family-owned company located in Maple, Ontario. It has experienced significant growth in the last 10 years, and nowadays it employs more than 100 persons in production...

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Q: Green News Group has two major divisions: Print and Internet.

Green News Group has two major divisions: Print and Internet. Summary financial data (in millions) for 2014 and 2015 are as follows: he two division managers’ annual bonuses are ba...

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Q: Murdoch Turner seeks your advice on revising the existing bonus plan for

Murdoch Turner seeks your advice on revising the existing bonus plan for division managers of Green News Group. Assume division managers do not like bearing risk. Turner is considering three ideas: ■...

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Q: Community Credit Union (CCU) recently introduced a new bonus plan

Community Credit Union (CCU) recently introduced a new bonus plan for its business unit executives. The company believes that current profitability and customer satisfaction levels are equally importa...

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Q: Hamilton Semiconductors manufactures specialized chips that sell for $20 each.

Hamilton Semiconductors manufactures specialized chips that sell for $20 each. Hamilton’s manufacturing costs consist of variable cost of $2 per chip and fixed costs of $9,000,000. Hamilton also incur...

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Q: United Forest Products (UFP) is a large timber and wood

United Forest Products (UFP) is a large timber and wood processing plant. UFP’s performance-evaluation system pays its managers substantial bonuses if the company achieves annual budgeted profit numbe...

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Q: When the Smith & Bain Company formed three divisions a year ago

When the Smith & Bain Company formed three divisions a year ago, the president told the division managers that an annual bonus would be paid to the most profitable division. However, absolute divi...

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Q: Mineral Waters Ltd. operates three divisions that process and bottle sparkling

Mineral Waters Ltd. operates three divisions that process and bottle sparkling mineral water. The historical-cost accounting system reports the following data for 2015: Mineral Waters estimates the...

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Q: Leader Automotive Canada is a Tier 1 supplier in the automotive industry

Leader Automotive Canada is a Tier 1 supplier in the automotive industry (direct supplier to car assemblies), an industry that is considered the most competitive in the manufacturing sector. A couple...

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Q: The following forecast variable costing income statement was prepared for Electric Machines

The following forecast variable costing income statement was prepared for Electric Machines Ltd. for the year ending April 2015: Sales ……………………………………..$100,000,000 Variable costs …………………………….45,000,0...

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Q: Transfer pricing is confined to profit centres.” Do you agree?

Transfer pricing is confined to profit centres.” Do you agree? Why?

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Q: Corners Ltd. owns and manages three convenience stores. The following

Corners Ltd. owns and manages three convenience stores. The following information has been collected for the year 2015: Required: 1. Compute the ROI for each store, where investment is measured at (...

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Q: Coventry Inc. is a diversified multidivisional corporation. One of its

Coventry Inc. is a diversified multidivisional corporation. One of its business units manufactures and sells industrial pumps. Coventry’s corporate management gives Industrial Pumps management conside...

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Q: Light Seating Canada produces recliners, the device inside car seats that

Light Seating Canada produces recliners, the device inside car seats that allows the seats to recline to a position comfortable to the driver but prevents the seat from trapping the driver in the case...

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Q: As a way to incent competition between divisions, the president of

As a way to incent competition between divisions, the president of Industrial Products told the division managers that a quarterly bonus would be paid only to the most profitable division. However, ab...

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Q: Crango Products is a cranberry cooperative that operates two divisions: a

Crango Products is a cranberry cooperative that operates two divisions: a harvesting division and a processing division. Currently, all of Harvesting’s output is converted into cranb...

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Q: Assume that Pat Borges, CEO of Crango, has mandated a

Assume that Pat Borges, CEO of Crango, has mandated a transfer price equal to 200% of full cost. Now she decides to decentralize some management decisions and sends around a memo that states: “Effecti...

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Q: The Ottawa Valley Instrument Company (OVIC) consists of the semiconductor

The Ottawa Valley Instrument Company (OVIC) consists of the semiconductor division and the process-control division, each of which operates as an independent profit centre. The semiconductor division...

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Q: Argone division of Gemini Corporation is located in the United States.

Argone division of Gemini Corporation is located in the United States. Its effective income tax rate is 20%. Another division of Gemini, Calcia, is located in Canada, where the income tax rate is 38%....

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Q: Fox Valley Healthcare Inc. is a not-for-profit

Fox Valley Healthcare Inc. is a not-for-profit organization that operates eight nursing homes and 10 assisted-living facilities. The company has grown considerably over the last three years and expect...

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Q: LVT is an international manufacturer of fragrances for women. Management at

LVT is an international manufacturer of fragrances for women. Management at LVT is considering expanding the product line to men’s fragrances. From the best estimates of the marketing and production m...

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Q: Imagine Washington State is considering implementing a program that pays monetary awards

Imagine Washington State is considering implementing a program that pays monetary awards to families when their high school age children meet certain goals (for example, school attendance, achievement...

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Q: How would the shadow price of a high school diploma change if

How would the shadow price of a high school diploma change if the labor force participation rate for increase?

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Q: (Instructor provided spreadsheet required) How much would the shadow price

(Instructor provided spreadsheet required) How much would the shadow price of a diploma change if the probabilities of high school graduates obtaining no further education, some college, and college g...

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Q: You are a decision-maker who has to decide whether to

You are a decision-maker who has to decide whether to adopt the Tulsa IDA program on a permanent basis relying, in part, on the information provided by the CBA described in this case study. a. The ca...

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Q: (Regression software required; instructor-provided spreadsheet recommended.) An

(Regression software required; instructor-provided spreadsheet recommended.) An analyst was asked to predict the gross social benefits of building a public swimming pool in Dryville, which has a popul...

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Q: Suppose the government is considering an increase in the toll on a

Suppose the government is considering an increase in the toll on a certain stretch of highway from $.40 to $.50. At present, 50,000 cars per week use that highway stretch; after the toll is imposed, i...

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Q: A country imports 3 billion barrels of crude oil per year and

A country imports 3 billion barrels of crude oil per year and domestically produces another 3 billion barrels of crude oil per year. The world price of crude oil is $90 per barrel. Assuming linear cur...

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Q: Consider a low-wage labor market. Workers in this market

Consider a low-wage labor market. Workers in this market are not presently covered by the minimum wage, but the government is considering implementing such legislation. If implemented, this law would...

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Q: Assume that a typical unskilled rural worker in a developing country would

Assume that a typical unskilled rural worker in a developing country would be paid 2 dubyas a week if he migrates to the city and finds a job. However, the unemployment rate for unskilled workers is 4...

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Q: (Instructor-provided spreadsheet recommended.) A proposed government project in

(Instructor-provided spreadsheet recommended.) A proposed government project in a rural area with 100 unemployed persons would require the hiring of 20 workers. The project would offer wages of $12 pe...

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Q: Recall exercise 1 from Chapter 5 in which an increase in the

Recall exercise 1 from Chapter 5 in which an increase in the toll on a highway from $.40 to $.50 would reduce use of the highway by 5,000 cars per week. a. Because of the reduced use of the highway,...

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Q: Why is there no consumer surplus included as a benefit?

Why is there no consumer surplus included as a benefit?

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Q: Recall exercise 2 from Chapter 5 in which a country imposes an

Recall exercise 2 from Chapter 5 in which a country imposes an import fee on the crude oil it imports. Assume that prior to the imposition of the import fee, the country annually consumed 900 million...

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Q: Recall exercise 2 from Chapter 5 in which a country imposes an

Recall exercise 2 from Chapter 5 in which a country imposes an import fee on the crude oil it imports. Imagine that all the crude oil imports to the country are made by ships owned by its nationals. T...

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Q: (Instructor-provided spreadsheet recommended) Consider an individual’s utility function

(Instructor-provided spreadsheet recommended) Consider an individual’s utility function over two goods, qm and qs, where m indicates the primary market in which a policy will have its effect and s is...

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Q: Review the following CBA: David L. Weimer and Mark A

Review the following CBA: David L. Weimer and Mark A. Sager, ““Early Identification and Treatment of Alzheimer’s Disease: Social and Fiscal Outcomes,” Alzheimer’s & Dementia 5(3), 2009, 215-226. Evalu...

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Q: Imagine that a project involves putting a high-voltage power transmission

Imagine that a project involves putting a high-voltage power transmission line near residential property. Discuss how you might predict and monetize its impact on residents.

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Q: A highway department is considering building a temporary bridge to cut travel

A highway department is considering building a temporary bridge to cut travel time during the three years it will take to build a permanent bridge. The temporary bridge can be put up in a few weeks at...

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Q: A government data processing center has been plagued in recent years by

A government data processing center has been plagued in recent years by complaints from employees of back pain. Consultants have estimated that upgrading office furniture at a net cost of $430,000 wou...

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Q: A town’s recreation department is trying to decide how to use a

A town’s recreation department is trying to decide how to use a piece of land. One option is to put up basketball courts with an expected life of 8 years. Another is to install a swimming pool with an...

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Q: The environmental protection agency of a county would like to preserve a

The environmental protection agency of a county would like to preserve a piece of land as a wilderness area. The current owner has offered to lease the land to the county for 20 years in return for a...

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Q: Imagine that the current owner of the land in the previous exercise

Imagine that the current owner of the land in the previous exercise was willing to sell the land for $2 million. Assuming this amount equaled the social opportunity cost of the land, calculate the net...

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Q: What weaknesses do you see in this CBA? If corrected,

What weaknesses do you see in this CBA? If corrected, would they increase or decrease the expected NPV?

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Q: (Instructor-provided spreadsheet recommended.) New City is considering building

(Instructor-provided spreadsheet recommended.) New City is considering building a recreation center. The estimated construction cost is $12 million with annual staffing and maintenance costs of $750,0...

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Q: (Instructor-provided spreadsheet recommended.) The following table gives cost

(Instructor-provided spreadsheet recommended.) The following table gives cost and benefit estimates in real dollars for dredging a navigable channel from an inland port to the open sea. Dredging an...

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Q: An analyst for a municipal public housing agency explained the choice of

An analyst for a municipal public housing agency explained the choice of a discount rate as follows: “Our agency funds its capital investments through nationally issued bonds. The effective interest r...

See Answer

Q: Assume the following: Society faces a marginal excess tax burden of

Assume the following: Society faces a marginal excess tax burden of raising public revenue denoted METB; the shadow price of capital equals θ; public borrowing displaces private investment dollar for...

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Q: Assume a project will result in benefits of $1.2

Assume a project will result in benefits of $1.2 trillion in 500 years by avoiding an environmental disaster that otherwise would occur at that time. a. Compute the present value of these benefits us...

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Q: The initial cost of constructing a permanent dam (i.e

The initial cost of constructing a permanent dam (i.e., a dam that is expected to last forever) is $830 million. The annual net benefits will depend on the amount of rainfall: $36 million in a “dry” y...

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Q: Use several alternative discount rate values to investigate the sensitivity of the

Use several alternative discount rate values to investigate the sensitivity of the present value of net benefits of the dam in exercise (1) to the assumed value of the real discount rate.

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Q: The prevalence of a disease among a certain population is 0.

The prevalence of a disease among a certain population is 0.40. That is, there is a 40 percent chance that a person randomly selected from the population will have the disease. An imperfect test that...

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Q: In exercise (3) the optimal strategy involved testing. Does

In exercise (3) the optimal strategy involved testing. Does testing remain optimal if the prevalence of the disease in the population is only .05? Does your answer suggest any general principle? Data...

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Q: (Use of a instructor-provided spreadsheet recommended for parts a

(Use of a instructor-provided spreadsheet recommended for parts a through e, and necessary for part f) A town with a population of 164,250 persons who live in 39,050 households is considering introduc...

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Q: What information would be needed to estimate the net benefits of a

What information would be needed to estimate the net benefits of a state-wide Alzheimer's disease screening program for 65 year olds?

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Q: Imagine that the net present value of a hydroelectric plant with

Imagine that the net present value of a hydroelectric plant with a life of 70 years is $25.73 million and that the net present value of a thermal electric plant with a life of 35 years is $18.77 mill...

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Q: A large rural county is considering establishing a medical transport unit that

A large rural county is considering establishing a medical transport unit that would use helicopters to fly emergency medical cases to hospitals. Analysts have attempted to estimate the benefits from...

See Answer

Q: Imagine that we want to value a cultural festival from the point

Imagine that we want to value a cultural festival from the point of view of a risk-averse person. The person’s utility is given by U (I) where $I is her income. She has a 50 percent chance of being ab...

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Q: Imagine a wilderness area of 200 square miles in the Rocky Mountains

Imagine a wilderness area of 200 square miles in the Rocky Mountains. How would you expect each of the following factors to affect people’s total willingness to pay for its preservation? a. The size...

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Q: An analyst wishing to estimate the benefits of preserving a wetland has

An analyst wishing to estimate the benefits of preserving a wetland has combined information obtained from two methods. First, she surveyed those who visited the wetland - fishers, duck hunters, and b...

See Answer

Q: Consider a government training program that provides low-skilled men job

Consider a government training program that provides low-skilled men job-specific training. To evaluate this program, members of the target population were randomly assigned to either a treatment grou...

See Answer

Q: Perhaps the most careful effort to measure the effects of compensatory preschool

Perhaps the most careful effort to measure the effects of compensatory preschool education was the Perry Preschool Project begun in Ypsilanti, Michigan in 1962. Children, mostly three years old, were...

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Q: Five years ago a community college district established programs in ten new

Five years ago a community college district established programs in ten new vocational fields. The district now wants to phase out those programs that are not performing successfully and retain those...

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Q: Child care services in a small Midwestern city cost $30 per

Child care services in a small Midwestern city cost $30 per day per child. The high cost of these services is one reason why very few mothers who are on welfare work; given their low potential wages,...

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Q: A worker, who is typical in all respects, works for

A worker, who is typical in all respects, works for a wage of $50,000 per year in a perfectly safe occupation. Another typical worker does a job requiring exactly the same skills as the first worker,...

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Q: Imagine that you wanted to use a life-course model similar

Imagine that you wanted to use a life-course model similar to the Alzheimer's disease model to estimate the net benefits of helping someone quit smoking. What would be the most important similarities...

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Q: (Instructor-provided spreadsheet recommended.) Happy Valley is the only

(Instructor-provided spreadsheet recommended.) Happy Valley is the only available camping area in Rural County. It is owned by the county, which allows free access to campers. Almost all visitors to H...

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Q: The construction of a dam that would provide hydroelectric power would result

The construction of a dam that would provide hydroelectric power would result in the loss of two streams: one that is now used for sport fishing; and another that does not support game fish but is par...

See Answer

Q: A number of residents of Dullsville have complained to the mayor that

A number of residents of Dullsville have complained to the mayor that the center of town looks shabby compared to the centers of many other nearby towns. At the mayor’s request, the Parks Department h...

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Q: (Instructor-provided spreadsheet recommended.) Suppose a 40-mile

(Instructor-provided spreadsheet recommended.) Suppose a 40-mile stretch of rural road with limited access is used primarily by regional commuters and business travelers to move between two major inte...

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Q: Analysts estimate that the expansion of the capacity of the criminal courts

Analysts estimate that the expansion of the capacity of the criminal courts in a city would require about 7,200 additional hours of juror time. The average wage rate in the county is $15/hour. A recen...

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Q: (Instructor-provided spreadsheet recommended.) Assuming that the elasticity of

(Instructor-provided spreadsheet recommended.) Assuming that the elasticity of the value of statistical life with respect to income is between 0.5 and 1.2 and that the value of statistical life in the...

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Q: A public health department is considering five alternative programs to encourage parents

A public health department is considering five alternative programs to encourage parents to have their preschool children vaccinated against a communicable disease. The following table shows the cost...

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Q: Analysts wish to evaluate alternative surgical procedures for spinal cord injuries.

Analysts wish to evaluate alternative surgical procedures for spinal cord injuries. The procedures have various probabilities of yielding the following results: Full recovery (FR) — the patient regai...

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Q: (Instructor-provided spreadsheet recommended) Two alternative mosquito control programs

(Instructor-provided spreadsheet recommended) Two alternative mosquito control programs have been proposed to reduce the health risks of West Nile disease in a state over the next five years. The cost...

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Q: A city is about to build a new sanitation plant. It

A city is about to build a new sanitation plant. It is considering two sites, one located in a moderately high-income neighborhood and the other in a low-income neighborhood. Indeed, most of the resid...

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Q: If you were running a state welfare agency and had to choose

If you were running a state welfare agency and had to choose one of the programs listed in the table, which table’s columns would you particularly focus upon? Why?

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Q: CBAs have been conducted of six proposed projects. None of these

CBAs have been conducted of six proposed projects. None of these projects are mutually exclusive and the agency has a sufficient budget to fund those that will make society better off. The findings fr...

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Q: Imagine that you live in a city that currently does not require

Imagine that you live in a city that currently does not require bicycle riders to wear helmets. Furthermore, imagine that you enjoy riding your bicycle without wearing a helmet. a) From your perspecti...

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Q: The effects of a tariff on imported kumquats can be divided into

The effects of a tariff on imported kumquats can be divided into the following categories: tariff revenues received by the treasury ($8 million); increased use of resources to produce more kumquats do...

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Q: (Spreadsheet recommended) Your municipality is considering building a public swimming

(Spreadsheet recommended) Your municipality is considering building a public swimming pool. Analysts have estimated the present values of the following effects over the expected useful life of the poo...

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Q: Three mutually exclusive projects are being considered for a remote river valley

Three mutually exclusive projects are being considered for a remote river valley: Project R, a recreational facility, has estimated benefits of $20 million and costs of $16 million; project F, a fores...

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Q: An analyst for the U.S. Navy was asked to

An analyst for the U.S. Navy was asked to evaluate alternatives for forward-basing a destroyer flotilla. He decided to do the evaluation as a CBA. The major categories of costs were related to obtaini...

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Q: Because of a recent wave of jewellery store robberies, a city

Because of a recent wave of jewellery store robberies, a city increases police surveillance of jewellery stores. The increased surveillance costs the city an extra $500,000 per year, but as a result,...

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Q: (Spreadsheet recommended.) Excessive and improper use of antibiotics is contributing

(Spreadsheet recommended.) Excessive and improper use of antibiotics is contributing to the resistance of many diseases to existing antibiotics. Consider a regulatory program in the United States that...

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Q: Many experts claim that, although VHS came to dominate the video

Many experts claim that, although VHS came to dominate the video recorder market, Betamax was a superior technology. Assume that these experts are correct, so that, all other things equal, a world in...

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Q: Let’s explore the concept of willingness to pay with a thought experiment

Let’s explore the concept of willingness to pay with a thought experiment. Imagine a specific sporting, entertainment, or cultural event that you would very much like to attend-perhaps a World Cup mat...

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Q: If you were running a state welfare agency and had to choose

If you were running a state welfare agency and had to choose one of the programs listed in the table, what information would you like in addition to that provided in the table?

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Q: How closely do government expenditures measure opportunity cost for each of the

How closely do government expenditures measure opportunity cost for each of the following program inputs? a. Time of jurors in a criminal justice program that requires more trials. b. Land to be us...

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Q: A person’s demand for gizmos is given by the following equation:

A person’s demand for gizmos is given by the following equation: q = 6 – 0.5p + 0.0002I where, q is the quantity demanded at price p when the person’s income is I. Assume initially that the person’s i...

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Q: At the current market equilibrium, the price of a good equals

At the current market equilibrium, the price of a good equals $40 and the quantity equals 10 units. At this equilibrium, the price elasticity of supply is 2.0. Assume that the supply schedule is linea...

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Q: (This question pertains to Appendix 3A; instructor-provided spreadsheet

(This question pertains to Appendix 3A; instructor-provided spreadsheet recommended). Imagine a person’s utility function over two goods, X and Y, where Y represents dollars. Specifically, assume a C...

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Q: Consider the example presented in Figure 4.3. Compute the

Consider the example presented in Figure 4.3. Compute the annual loss in consumer surplus for the price increase from $1.25 to $1.75. a. Assume a linear demand curve as per equation (4.7) b. Assume a...

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Q: Would you describe this study as a Distributional CBA?

Would you describe this study as a Distributional CBA?

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Q: Using the scheme shown in Table 14.1, diagram the

Using the scheme shown in Table 14.1, diagram the evaluation design used in each of the following demonstration programs. a. To evaluate a government training program that provides low-income, low-sk...

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Q: (Spreadsheet required.) Imagine that a rancher would have an income

(Spreadsheet required.) Imagine that a rancher would have an income of $80,000 if his county remains free from a cattle parasite but only $50,000 if the county is exposed to the parasite. Further imag...

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Q: Consider a project that would involve purchasing marginal farmland that would then

Consider a project that would involve purchasing marginal farmland that would then be allowed to return to wetlands capable of supporting migrant birds. Researchers designed a survey to implement the...

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Q: (Instructor provided spreadsheet recommended) Figure C4.1 shows the

(Instructor provided spreadsheet recommended) Figure C4.1 shows the effect of adding 183.6 million dozen eggs to the cage free market assuming a price elasticity of supply of 0.5. Recalculate the equi...

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Q: a. Why did Blomquist and his colleagues believe that contingent valuation

a. Why did Blomquist and his colleagues believe that contingent valuation was needed to fully assess the value of a 10 percent expansion of KCTCS? b. Did their findings suggest that they were correct?...

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Q: An overlook in the state’s Scenic Park offers a spectacular view of

An overlook in the state’s Scenic Park offers a spectacular view of Angel’s Lake and the surrounding countryside. The overlook is accessible to people in wheelchairs by a special park bus that takes a...

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Q: Blomquist and his colleagues predict that willingness-to-pay for

Blomquist and his colleagues predict that willingness-to-pay for a 10 percent expansion of KCTCS would be around $92.7 million. Do you think that this is a reasonable estimate? Why or why not?

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Q: A city is about to build a new sanitation plant. It

A city is about to build a new sanitation plant. It is considering two sites, one located in a moderately high-income neighborhood and the other in a low-income neighborhood. Indeed, most of the resid...

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Q: Consider a low-wage labor market. Workers in this market

Consider a low-wage labor market. Workers in this market are not presently covered by the minimum wage, but the government is considering implementing such legislation. If implemented, this law would...

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Q: Assume that a typical unskilled rural worker in a developing country would

Assume that a typical unskilled rural worker in a developing country would be paid 2 dubyas a week if he migrates to the city and finds a job. However, the unemployment rate for unskilled workers is 4...

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Q: Suppose the government is considering an increase in the toll on a

Suppose the government is considering an increase in the toll on a certain stretch of highway from $.40 to $.50. At present, 50,000 cars per week use that highway stretch; after the toll is imposed, i...

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Q: (Instructor-provided spreadsheet recommended) Consider an individual’s utility function

(Instructor-provided spreadsheet recommended) Consider an individual’s utility function over two goods, qm and qs, where m indicates the primary market in which a policy will have its effect and s is...

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Q: A proposed government project in a rural area with 100 unemployed persons

A proposed government project in a rural area with 100 unemployed persons would require the hiring of 20 workers. The project would offer wages of $12 per hour. Imagine that the reservation wages of t...

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Q: Review the following CBA: David L. Weimer and Mark A

Review the following CBA: David L. Weimer and Mark A. Sager, ““Early Identification and Treatment of Alzheimer’s disease: Social and Fiscal Outcomes,” Alzheimer’s & Dementia 5(3), 2009, 215-226. Evalu...

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Q: Imagine that a project involves putting a high-voltage power transmission

Imagine that a project involves putting a high-voltage power transmission line near residential property. Discuss how you might predict and monetize its impact on residents.

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Q: A highway department is considering building a temporary bridge to cut travel

A highway department is considering building a temporary bridge to cut travel time during the three years it will take to build a permanent bridge. The temporary bridge can be put up in a few weeks at...

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Q: A government data processing center has been plagued in recent years by

A government data processing center has been plagued in recent years by complaints from employees of back pain. Consultants have estimated that upgrading office furniture at a net cost of $430,000 wou...

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Q: A town’s recreation department is trying to decide how to use a

A town’s recreation department is trying to decide how to use a piece of land. One option is to put up basketball courts with an expected life of 8 years. Another is to install a swimming pool with an...

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Q: CBAs have been conducted of six proposed projects. None of these

CBAs have been conducted of six proposed projects. None of these projects are mutually exclusive and the agency has a sufficient budget to fund those that will make society better off. The findings fr...

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Q: The environmental protection agency of a county would like to preserve a

The environmental protection agency of a county would like to preserve a piece of land as a wilderness area. The current owner has offered to lease the land to the county for 20 years in return for a...

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Q: A country imports 3 billion barrels of crude oil per year and

A country imports 3 billion barrels of crude oil per year and domestically produces another 3 billion barrels of crude oil per year. The world price of crude oil is $90 per barrel. Assuming linear cur...

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Q: The following table gives cost and benefit estimates in real dollars for

The following table gives cost and benefit estimates in real dollars for dredging a navigable channel from an inland port to the open sea. Dredging and Savings to Value of Pleasure  Year Patr...

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Q: An analyst for a municipal public housing agency explained the choice of

An analyst for a municipal public housing agency explained the choice of a discount rate as follows: “Our agency funds its capital investments through nationally issued bonds. The effective interest r...

See Answer

Q: Assume the following: Society faces a marginal excess tax burden of

Assume the following: Society faces a marginal excess tax burden of raising public revenue denoted METB; the shadow price of capital equals θ; public borrowing displaces private investment dollar for...

See Answer

Q: Assume a project will result in benefits of $1.2

Assume a project will result in benefits of $1.2 trillion in 500 years by avoiding an environmental disaster that otherwise would occur at that time. a. Compute the present value of these benefits usi...

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Q: Imagine that the current owner of the land in the previous exercise

Imagine that the current owner of the land in the previous exercise was willing to sell the land for $2 million. Assuming this amount equaled the social opportunity cost of the land, calculate the net...

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Q: The initial cost of constructing a permanent dam (i.e

The initial cost of constructing a permanent dam (i.e., a dam that is expected to last forever) is $830 million. The annual net benefits will depend on the amount of rainfall: $36 million in a “dry” y...

See Answer

Q: Use several alternative discount rate values to investigate the sensitivity of the

Use several alternative discount rate values to investigate the sensitivity of the present value of net benefits of the dam in exercise (1) to the assumed value of the real discount rate. Data from e...

See Answer

Q: The prevalence of a disease among a certain population is 0.

The prevalence of a disease among a certain population is 0.40. That is, there is a 40 percent chance that a person randomly selected from the population will have the disease. An imperfect test that...

See Answer

Q: Two alternative mosquito control programs have been proposed to reduce the health

Two alternative mosquito control programs have been proposed to reduce the health risks of West Nile disease in a state over the next five years. The costs and effectiveness of each program in each of...

See Answer

Q: A large rural county is considering establishing a medical transport unit that

A large rural county is considering establishing a medical transport unit that would use helicopters to fly emergency medical cases to hospitals. Analysts have attempted to estimate the benefits from...

See Answer

Q: Imagine that we want to value a cultural festival from the point

Imagine that we want to value a cultural festival from the point of view of a risk-averse person. The person’s utility is given by U (I) where $I is her income. She has a 50 percent chance of being ab...

See Answer

Q: An analyst wishing to estimate the benefits of preserving a wetland has

An analyst wishing to estimate the benefits of preserving a wetland has combined information obtained from two methods. First, she surveyed those who visited the wetland - fishers, duck hunters, and b...

See Answer

Q: Imagine that a rancher would have an income of $80,

Imagine that a rancher would have an income of $80,000 if his county remains free from a cattle parasite but only $50,000 if the county is exposed to the parasite. Further imagine that a county progra...

See Answer

Q: In exercise (3) the optimal strategy involved testing. Does

In exercise (3) the optimal strategy involved testing. Does testing remain optimal if the prevalence of the disease in the population is only .05? Does your answer suggest any general principle? Data...

See Answer

Q: Imagine a wilderness area of 200 square miles in the Rocky Mountains

Imagine a wilderness area of 200 square miles in the Rocky Mountains. How would you expect each of the following factors to affect people’s total willingness to pay for its preservation? a. The size o...

See Answer

Q: Consider a government training program that provides low-skilled men job

Consider a government training program that provides low-skilled men job-specific training. To evaluate this program, members of the target population were randomly assigned to either a treatment grou...

See Answer

Q: Perhaps the most careful effort to measure the effects of compensatory preschool

Perhaps the most careful effort to measure the effects of compensatory preschool education was the Perry Preschool Project begun in Ypsilanti, Michigan in 1962. Children, mostly three years old, were...

See Answer

Q: Child care services in a small Midwestern city cost $30 per

Child care services in a small Midwestern city cost $30 per day per child. The high cost of these services is one reason why very few mothers who are on welfare work; given their low potential wages,...

See Answer

Q: A worker, who is typical in all respects, works for

A worker, who is typical in all respects, works for a wage of $50,000 per year in a perfectly safe occupation. Another typical worker does a job requiring exactly the same skills as the first worker,...

See Answer

Q: Five years ago a community college district established programs in ten new

Five years ago a community college district established programs in ten new vocational fields. The district now wants to phase out those programs that are not performing successfully and retain those...

See Answer

Q: (Instructor-provided spreadsheet recommended.) Happy Valley is the only

(Instructor-provided spreadsheet recommended.) Happy Valley is the only available camping area in Rural County. It is owned by the county, which allows free access to campers. Almost all visitors to H...

See Answer

Q: The construction of a dam that would provide hydroelectric power would result

The construction of a dam that would provide hydroelectric power would result in the loss of two streams: one that is now used for sport fishing; and another that does not support game fish but is par...

See Answer

Q: A number of residents of Dullsville have complained to the mayor that

A number of residents of Dullsville have complained to the mayor that the center of town looks shabby compared to the centers of many other nearby towns. At the mayor’s request, the Parks Department h...

See Answer

Q: Consider a project that would involve purchasing marginal farmland that would then

Consider a project that would involve purchasing marginal farmland that would then be allowed to return to wetlands capable of supporting migrant birds. Researchers designed a survey to implement the...

See Answer

Q: Suppose a 40-mile stretch of rural road with limited access

Suppose a 40-mile stretch of rural road with limited access is used primarily by regional commuters and business travelers to move between two major interstate highways. The legal speed limit on the r...

See Answer

Q: Analysts estimate that the expansion of the capacity of the criminal courts

Analysts estimate that the expansion of the capacity of the criminal courts in a city would require about 7,200 additional hours of juror time. The average wage rate in the county is $15/hour. A recen...

See Answer

Q: Assuming that the elasticity of the value of statistical life with respect

Assuming that the elasticity of the value of statistical life with respect to income is between 0.5 and 1.2 and that the value of statistical life in the United States is between $4 million and $13 mi...

See Answer

Q: A public health department is considering five alternative programs to encourage parents

A public health department is considering five alternative programs to encourage parents to have their preschool children vaccinated against a communicable disease. The following table shows the cost...

See Answer

Q: Analysts wish to evaluate alternative surgical procedures for spinal cord injuries.

Analysts wish to evaluate alternative surgical procedures for spinal cord injuries. The procedures have various probabilities of yielding the following results: Full recovery (FR) — the patient regain...

See Answer

Q: 1. You are a decision-maker who has to decide

1. You are a decision-maker who has to decide whether to adopt the Tulsa IDA program on a permanent basis relying, in part, on the information provided by the CBA described in this case study. Requir...

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Q: A town with a population of 164,250 persons who live

A town with a population of 164,250 persons who live in 39,050 households is considering introducing a recycling program that would require residents to separate paper from their household waste so th...

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Q: Imagine Washington State is considering implementing a program that pays monetary awards

Imagine Washington State is considering implementing a program that pays monetary awards to families when their high school age children meet certain goals (for example, school attendance, achievement...

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Q: 1. Would you describe this study as a Distributional CBA?

1. Would you describe this study as a Distributional CBA? 2. Why is there no consumer surplus included as a benefit? 3. What weaknesses do you see in this CBA? If corrected, would they increase or dec...

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Q: 1. What information would be needed to estimate the net benefits

1. What information would be needed to estimate the net benefits of a state-wide Alzheimer's disease screening program for 65 year olds? 2. Imagine that you wanted to use a life-course model similar t...

See Answer

Q: 1. If you were running a state welfare agency and had

1. If you were running a state welfare agency and had to choose one of the programs listed in the table, which table’s columns would you particularly focus upon? Why? 2. If you were running a state w...

See Answer

Q: 1. a. Why did Blomquist and his colleagues

1. a. Why did Blomquist and his colleagues believe that contingent valuation was needed to fully assess the value of a 10 percent expansion of KCTCS? b. Did their findings suggest that they were corr...

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Q: 1. How would the shadow price of a high school diploma

1. How would the shadow price of a high school diploma change if the labor force participation rate for increase? 2. (Instructor provided spreadsheet required) How much would the shadow price of a dip...

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Q: Imagine that the net present value of a hydroelectric plant with a

Imagine that the net present value of a hydroelectric plant with a life of 70 years is $25.73 million and that the net present value of a thermal electric plant with a life of 35 years is $18.77 milli...

See Answer

Q: Recall exercise 1 from Chapter 5 in which an increase in the

Recall exercise 1 from Chapter 5 in which an increase in the toll on a highway from $.40 to $.50 would reduce use of the highway by 5,000 cars per week. Data From exercise 1 of Chapter 5: Suppose the...

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Q: Recall exercise 2 from Chapter 5 in which a country imposes an

Recall exercise 2 from Chapter 5 in which a country imposes an import fee on the crude oil it imports. Assume that prior to the imposition of the import fee, the country annually consumed 900 million...

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Q: Recall exercise 2 from Chapter 5 in which a country imposes an

Recall exercise 2 from Chapter 5 in which a country imposes an import fee on the crude oil it imports. Imagine that all the crude oil imports to the country are made by ships owned by its nationals. T...

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Q: Explain the term “supply chain” and its importance to cost

Explain the term “supply chain” and its importance to cost management.

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Q: Increasing the number of indirect-cost pools is guaranteed to sizably

Increasing the number of indirect-cost pools is guaranteed to sizably increase the accuracy of product or service costs.” Do you agree? Why?

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Q: The Solutions Corporation is a manufacturer of centrifuges. Fixed and variable

The Solutions Corporation is a manufacturer of centrifuges. Fixed and variable manufacturing overheads are allocated to each centrifuge using budgeted assembly-hours. Budgeted assembly time is two hou...

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Q: Rozema, Inc., produces chemicals for large biotech companies. It

Rozema, Inc., produces chemicals for large biotech companies. It has the following data for manufacturing overhead costs during August 2013: Use F for favorable and U for unfavorable:

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Q: The Singapore division of a Canadian telecommunications company uses standard costing for

The Singapore division of a Canadian telecommunications company uses standard costing for its machine-paced production of telephone equipment. Data regarding production during June are as follows: R...

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Q: Meals on Wheels (MOW) operates a meal home-delivery

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...

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Q: Furniture, Inc., specializes in the production of futons. It

Furniture, 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 2011, budgeted variable overhead at a...

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Q: Dvent budgets 18,000 machine-hours for the production of

Dvent budgets 18,000 machine-hours for the production of computer chips in August 2011. The budgeted variable overhead rate is $6 per machine hour. At the end of August, there is a $375 favorable spen...

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Q: Purdue, Inc., manufactures tires for large auto companies. It

Purdue, Inc., manufactures tires for large auto companies. It uses standard costing and allocates variable and fixed manufacturing overhead based on machine-hours. For each independent scenario given,...

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Q: David James is a cost accountant and business analyst for Doorknob Design

David 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...

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Q: Nascar Motors assembles and sells motor vehicles and uses standard costing.

Nascar Motors assembles and sells motor vehicles and uses standard costing. Actual data relating to April and May 2011 are as follows: The selling price per vehicle is $24,000. The budgeted level of...

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Q: The variable manufacturing costs per unit of Nascar Motors are as follows

The variable manufacturing costs per unit of Nascar Motors are as follows: Required: 1. Prepare income statements for Nascar Motors in April and May of 2011 under throughput costing. 2. Contrast the...

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Q: Benchmarking against other companies enables a company to identify the lowest-

Benchmarking against other companies enables a company to identify the lowest-cost producer. This amount should become the performance measure for next year.” Do you agree?

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Q: BigScreen Corporation manufactures and sells 50-inch television sets and uses

BigScreen Corporation manufactures and sells 50-inch television sets and uses standard costing. Actual data relating to January, February, and March of 2012 are as follows: The selling price per uni...

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Q: The variable manufacturing costs per unit of BigScreen Corporation are as follows

The variable manufacturing costs per unit of BigScreen Corporation are as follows: Required: 1. Prepare income statements for BigScreen in January, February, and March of 2012 under throughput costi...

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Q: The Zwatch Company manufactures trendy, high-quality moderately priced watches

The Zwatch Company manufactures trendy, high-quality moderately priced watches. As Zwatch’s senior financial analyst, you are asked to recommend a method of inventory costing. The CF...

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Q: Osawa, Inc., planned and actually manufactured 200,000units of

Osawa, Inc., planned and actually manufactured 200,000units of its single product in 2012, its first year of operation. Variable manufacturing cost was $20 per unit produced. Variable operating (nonma...

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Q: Grunewald Company manufacturers a professional grade vacuum cleaner and began operations in

Grunewald Company manufacturers a professional grade vacuum cleaner and began operations in 2011. For 2011, Grunewald budgeted to produce and sell 20,000units. The company had no price, spending, or e...

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Q: The Rehe Company sells its razors at $3 per unit.

The Rehe Company sells its razors at $3 per unit. The company uses a first-in, first-out actual costing system. A fixed manufacturing cost rate is computed at the end of each year by dividing the actu...

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Q: Helmetsmart, a three year-old company, has been producing

Helmetsmart, a three year-old company, has been producing and selling a single type of bicycle helmet. Helmetsmart uses standard costing. After reviewing the income statements for the first three year...

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Q: Thunder Bolt, Inc., is a manufacturer of the very popular

Thunder Bolt, Inc., is a manufacturer of the very popular G36 motorcycles. The management at Thunder Bolt has recently adopted absorption costing and is debating which denominator-level concept to use...

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Q: Mega-Air, Inc., manufactures a specialized snowboard made for

Mega-Air, Inc., manufactures a specialized snowboard made for the advanced snowboarder. Mega-Air began 2011 with an inventory of 240 snowboards. During the year, it produced 900 boards and sold 995 fo...

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Q: The Pacific Corporation operates car rental agencies at more than 20 airports

The Pacific Corporation operates car rental agencies at more than 20 airports. Customers can choose from one of three contracts for car rentals of one day or less: Contract 1: $50 for the day Contract...

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Q: Compaq Computer incurs the following costs: a. Electricity costs

Compaq Computer incurs the following costs: a. Electricity costs for the plant assembling the Presario computer line of products b. Transportation costs for shipping the Presario line of products to a...

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Q: Lorenzo operates a car wash. Incoming cars are put on an

Lorenzo operates a car wash. Incoming cars are put on an automatic conveyor belt. Cars are washed as the conveyor belt carries them from the start station to the finish station. After a car moves off...

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Q: Java Joe Coffees wants to find an equation to estimate monthly utility

Java Joe Coffees wants to find an equation to estimate monthly utility costs. Java Joe’s has been in business for one year and has collected the following cost data for utilities:...

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Q: Gower, Inc., a manufacturer of plastic products, reports the

Gower, Inc., a manufacturer of plastic products, reports the following manufacturing costs and account analysis classification for the year ended December 31, 2012. Gower, Inc., produced 75,000 unit...

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Q: Laurie Daley is examining customer-service costs in the southern region

Laurie Daley is examining customer-service costs in the southern region of Capitol Products. Capitol Products has more than 200 separate electrical products that are sold with a six-month guarantee of...

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Q: Terry Lawler, managing director of the Chicago Reviewers Group, is

Terry Lawler, managing director of the Chicago Reviewers Group, is examining how overhead costs behave with changes in monthly professional labor-hours billed to clients. Assume the following historic...

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Q: Goldstein Corporation manufactures a children’s bicycle, model CT 8. Goldstein

Goldstein Corporation manufactures a children’s bicycle, model CT 8. Goldstein currently manufactures the bicycle frame. During 2012, Goldstein made 32,000frames at a total cost of $...

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Q: Bob Jones owns a catering company that prepares food and beverages for

Bob Jones owns a catering company that prepares food and beverages for banquets and parties. For a standard party the cost on a per-person basis is as follows: Jones is quite certain about his estim...

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Q: Melissa Crupp is the new manager of the materials storeroom for Canton

Melissa Crupp is the new manager of the materials storeroom for Canton Manufacturing. Melissa has been asked to estimate future monthly purchase costs for part #4599, used in two of Cantonâ€...

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Q: Global Defense manufactures radar systems. It has just completed the manufacture

Global Defense manufactures radar systems. It has just completed the manufacture of its first newly designed system, RS-32. Manufacturing data for the RS-32 follow: Required: Calculate the total var...

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Q: Assume the same information for Global Defense as in Exercise 10-

Assume the same information for Global Defense as in Exercise 10-29, except that Global Defense uses an 85% incremental unit-time learning model as a basis for predicting direct manufacturing labor-ho...

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Q: Merck, a pharmaceutical company, incurs the following costs:

Merck, a pharmaceutical company, incurs the following costs: a. Cost of redesigning blister packs to make drug containers more tamperproof b. Cost of videos sent to doctors to promote sales of a new d...

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Q: Answer the following questions. 1. A company has an

Answer the following questions. 1. A company has an inventory of 1,100 assorted parts for a line of missiles that has been discontinued. The inventory cost is $78,000. The parts can be either (a) re m...

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Q: Answer the following questions. 1. DeCesare Computers makes 5

Answer the following questions. 1. DeCesare Computers makes 5,200 units of a circuit board, CB76 at a cost of $280 each. Variable cost per unit is $190 and fixed cost per unit is $90. Peach Electronic...

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Q: Choose the best answer. 1. The Woody Company manufactures

Choose the best answer. 1. The Woody Company manufactures slippers and sells them at $10 a pair. Variable manufacturing cost is $4.50 a pair, and allocated fixed manufacturing cost is $1.50 a pair. It...

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Q: The Award Plus Company manufactures medals for winners of athletic events and

The Award Plus Company manufactures medals for winners of athletic events and other contests. Its manufacturing plant has the capacity to produce 10,000 medals each month. Current production and sales...

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Q: The Svenson Corporation manufactures cellular modems. It manufactures its own cellular

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 a...

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Q: Lawn World, a manufacturer of lawn mowers, predicts that it

Lawn World, a manufacturer of lawn mowers, predicts that it will purchase 264,000 spark plugs next year. Lawn World estimates that 22,000 spark plugs will be required each month. A supplier quotes a p...

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Q: The Seashore Stand is a take-out food store at a

The Seashore Stand is a take-out food store at a popular beach resort. Susan Sexton, owner of the Seashore Stand, is deciding how much refrigerator space to devote to four different drinks. Pertinent...

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Q: Body-Builders, Inc., produces two basic types of weightlifting

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...

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Q: Fair Lakes Hospital Corporation has been operating ambulatory surgery centers in Groveton

Fair Lakes Hospital Corporation has been operating ambulatory surgery centers in Groveton and Stockdale, two small communities each about an hour away from its main hospital. As a cost control measure...

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Q: Sanchez Corporation runs two convenience stores, one in Connecticut and one

Sanchez Corporation runs two convenience stores, one in Connecticut and one in Rhode Island. Operating income for each store in 2012 is as follows: The equipment has a zero disposal value. In a seni...

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Q: Burger King, a hamburger fast food restaurant, incurs the following

Burger King, a hamburger 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 the costume...

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Q: The TechGuide Company produces and sells 7,500 modular computer desks

The TechGuide Company produces and sells 7,500 modular computer desks per year at a selling price of $750 each. Its current production equipment, purchased for $1,800,000 and with a five-year useful l...

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Q: The following financial data apply to the DVD production plant of the

The following financial data apply to the DVD production plant of the Dill Company for October 2011: Variable manufacturing overhead varies with the number of DVD packs produced. Fixed manufacturing...

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Q: The San Carlos Company is an electronics business with eight product lines

The San Carlos Company is an electronics business with eight product lines. Income data for one of the products (XT-107) for June 2011 are as follows: Abrams, Inc., an instruments company, has a pro...

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Q: Colorado Mountains Dairy, maker of specialty cheeses, produces a soft

Colorado Mountains 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 m...

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Q: The Marino Repair Shop repairs and services machine tools. A summary

The Marino Repair Shop repairs and services machine tools. A summary of its costs (by activity) for 2011 is as follows: Required: 1. Classify each cost as value-added, nonvalue-added, or in the gray...

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Q: Calvert Associates prepares architectural drawings to conform to local structural-safety

Calvert Associates prepares architectural drawings to conform to local structural-safety codes. Its income statement for 2012 is as follows: Following is the percentage of time spent by professional...

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Q: Snappy Tiles is a small distributor of marble tiles. Snappy identifies

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...

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Q: Medical Instruments uses a manufacturing costing system with one direct-cost

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 th...

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Q: John Blodgett is the managing partner of a business that has just

John Blodgett is the managing partner of a business that has just finished building a 60-room motel. Blodgett anticipates that he will rent these rooms for 15,000 nights next year (or 15,000 room-nigh...

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Q: Road Warrior manufactures and sells a model of motorcycle, XR500.

Road Warrior manufactures and sells a model of motorcycle, XR500. In 2011, it reported the following: Required: 1. What was Road Warrior’s operating income on XR500 in 2011? What w...

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Q: Grey Brothers Consulting has issued a report recommending changes for its newest

Grey Brothers Consulting has issued a report recommending changes for its newest manufacturing client, Energy Motors. Energy Motors currently manufactures a single product, which is sold and distribut...

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Q: Gadzooks, Inc., develops and manufactures toys that it then sells

Gadzooks, Inc., develops and manufactures toys that it then sells through infomercials. Currently, the company is designing a toy robot that it intends to begin manufacturing and marketing next year....

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Q: Ridgecrest Corporation manufactures corrugated cardboard boxes. It competes and plans to

Ridgecrest Corporation manufactures corrugated cardboard boxes. It competes and plans to grow by selling high-quality boxes at a low price and by delivering them to customers quickly after receiving c...

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Q: An analysis of Ridgecrest’s operating-income changes between 2011 and 2012

An analysis of Ridgecrest’s operating-income changes between 2011 and 2012 shows the following: The industry market size for corrugated cardboard boxes did not grow in 2012, input...

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Q: Roberto & Sons buys T-shirts in bulk, applies its

Roberto & Sons buys T-shirts in bulk, applies its own trendsetting silk-screen designs, and then sells the T-shirts to a number of retailers. Roberto wants to be known for its trendsetting designs...

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Q: Refer to Exercise 13-18. Required:

Refer to Exercise 13-18. Required: 1. Calculate Roberto‘s operating income in both 2010 and 2011. 2. Calculate the growth, price-recovery, and productivity components that explain t...

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Q: Refer to Exercise 13-19. Suppose that the market for

Refer to Exercise 13-19. Suppose that the market for silk-screened T-shirts grew by 10% during 2011. All increases in sales greater than 10% are the result of Roberto’s strategic act...

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Q: Refer to Exercise 13-18. Required:

Refer to Exercise 13-18. Required: 1. Calculate the amount and cost of unused administrative capacity at the beginning of 2011, based on the actual number of customers Roberto served in 2011. 2. Supp...

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Q: Stanmore Corporation makes a special-purpose machine, D4H, used

Stanmore Corporation makes a special-purpose machine, D4H, used in the textile industry. Stanmore has designed the D4H machine for 2011 to be distinct from its competitors. It has been generally regar...

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Q: Refer to Exercise 13-22. Required:

Refer to Exercise 13-22. Required: 1. Calculate the operating income of Stanmore Corporation in 2010 and 2011. 2. Calculate the growth, price-recovery, and productivity components that explain the ch...

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Q: Suppose that during 2011, the market for Stanmore’s special-purpose

Suppose that during 2011, the market for Stanmore’s special-purpose machines grew by 3%. All increases in market share (that is, sales increases greater than 3%) are the result of Stanmore’s strategic...

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Q: Conner Company makes and sells brooms and mops. It takes the

Conner Company makes and sells brooms and mops. It 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....

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Q: Refer to Exercise 13-22. Required:

Refer to Exercise 13-22. Required: 1. Calculate the amount and cost of (a) unused manufacturing capacity and (b) unused selling and customer-service capacity at the beginning of 2011 based on actual...

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Q: Westlake Corporation is a small information systems consulting firm that specializes in

Westlake Corporation is a small information systems consulting firm that specializes in helping companies implement standard sales-management software. The market for Westlake’s serv...

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Q: Refer to Exercise 13-26. Required:

Refer to Exercise 13-26. Required: 1. Calculate the operating income of Westlake Corporation in 2010 and 2011. 2. Calculate the growth, price-recovery, and productivity components that explain the ch...

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Q: Suppose that during 2011 the market for implementing sales-management software

Suppose that during 2011 the market for implementing sales-management software increases by 5%. Assume that any decrease in selling price and any increase in market share more than 5% are the result o...

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Q: Refer to Exercise 13-26. Required:

Refer to Exercise 13-26. Required: 1. Calculate the amount and cost of unused software-implementation support capacity at the beginning of 2011, based on the number of jobs actually done in 2011. 2....

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Q: Dave Meltzer vacationed at Lake Tahoe last winter. Unfortunately, he

Dave Meltzer vacationed at Lake Tahoe last winter. Unfortunately, he broke his ankle while skiing and spent two days at the Sierra University Hospital. Meltzer’s insurance company re...

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Q: Green bold Manufacturing has four divisions named after its locations: Arizona

Green bold Manufacturing has four divisions named after its locations: Arizona, Colorado, Delaware, and Florida. Corporate headquarters is in Minnesota. Green bold corporate headquarters incurs $5,600...

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Q: Rembrandt Hotel & Casino is situated on beautiful Lake Tahoe in Nevada

Rembrandt Hotel & Casino is situated on beautiful Lake Tahoe in Nevada. The complex includes a 300-room hotel, a casino, and a restaurant. As Rembrandt’s new controller, you are...

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Q: Lenzig Corporation has three divisions: pulp, paper, and fibers

Lenzig Corporation has three divisions: pulp, paper, and fibers. Lenzig’s new controller, Ari Bardem, is reviewing the allocation of fixed corporate-overhead costs to the three divis...

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Q: Orsack Electronics has only two retail and two whole sale customers.

Orsack Electronics has only two retail and two whole sale customers. Information relating to each customer for 2012 follows (in thousands): Orsack’s annual distribution-channel cos...

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Q: Garnicki Foods makes frozen dinners that it sells through grocery stores.

Garnicki Foods makes frozen dinners that it sells through grocery stores. Typical products include turkey dinners, pot roast, fried chicken, and meat loaf. The managers at Garnicki have recently intro...

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Q: Instant Service (IS) repairs printers and photocopiers for five multisite

Instant Service (IS) repairs printers and photocopiers for five multisite companies in a tristate area. IS’s costs consist of the cost of technicians and equipment that are directly...

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Q: Figure Four is a distributor of pharmaceutical products. Its ABC system

Figure Four is a distributor of pharmaceutical products. Its ABC system has five activities: Rick Flair, the controller of Figure Four, wants to use this ABC system to examine individual customer pr...

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Q: The Detroit Penguins play in the American Ice Hockey League. The

The Detroit Penguins play in the American Ice Hockey League. The Penguins play in the Downtown Arena (owned and managed by the City of Detroit), which has a capacity of 15,000 seats (5,000 lower-tier...

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Q: The Jinwa Corporation sells two brands of wine glasses: Plain and

The Jinwa Corporation sells two brands of wine glasses: Plain and Chic. Jinwa provides the following information for sales in the month of June 2011: All variances are to be computed in contribution...

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Q: Soda-King manufactures and sells three soft drinks: Kola,

Soda-King manufactures and sells three soft drinks: Kola, Limor, and Orlem. Budgeted and actual results for 2011 are as follows: Required: 1. Compute the total sales-volume variance, the total sales...

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Q: Soda-King prepared the budget for 2011 assuming a 12%

Soda-King prepared the budget for 2011 assuming a 12% market share based on total sales in the western region of the United States. The total soft drinks market was estimated to reach sales of 20 mill...

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Q: The Chicago power plant that services all manufacturing departments of Mid West

The Chicago power plant that services all manufacturing departments of Mid West Engineering has a budget for the coming year. This budget has been expressed in the following monthly terms: The expec...

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Q: Chocolat Inc. is a producer of premium chocolate based in Palo

Chocolat Inc. is a producer of premium chocolate based in Palo Alto. The company has a separate division for each of its two products: dark chocolate and milk chocolate. Chocolat purchases ingredients...

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Q: Chocolat Inc. decides to examine the effect of using the dual

Chocolat Inc. decides to examine the effect of using the dual-rate method for allocating truck costs to each roundtrip. At the start of 2012, the budgeted costs were as follows: The actual results f...

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Q: Phoenix Partners provides management consulting services to government and corporate clients.

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

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Q: Brite Exteriors is a firm that provides house painting services. Robert

Brite Exteriors is a firm that provides house painting services. Robert Brite, the owner, is trying to find new ways to increase revenues. Mr. Brite performs the following actions, not in the order li...

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Q: Refer to the data given in Exercise 15-19.

Refer to the data given in Exercise 15-19. Required: 1. Allocate the two support departments’ costs to the two operating departments using the reciprocal method. Use (a) linear equa...

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Q: E-books, an online book retailer, has two operating

E-books, an online book retailer, has two operating departments— corporate sales and consumer sales—and two support departments—human resources an...

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Q: Consider E-books again. The controller of E-books

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

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Q: Ben and Gary are students at Berkeley College. They share an

Ben and Gary are students at Berkeley College. They share an apartment that is owned by Gary. Gary is considering subscribing to an Internet provider that has the following packages available: Ben s...

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Q: Sunny Gunn, a self-employed consultant near Sacramento, received

Sunny Gunn, a self-employed consultant near Sacramento, received an invitation to visit a prospective client in Baltimore. A few days later, she received an invitation to make a presentation to a pros...

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Q: Yves Parfum Company blends and sells designer fragrances. It has a

Yves Parfum Company blends and sells designer fragrances. It has a Men’s Fragrances Division and a Women’s Fragrances Division, each with different sales strategies...

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Q: Jim Dandy Auto Sales uses all types of media to advertise its

Jim Dandy Auto Sales uses all types of media to advertise its products (television, radio, newspaper, etc.). At the end of 2011, the company president, Jim Dandridge, decided that all advertising cost...

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Q: Quality Chicken grows and processes chickens. Each chicken is disassembled into

Quality Chicken grows and processes chickens. Each chicken is disassembled into five main parts. Information pertaining to production in July 2012 is as follows: Joint cost of production in July 201...

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Q: Quality Chicken is computing the ending inventory values for its July 31

Quality Chicken is computing the ending inventory values for its July 31, 2012, balance sheet. Ending inventory amounts on July 31 are 15 pounds of breasts, 4 pounds of wings, 6 pounds of thighs, 5 po...

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Q: Convad Company is one of the world’s leading corn refiners. It

Convad Company is one of the world’s leading corn refiners. It produces two joint products—corn syrup and corn starch—using a common production pr...

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Q: Marcia Miller is division controller and Tom Maloney is division manager of

Marcia Miller is division controller and Tom Maloney is division manager of the Ramses Shoe Company. Miller has line responsibility to Maloney, but she also has staff responsibility to the company con...

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Q: The Wood Spirits Company produces two products—turpentine and methanol (

The Wood Spirits Company produces two products—turpentine and methanol (wood alcohol)—by a joint process. Joint costs amount to $120,000 per batch of output. Each batch totals 10,000 gallons: 25% meth...

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Q: The Evrett Company operates a simple chemical process to convert a single

The Evrett Company operates a simple chemical process to convert a single material into three separate items, referred to here as X, Y, and Z. All three end products are separated simultaneously at a...

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Q: Sinclair Oil & Gas, a large energy conglomerate, jointly processes

Sinclair Oil & Gas, a large energy conglomerate, jointly processes purchased hydrocarbons to generate three non saleable intermediate products: ICR8, ING4, and XGE3. These intermediate products ar...

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Q: .Instant Foods produces two types of microwavable products—beef-

.Instant 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 producti...

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Q: Iowa Soy Products (ISP) buys soy beans and processes them

Iowa Soy Products (ISP) buys soy beans and processes them into other soy products. Each ton of soy beans that ISP purchases for $300 can be converted for an additional $200 into 500 pounds of soy meal...

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Q: Tasty, Inc., is a producer of potato chips. A

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 full...

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Q: Royston, Inc., is a large food processing company. It

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 12,000pounds of product A, 65,000 pounds of product B...

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Q: Nihon, Inc., is a manufacturer of digital cameras. It

Nihon, Inc., is a manufacturer of digital cameras. It has two departments: assembly and testing. In January 2012, the company incurred $750,000 on direct materials and $798,000 on conversion costs, fo...

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Q: Refer to requirement 2 of Exercise 17-16.

Refer to requirement 2 of Exercise 17-16. Required: Prepare summary journal entries for the use of direct materials and incurrence of conversion costs. Also prepare a journal entry to transfer out th...

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Q: Roary Chemicals has a mixing department and a refining department. Its

Roary 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 conv...

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Q: Describe three methods that can be used to express CVP relationships.

Describe three methods that can be used to express CVP relationships.

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Q: Helner Cell Phones (HCP) is developing a new touch screen

Helner Cell Phones (HCP) is developing a new touch screen smartphone to compete in the cellular phone industry. The phones will be sold at wholesale prices to cell phone companies, which will in turn...

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Q: Consider the following data for the assembly division of Fenton Watches,

Consider the following data for the assembly division of Fenton Watches, Inc.: The assembly division uses the weighted-average method of process costing. Required: Compute equivalent units for direc...

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Q: Required: For the data in Exercise 17-19,

Required: For the data in Exercise 17-19, summarize total costs to account for, calculate cost per equivalent unit for direct materials and conversion costs, and assign total costs to units completed...

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Q: Refer to the information in Exercise 17-19. Suppose the

Refer to the information in Exercise 17-19. Suppose the assembly division at Fenton Watches, Inc., uses the FIFO method of process costing instead of the weighted-average method. Required: Compute eq...

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Q: Required: For the data in Exercise 17-19,

Required: For the data in Exercise 17-19, use the FIFO method to summarize total costs to account for, calculate cost per equivalent unit for direct materials and conversion costs, and assign total co...

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Q: Whole Goodness Bakery needs to determine the cost of two work orders

Whole Goodness Bakery needs to determine the cost of two work orders for the month of June. Work order 215 is for 1,200 packages of dinner rolls and work order 216 is for 1,400 loaves of multigrain br...

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Q: Bio Doc Corporation is a biotech company based in Milpitas. It

Bio Doc 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...

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Q: Required: Do Exercise 17-24 using the FIFO method

Required: Do Exercise 17-24 using the FIFO method. Note that you first need to calculate the equivalent units of work done in the current period (for direct materials and conversion costs) to complete...

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Q: Refer to the information in Exercise 17-24. Suppose Bio

Refer to the information in Exercise 17-24. Suppose Bio Doc determines standard costs of $8.25 per equivalent unit for direct materials and $12.70 per equivalent unit for conversion costs for both beg...

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Q: Asaya Clothing, Inc., is a manufacturer of winter clothes.

Asaya Clothing, Inc., is a manufacturer of winter clothes. It has a knitting department and a finishing department. This exercise focuses on the finishing department. Direct materials are added at the...

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Q: .Refer to the information in Exercise 17-27. Suppose

.Refer to the information in Exercise 17-27. Suppose that Asaya uses the FIFO method instead of the weighted-average method in all of its departments. The only changes to Exercise17-27 under the FIFO...

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Q: Minnesota Office Products (MOP) produces three different paper products at

Minnesota Office Products (MOP) produces three different paper products at its Vaasa lumber plant: Supreme, Deluxe, and Regular. Each product has its own dedicated production line at the plant. It cur...

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Q: UB Healthy Company manufactures three different types of vitamins: vitamin A

UB Healthy Company manufactures three different types of vitamins: vitamin A, vitamin B, and a multivitamin. The company uses four operations to manufacture the vitamins: mixing, tableting, encapsulat...

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Q: The following data, in physical units, describe a grinding process

The following data, in physical units, describe a grinding process for January: Inspection occurs at the 100% completion stage. Normal spoilage is 5% of the good units passing inspection. Required:...

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Q: Consider the following data for November 2012 from Gray Manufacturing Company,

Consider the following data for November 2012 from Gray Manufacturing Company, which makes silk pennants and uses a process-costing system. All direct materials are added at the beginning of the proce...

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Q: Required: For the data in Exercise 18-17,

Required: For the data in Exercise 18-17, summarize total costs to account for; calculate the cost per equivalent unit for direct materials and conversion costs; and assign total costs to units comple...

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Q: Manufacturing Company uses the FIFO method of process costing instead of the

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...

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Q: Required: For the data in Exercise 18-17,

Required: For the data in Exercise 18-17, use the FIFO method to summarize total costs to account for; calculate the cost per equivalent unit for direct materials and conversion costs; and assign tota...

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Q: Appleton Company makes wooden toys in its forming department, and it

Appleton Company makes wooden toys in its forming department, and it uses the weighted-average method of process costing. All direct materials are added at the beginning of the process, and conversion...

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Q: Jordan, Inc., is a manufacturer of vents for water heaters

Jordan, Inc., is a manufacturer of vents for water heaters. The company uses a process-costing system to account for its work-in-process inventories. When Job 512 was being processed in the machining...

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Q: Arokia Electronics manufactures cell phone models in its Walnut Creek plant.

Arokia Electronics manufactures cell phone models in its Walnut Creek plant. Suppose the company provides you with the following information regarding operations for September 2011: Assume the spoil...

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Q: Chipcity is a fast-growing manufacturer of computer chips. Direct

Chipcity 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 p...

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Q: .A student association has hired a band and a caterer for

.A student association has hired a band and a caterer for a graduation party. The band will charge a fixed fee of $1,000 for an evening of music, and the caterer will charge a fixed fee of $600 for th...

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Q: Refer to the information in Exercise 18-24.

Refer to the information in Exercise 18-24. Required: Do Exercise 18-24 using the FIFO method of process costing. Data from Exercise 18-24: Chipcity is a fast-growing manufacturer of computer chips...

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Q: Refer to the information in Exercise 18-24. Suppose Chipcity

Refer to the information in Exercise 18-24. Suppose Chipcity determines standard costs of $200 per equivalent unit for direct materials and $75 per equivalent unit for conversion costs for both beginn...

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Q: Barrett Kitchens produces a variety of items in accordance with special job

Barrett Kitchens produces a variety of items in accordance with special job orders from hospitals, plant cafeterias, and university dormitories. An order for 2,100 cases of mixed vegetables costs $9 p...

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Q: White Goods assembles washing machines at its Auburn plant. In February

White Goods assembles washing machines at its Auburn plant. In February 2012, 60 tumbler units that cost $44 each (from a new supplier who subsequently went bankrupt) were defective and had to be disp...

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Q: The Morgan Company has an extensive job-costing facility that uses

The Morgan Company 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 fo...

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Q: Costen, Inc., produces cell phone equipment. Jessica Tolmy,

Costen, Inc., produces cell phone equipment. Jessica Tolmy, Costen’s president, decided to devote more resources to the improvement of product quality after learning that her company...

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Q: Dream Rider produces car seats for children from newborn to two years

Dream Rider produces car seats for children from newborn to two years old. The company is worried because one of its competitors has recently come under public scrutiny because of product failure. His...

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Q: Refer to information in Exercise 19-17 in answering this question

Refer to information in Exercise 19-17 in answering this question. Dream Rider has discovered a more serious problem with the plastic core of its car seats. An accident can cause the plastic in some o...

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Q: Worldwide Cell Phones (WCP) has developed a cell phone that

Worldwide Cell Phones (WCP) 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). WCP has been receiving compla...

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Q: Speed Print manufactures and sells 18,000 high-technology printing

Speed Print manufactures and sells 18,000 high-technology printing presses each year. The variable and fixed costs of rework and repair are as follows: Speed Print’s current presse...

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Q: Best Breads manufactures two types of bread, which are sold as

Best Breads manufactures two types of bread, which are sold as wholesale products to various specialty retail bakeries. Each loaf of bread requires a three step process. The first step is mixing. The...

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Q: Flagstar Conference Center and Catering is a conference center and restaurant facility

Flagstar Conference Center and Catering is a conference center and restaurant facility that hosts over 300 national and international events each year attended by 50,000 professionals. Due to increase...

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Q: Torrance Manufacturing evaluates the performance of its production managers based on a

Torrance 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...

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Q: Refer to the information in Exercise 19-25 in answering the

Refer to the information in Exercise 19-25 in answering the following requirements. There is no connection between the requirements. Required: 1. Mayfield produces 2,000 defective units at the machin...

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Q: Fan Base (FB) operates a megastore featuring sports merchandise.

Fan Base (FB) operates a megastore featuring sports merchandise. It uses an EOQ decision model to make inventory decisions. It is now considering inventory decisions for its Los Angeles Galaxy soccer...

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Q: Athletic Textiles (AT) manufactures the Galaxy jerseys that Fan Base

Athletic Textiles (AT) manufactures the Galaxy jerseys that Fan Base (FB) sells to its customers. AT has recently installed computer software that enables its customers to conduct “one-stop” purchasin...

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Q: The Denim World sells fabrics to a wide range of industrial and

The Denim World sells fabrics to a wide range of industrial and consumer users. One of the products it carries is denim cloth, used in the manufacture of jeans and carrying bags. The supplier for the...

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Q: Lakeland Company produces lawn mowers and purchases 18,000 units of

Lakeland Company produces lawn mowers and purchases 18,000 units of a rotor blade part each year at a cost of $60 per unit. Lakeland requires a 15% annual rate of return on investment. In addition, th...

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Q: The Champion Hardware Company manufactures specialty brass door handles at its Lynchburg

The Champion Hardware Company manufactures specialty brass door handles at its Lynchburg plant. Champion is considering implementing a JIT production system. The following are the estimated costs and...

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Q: Road Warrior Corporation assembles handheld computers that have scaled-down capabilities

Road Warrior Corporation assembles handheld computers that have scaled-down capabilities of laptop computers. Each handheld computer takes six hours to assemble. Road Warrior uses a JIT production sys...

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Q: Assume the same facts as in Exercise 20-23, except

Assume the same facts as in Exercise 20-23, except that Road Warrior now uses a backflush costing system with the following two trigger points: Purchase of direct materials and incurring of conversion...

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Q: Each of the following cost items pertains to one of these companies

Each of the following cost items pertains to one of these companies: General Electric (a manufacturing-sector company), Safeway (a merchandising-sector company), and Google (a service-sector company):...

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Q: Assume the same facts as in Exercise 20-23, except

Assume the same facts as in Exercise 20-23, except now Road Warrior uses only two trigger points, Completion of good finished units of product and Sale of finished goods. Any under- or over allocated...

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Q: Riverbend Company runs hardware stores in a tristate area. Riverbend’s management

Riverbend Company runs hardware stores in a tristate area. Riverbend’s management estimates that if it invests $250,000 in a new computer system, it can save $67,000 in annual cash operating costs. Th...

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Q: City Hospital, a non-profit organization, estimates that it

City Hospital, a non-profit organization, estimates that it can save $28,000 a year in cash operating costs for the next 10 years if it buys a special-purpose eye testing machine at a cost of $110,000...

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Q: Assume the same facts as in Exercise 21-18 except that

Assume the same facts as in Exercise 21-18 except that City Hospital is a taxpaying entity. The income tax rate is 30% for all transactions that affect income taxes. Required: 1. Do requirement 1 of...

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Q: Southern Cola is considering the purchase of a special-purpose bottling

Southern Cola is considering the purchase of a special-purpose bottling machine for $23,000. It is expected to have a useful life of four years with no terminal disposal value. The plant manager estim...

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Q: New Bio Corporation is a rapidly growing biotech company that has a

New Bio Corporation is a rapidly growing biotech company that has a required rate of return of 10%. It plans to build a new facility in Santa Clara County. The building will take two years to complete...

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Q: Century Lab plans to purchase a new centrifuge machine for its New

Century Lab plans to purchase a new centrifuge machine for its New Hampshire facility. The machine costs $137,500 and is expected to have a useful life of eight years, with a terminal disposal value o...

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Q: Anna’s Bakery plans to purchase a new oven for its store.

Anna’s Bakery plans to purchase a new oven for its store. The oven has an estimated useful life of four years. The estimated pretax cash flows for the oven are as shown in the table...

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Q: Innovation, Inc., is considering the purchase of a new industrial

Innovation, Inc., is considering the purchase of a new industrial electric motor to improve efficiency at its Fremont plant. The motor has an estimated useful life of five years. The estimated pretax...

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Q: The Crossroad Company is an international clothing manufacturer. Its Santa Monica

The Crossroad Company is an international clothing manufacturer. Its Santa Monica plant will become idle on December 31, 2011. Peter Laney, the corporate controller, has been asked to look at three op...

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Q: Consumer Focus is a marketing research firm that organizes focus groups for

Consumer Focus is a marketing research firm that organizes focus groups for consumer-product companies. Each focus group has eight individuals who are paid $50per session to provide comments on new pr...

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Q: Adventure Parks Inc. (API) operates ten theme parks throughout

Adventure Parks Inc. (API) operates ten theme parks throughout the United States. The company’s slogan is “Name Your Adventure,” and its mission is to offer an exciting theme park experience to visito...

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Q: Jackson Markets, a chain of traditional supermarkets, is interested in

Jackson Markets, a chain of traditional supermarkets, is interested in gaining access to the organic and health food retail market by acquiring a regional company in that sector. Jackson intends to op...

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Q: British Columbia Lumber has a raw lumber division and a finished lumber

British Columbia Lumber has a raw lumber division and a finished lumber division. The variable costs are as follows: Raw lumber division: $100 per 100 board-feet of raw lumber Finished lumber division...

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Q: The Mornay Company manufactures telecommunications equipment at its plant in Toledo,

The Mornay Company manufactures telecommunications equipment at its plant in Toledo, Ohio. The company has marketing divisions throughout the world. A Mornay marketing division in Vienna, Austria, imp...

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Q: Suppose that the U.S. division could sell as many

Suppose that the U.S. division could sell as many units of Product 4A36 as it makes at $900 per unit in the U.S. market, net of all marketing and distribution costs. Required: 1. From the viewpoint o...

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Q: The Allison-Chambers Corporation, manufacturer of tractors and other heavy

The Allison-Chambers Corporation, manufacturer of tractors and other heavy farm equipment, is organized along decentralized product lines, with each manufacturing division operating as a separate prof...

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Q: Refer to Exercise 22-25. Assume that division A can

Refer to Exercise 22-25. Assume that division A can sell the 1,000 units to other customers at $155 per unit, with variable marketing cost of $5 per unit. Required: Determine whether Allison-Chambers...

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Q: Global Data, Inc., has two divisions: Test Preparation and

Global Data, Inc., has two divisions: Test Preparation and Language Arts. Results (in millions) for the past three years are partially displayed here: Required: 1. Complete the table by filling in t...

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Q: Superior Motor Company makes electric cars and has only two products,

Superior Motor Company makes electric cars and has only two products, the Simple green and the Superior green. To produce the Simple green, Superior Motor employed assets of $13,500,000 at the beginni...

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Q: Summit Equipment specializes in the manufacture of medical equipment, a field

Summit Equipment specializes in the manufacture of medical equipment, a field that has become increasingly competitive. Approximately two years ago, Ben Harrington, president of Summit, decided to rev...

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Q: Home Entertainment Center (HEC) operates a large store in San

Home Entertainment Center (HEC) operates a large store in San Francisco. The store has both a video section and a music (compact disks and tapes) section. HEC reports revenues for the video section se...

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Q: Bleefl Corporation manufactures furniture in several divisions, including the patio furniture

Bleefl Corporation manufactures furniture in several divisions, including the patio furniture division. The manager of the patio furniture division plans to retire in two years. The manager receives a...

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Q: Performance Auto Company operates a new car division (that sells high

Performance Auto Company operates a new car division (that sells high performance sports cars) and a performance parts division (that sells performance improvement parts for family cars). Some divisio...

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Q: Carter Corporation recently announced a bonus plan to be awarded to the

Carter Corporation recently announced a bonus plan to be awarded to the manager of the most profitable division. The three division managers are to choose whether ROI or RI will be used to measure pro...

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Q: The Seaside Corporation manufactures similar products in the United States and Norway

The Seaside Corporation manufactures similar products in the United States and Norway. The U.S. and Norwegian operations are organized as decentralized divisions. The following information is availabl...

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Q: Eva Manufacturing makes fashion products and competes on the basis of quality

Eva Manufacturing makes fashion products and competes on the basis of quality and leading-edge designs. The company has $3,000,000 invested in assets in its clothing manufacturing division. After-tax...

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Q: he Fremont, California, plant of New United Motor Manufacturing,

he Fremont, California, plant of New United Motor Manufacturing, Inc. (NUMMI), a joint venture of General Motors and Toyota, assembles two types of cars (Corollas and Geo Prisms). Separate assembly li...

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Q: Sunny Spot Travel Agency specializes in flights between Toronto and Jamaica.

Sunny Spot Travel Agency specializes in flights between Toronto and Jamaica. It books passengers on Canadian Air. Sunny Spot’s fixed costs are $23,500 per month. Canadian Air charges passengers $1,500...

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Q: The Super Donut owns and operates six doughnut outlets in and round

The Super Donut owns and operates six doughnut outlets in and round Kansas City. You are given the following corporate budget data for next year: Revenues ………………..……………….$10,000,000 Fixed costs ……………...

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Q: Brooke Motors is a small car dealership. On average, it

Brooke Motors is a small car dealership. On average, it sells a car for $27,000, which it purchases from the manufacturer for $23,000. Each month, Brooke Motors pays $48,200 in rent and utilities and...

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Q: The Express Banquet has two restaurants that are open 24-hours

The Express Banquet has two restaurants that are open 24-hours a day. Fixed costs for the two restaurants together total $459,000 per year. Service varies from a cup of coffee to full meals. The avera...

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Q: Bredahl Logistics, a U.S. shipping company, has

Bredahl Logistics, a U.S. shipping company, has just begun distributing goods across the Atlantic to Norway. The company began operations in 2010, transporting goods to South America. The company’s ea...

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Q: Hoot Washington is the newly elected leader of the Republican Party.

Hoot Washington is the newly elected leader of the Republican Party. Media Publishers is negotiating to publish Hoot’s Manifesto, a new book that promises to be an instant best-seller. The fixed costs...

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Q: Suppose Doral Corp.’s breakeven point is revenues of $1

Suppose Doral Corp.’s breakeven point is revenues of $1,100,000. Fixed costs are $660,000. Required: 1. Compute the contribution margin percentage. 2. Compute the selling price if variable costs are...

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Q: Color Rugs is holding a two-week carpet sale at Jerry’s

Color Rugs is holding a two-week carpet sale at Jerry’s Club, a local warehouse store. Color Rugs plans to sell carpets for $500 each. The company will purchase the carpets from a local distributor fo...

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Q: Global Textiles, Inc., is considering three possible countries for the

Global Textiles, Inc., is considering three possible countries for the sole manufacturing site of its newest area rug: Singapore, Brazil, and the United States. All area rugs are to be sold to retail...

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Q: Data 1-2-3 is a top-selling electronic

Data 1-2-3 is a top-selling electronic spreadsheet product. Data is about to release version 5.0. It divides its customers into two groups: new customers and upgrade customers (those who previously pu...

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Q: Bobbie’s Bagel Shop sells only coffee and bagels. Bobbie estimates that

Bobbie’s Bagel Shop sells only coffee and bagels. Bobbie estimates that every time she sells one bagel, she sells four cups of coffee. The budgeted cost information for Bobbieâ...

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Q: Monroe Classical Music Society is a not-for-profit organization

Monroe Classical Music Society is a not-for-profit organization that brings guest artists to the community’s greater metropolitan area. The Music Society just bought a small concert hall in the center...

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Q: Lurvey Men’s Clothing’s revenues and cost data for 2011 are as follows

Lurvey Men’s Clothing’s revenues and cost data for 2011 are as follows: Mr. Lurvey, the owner of the store, is unhappy with the operating results. An analysis of...

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Q: Mirabella Cosmetics manufactures and sells a face cream to small ethnic stores

Mirabella Cosmetics manufactures and sells a face cream to small ethnic stores in the greater New York area. It presents the monthly operating income statement shown here to George Lopez, a potential...

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Q: Foodmart Corp, an international retail giant, is considering implementing a

Foodmart Corp, an international retail giant, is considering implementing a new business to business (B2B) information system for processing purchase orders. The current system costs Foodmart $2,500,0...

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Q: Sweetum Candies manufactures jaw-breaker candies in a fully automated process

Sweetum Candies manufactures jaw-breaker candies in a fully automated process. The machine that produces candies was purchased recently and can make 4,100 per month. The machine costs $9,000 and is de...

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Q: In each of the following situations, determine whether job costing or

In each of the following situations, determine whether job costing or process costing would be more appropriate. a. ACPA firm b. An oil refinery c. A custom furniture manufacturer d. A tire manufactur...

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Q: Destin Products uses a job-costing system with two direct-

Destin Products uses a job-costing system with two direct-cost categories (direct materials and direct manufacturing labor) and one manufacturing over head cost pool. Destin allocates manufacturing ov...

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Q: Amesbury Construction assembles residential houses. It uses a job-costing

Amesbury Construction assembles residential houses. It uses a job-costing system with two direct-cost categories (direct materials and direct labor) and one indirect-cost pool (assembly support). Dire...

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Q: Gammaro Company uses normal costing. It allocates manufacturing overhead costs using

Gammaro Company uses normal costing. It allocates manufacturing overhead costs using a budgeted rate per machine-hour. The following data are available for 2011: Required: 1. Calculate the budgeted...

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Q: The Lynn Company uses a normal job-costing system at its

The Lynn Company uses a normal job-costing system at its Minneapolis plant. The plant has a machining department and an assembly department. Its job-costing system has two direct-cost categories (dire...

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Q: Turner & Associates, a consulting firm, has the following condensed

Turner & Associates, a consulting firm, has the following condensed budget for 2011: Turner has a single direct-cost category (professional labor) and a single indirect-cost pool (client support...

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Q: Splash Manufacturing produces outdoor wading and slide pools. The company uses

Splash Manufacturing produces outdoor wading and slide pools. The company uses a normal-costing system and allocates manufacturing overhead on the basis of direct manufacturing labor-hours. Most of th...

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Q: Consider the following selected cost data for the Pittsburgh Forging Company for

Consider the following selected cost data for the Pittsburgh Forging Company for 2011. The company uses normal costing. Its job-costing system has a single manufacturing overhead cost pool. Costs ar...

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Q: The following data are for Marvin Department Store. The account balances

The following data are for Marvin Department Store. The account balances (in thousands) are for 2011. Required: 1. Compute(a)the cost of goods purchased and (b)the cost of goods sold. 2. Prepare the...

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Q: Deacon Publishing House is a publishing company that produces consumer magazines.

Deacon Publishing House is a publishing company that produces consumer magazines. The house and home division, which sells home-improvement and home-decorating magazines, has seen a 20% reduction in o...

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Q: Fill in the blanks for each of the following independent cases.

Fill in the blanks for each of the following independent cases.

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Q: Renka’s Heaters selected data for October 2011 are presented here (in

Renka’s Heaters selected data for October 2011 are presented here (in millions): Required: Calculate the following costs: 1. Direct materials inventory 10/31/2011 2. Fixed manufact...

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Q: Consider the following account balances (in thousands) for the Canseco

Consider the following account balances (in thousands) for the Canseco Company: Required: 1. Prepare a schedule for the cost of goods manufactured for 2011. 2. Revenues for 2011 were $300 million. P...

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Q: Consider the following account balances (in thousands) for the Piedmont

Consider the following account balances (in thousands) for the Piedmont Corporation: Required: 1. Prepare a schedule for the cost of goods manufactured for 2011. 2. Revenues for 2011 were $600 milli...

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Q: The Howell Corporation has the following account balances (in millions):

The Howell Corporation has the following account balances (in millions): Required: Prepare an income statement and a supporting schedule of cost of goods manufactured for the year ended December 31,...

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Q: Required: 1. How would the answer to Problem 2

Required: 1. How would the answer to Problem 2-34 be modified if you were asked for a schedule of cost of goods manufactured and sold instead of a schedule of cost of goods manufactured? Be specific....

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Q: The following items (in millions) pertain to Calendar Corporation:

The following items (in millions) pertain to Calendar Corporation: Calendar’s manufacturing costing system uses a three-part classification of direct materials, direct manufacturin...

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Q: 1. Calculate total prime costs and total conversion costs.

1. Calculate total prime costs and total conversion costs. 2. Calculate total inventoriable costs and period costs. 3. Design costs and R&D costs are not considered product costs for financial stateme...

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Q: Jim Anderson works in the production department of Midwest Steelworks as a

Jim Anderson works in the production department of Midwest Steelworks as a machine operator. Jim, a long-time employee of Midwest, is paid on an hourly basis at a rate of $20 per hour. Jim works five...

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Q: Ron Williams recently took over as the controller of Johnson Brothers Manufacturing

Ron Williams recently took over as the controller of Johnson Brothers Manufacturing. Last month, the previous controller left the company with little notice and left the accounting records in disarray...

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Q: Denver Office Equipment manufactures and sells metal shelving. It began operations

Denver Office Equipment manufactures and sells metal shelving. It began operations on January 1, 2011. Costs incurred for 2011 are as follows (V stands for variable; F stands for fixed): Variable ma...

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Q: What criteria might be used to guide cost-allocation decisions?

What criteria might be used to guide cost-allocation decisions? Which are the dominant criteria?

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Q: Garrett Manufacturing sold 410,000 units of its product for $

Garrett Manufacturing sold 410,000 units of its product for $68 per unit in 2011. Variable cost per unit is $60 and total fixed costs are $1,640,000. Required: 1. Calculate (a) contribution margin an...

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Q: Scott Hewitt, the new Plant Manager of Old World Manufacturing Plant

Scott Hewitt, the new Plant Manager of Old World Manufacturing Plant Number 7, has just reviewed a draft of his year-end financial statements. Hewitt receives a year-end bonus of 10% of the plant’s op...

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Q: The following data are for Montgomery Retail Outlet Stores. The account

The following data are for Montgomery Retail Outlet Stores. The account balances (in thousands) are for 2011. Required: 1. Compute(a)the cost of goods purchased and (b)the cost of goods sold. 2. Pre...

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Q: Marston Corporation manufactures pharmaceutical products that are sold through a network of

Marston Corporation manufactures pharmaceutical products that are sold through a network of external sales agents. The agents are paid a commission of 18% of revenues. Marston is considering replacing...

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Q: Lifetime Escapes generates average revenue of $5,000 per person

Lifetime Escapes generates average revenue of $5,000 per person on its five-day package tours to wildlife parks in Kenya. The variable costs per person are as follows: Annual fixed costs total $520,...

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Q: Pure Water Products produces two types of water filters. One attaches

Pure Water Products produces two types of water filters. One attaches to the faucet and cleans all water that passes through the faucet. The other is a pitcher-cum-filter that only purifies water mean...

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Q: Snow Leopard Daycare provides daycare for children Mondays through Fridays. Its

Snow Leopard Daycare provides daycare for children Mondays through Fridays. Its monthly variable costs per child are as follows: Lunch and snacks ……………………………………………………………$150 Educational supplies …………...

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Q: Technology Solutions sells a ready-to-use software product for

Technology Solutions sells a ready-to-use software product for small businesses. The current selling price is $300. Projected operating income for 2011 is $490,000 based on a sales volume of 10,000 un...

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Q: R. A. Ro and Company, a manufacturer of quality

R. A. Ro and Company, a manufacturer of quality handmade walnut bowls, has had a steady growth in sales for the past five years. However, increased competition has led Mr. Ro, the president, to believ...

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Q: The Brown Shoe Company produces its famous shoe, the Divine Loafer

The Brown Shoe Company produces its famous shoe, the Divine Loafer that sells for $60 per pair. Operating income for 2011 is as follows: Sales revenue ($60 per pair) ……………………$300,000 Variable cost ($...

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Q: The WalkRite Shoe Company operates a chain of shoe stores that sell

The WalkRite Shoe Company operates a chain of shoe stores that sell 10different styles of inexpensive men’s shoes with identical unit costs and selling prices. A unit is defined as a...

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Q: Exclusive Resorts (ER) operates a five-star hotel with

Exclusive Resorts (ER) operates a five-star hotel with a championship golf course. ER has a decentralized management structure, with three divisions: Lodging (rooms, conference facilities) Food (resta...

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Q: Refer to requirement 3 of Problem 3-38. In this

Refer to requirement 3 of Problem 3-38. In this problem, assume the role of the owner of WalkRite. Required: 1. Calculate the number of units sold at which the owner of WalkRite would be indifferent...

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Q: Stylewise Printing Company currently leases its only copy machine for $1

Stylewise Printing Company currently leases its only copy machine for $1,000 a month. The company is considering replacing this leasing agreement with a new contract that is entirely commission based....

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Q: PC Planet has just opened its doors. The new retail store

PC Planet has just opened its doors. The new retail store sells refurbished computers at a significant discount from market prices. The computers cost PC Planet $100 to purchase and require 10 hours o...

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Q: Agro Engine Company manufactures and sells diesel engines for use in small

Agro Engine Company manufactures and sells diesel engines for use in small farming equipment. For its 2012 budget, Agro Engine Company estimates the following: Selling price …………………………………………..$ 3,000...

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Q: The Fasano Company uses a job-costing system at its Dover

The Fasano Company uses a job-costing system at its Dover, Delaware, plant. The plant has a machining department and a finishing department. Fasano uses normal costing with two direct-cost categories...

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Q: Keating & Associates is a law firm specializing in labor relations and

Keating & Associates is a law firm specializing in labor relations and employee-related work. It employs 25 professionals (5 partners and 20 associates) who work directly with its clients. The average...

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Q: Keating has just completed a review of its job-costing system

Keating has just completed a review of its job-costing system. This review included a detailed analysis of how past jobs used the firm’s resources and interviews with personnel about...

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Q: The Zaf Radiator Company uses a normal-costing system with a

The Zaf Radiator Company uses a normal-costing system with a single manufacturing overhead cost pool and machine-hours as the cost-allocation base. The following data are for 2011: Machine-hours dat...

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Q: Gibson Manufacturing uses normal costing for its job-costing system,

Gibson Manufacturing uses normal costing for its job-costing system, which has two direct-cost categories (direct materials and direct manufacturing labor) and one indirect-cost category (manufacturin...

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Q: New Rise, Inc., produces porcelain figurines. The production is

New Rise, Inc., produces porcelain figurines. The production is semi-automated where the figurine is molded almost entirely by operator-less machines and then individually hand-painted. The overhead i...

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Q: Parson Container Corporation is considering implementing a JIT production system. The

Parson Container Corporation is considering implementing a JIT production system. The new system would reduce current average inventory levels of $2,000,000 by 75%, but would require a much greater de...

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Q: Needham Company uses normal costing in its job-costing system.

Needham Company uses normal costing in its job-costing system. Partially completed T-accounts and additional information for Needham for 2011 are as follows: Additional information follows: a. Direc...

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Q: Brady Company uses normal costing in its job-costing system.

Brady Company uses normal costing in its job-costing system. The company produces custom bikes for toddlers. The beginning balances (December 1) and ending balances (as of December 30) in their invent...

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Q: Tamden, Inc., prints custom marketing materials. The business was

Tamden, Inc., prints custom marketing materials. The business was started January 1, 2010. The company uses a normal-costing system. It has two direct cost pools, materials and labor and one indirect...

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Q: Kingston Company manufactures modular homes. The company has two main products

Kingston Company manufactures modular homes. The company has two main products that it sells commercially: a 1,000 square foot, one-bedroom model and a 1,500 square foot, two-bedroom model. The compan...

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Q: Hanley asks his assistant to collect details on those costs included in

Hanley asks his assistant to collect details on those costs included in the $21,000 indirect-cost pool that can be traced to each individual job. After analysis, Wigan is able to reclassify $14,000 of...

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Q: Wigan has two classifications of professional staff: partners and associates.

Wigan has two classifications of professional staff: partners and associates. Hanley asks his assistant to examine the relative use of partners and associates on the recent Widnes Coal and St. Helen&a...

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Q: Allen’s Aero Toys makes two models of toy airplanes, fighter jets

Allen’s Aero Toys makes two models of toy airplanes, fighter jets, and cargo planes. The fighter jets are more detailed and require smaller batch sizes. The controller has asked you...

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Q: Roxbury’s Radiology Center (RRC) performs X-rays, ultrasounds

Roxbury’s Radiology Center (RRC) performs X-rays, ultrasounds, CT scans, and MRIs. RRC has developed a reputation as a top Radiology Center in the state. RRC has achieved this status...

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Q: Annie Warbucks runs a dance studio with childcare and adult fitness classes

Annie Warbucks runs a dance studio with childcare and adult fitness classes. Annie’s budget for the upcoming year is as follows: Other budget information follows: Required: 1. De...

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Q: Pharmacare, Inc., a distributor of special pharmaceutical products, operates

Pharmacare, Inc., a distributor of special pharmaceutical products, operates at capacity and has three main market segments: a. General supermarket chains b. Drugstore chains c. Mom-and-Pop single-sto...

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Q: Pacific Décor, Inc., designs, manufactures, and sells contemporary

Pacific Décor, Inc., designs, manufactures, and sells contemporary wood furniture. Ling Li is a furniture designer for Pacific. Li has spent much of the past month working on the design o...

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Q: Pumpkin Bags (PB) is a designer of high quality backpacks

Pumpkin Bags (PB) is a designer of high quality backpacks and purses. Each design is made in small batches. Each spring, PB comes out with new designs for the backpack and for the purse. The company u...

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Q: Uppervale Health Center runs two programs: drug addict rehabilitation and aftercare

Uppervale Health Center runs two programs: drug addict rehabilitation and aftercare (counseling and support of patients after release from a mental hospital). The center’s budget for...

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Q: Nivag’s Netballs is a manufacturer of high quality basketballs and volleyballs.

Nivag’s Netballs is a manufacturer of high quality basketballs and volleyballs. Setup costs are driven by the number of batches. Equipment and maintenance costs increase with the num...

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Q: The Tracy Corporation has a machining facility specializing in jobs for the

The Tracy Corporation has a machining facility specializing in jobs for the aircraft-components market. Tracy’s previous simple job-costing system had two direct-cost categories (dir...

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Q: Applewood Electronics, a division of Elgin Corporation, manufactures two large

Applewood Electronics, a division of Elgin Corporation, manufactures two large-screen television models: the Monarch, which has been produced since 2006 and sells for $900, and the Regal, a newer mode...

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Q: Logo Specialties manufactures, among other things, woolen blankets for the

Logo Specialties manufactures, among other things, woolen blankets for the athletic teams of the two local high schools. The company sews the blankets from fabric and sews on a logo patch purchased fr...

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Q: DryPool T-Shirt Factory manufactures plain white and solid colored T

DryPool T-Shirt Factory manufactures plain white and solid colored T-shirts. Inputs include the following: Additionally, the colored T-shirts require 3 ounces of dye per shirt at a cost of $0.20 per...

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Q: The Scarborough Corporation manufactures and sells two products: Thingone and Thingtwo

The Scarborough Corporation manufactures and sells two products: Thingone and Thingtwo. In July 2011, Scarborough’s budget department gathered the following data to prepare budgets f...

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Q: Easecom Company is a manufacturer of videoconferencing products. Regular units are

Easecom Company is a manufacturer of videoconferencing products. Regular units are manufactured to meet marketing projections, and specialized units are made after an order is received. Maintaining th...

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Q: Barney Briggs owns a restaurant franchise that is part of a chain

Barney Briggs owns a restaurant franchise that is part of a chain of “southern homestyle” restaurants. One of the chain’s popular breakfast items is biscuits and gravy. Central Warehouse makes and fre...

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Q: Unified Chemical Company has a joint production process that converts Zeta into

Unified Chemical Company has a joint production process that converts Zeta into two chemicals: Alpha and Beta. The company purchases Zeta for $12 per pound and incurs a cost of $30 per pound to proces...

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Q: Pet Luggage Company makes two pet carriers, the Cat-allac

Pet Luggage Company makes two pet carriers, the Cat-allac and the Dog-eriffic. They are both made of plastic with metal doors, but the Cat-allac is smaller. Information for the two products for the mo...

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Q: Refer to the information in Problem 6-33. Assume the

Refer to the information in Problem 6-33. Assume the following: Pet Luggage (PL) does not make any sales on credit. PL sells only to the public, and accepts cash and credit cards; 90% of its sales are...

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Q: Slopes, Inc., manufactures and sells snowboards. Slopes manufactures a

Slopes, Inc., manufactures and sells snowboards. Slopes manufactures a single model, the Pipex. In the summer of 2011, Slopes’ management accountant gathered the following data to pr...

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Q: Retail outlets purchase snowboards from Slopes, Inc., throughout the year

Retail outlets purchase snowboards from Slopes, Inc., throughout the year. However, in anticipation of late summer and early fall purchases, outlets ramp up inventories from May through August. Outlet...

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Q: On December 1, 2011, the Itami Wholesale Co. is

On December 1, 2011, the Itami Wholesale Co. is attempting to project cash receipts and disbursements through January 31, 2012. On this latter date, a note will be payable in the amount of $100,000. T...

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Q: Follete Inc. operates at capacity and makes plastic combs and hairbrushes

Follete Inc. operates at capacity and makes plastic combs and hairbrushes. Although the combs and brushes are a matching set, they are sold individually and so the sales mix is not 1:1. Follette Inc....

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Q: Delma Company manufactures a variety of products in a variety of departments

Delma Company manufactures a variety of products in a variety of departments, and evaluates departments and departmental managers by comparing actual cost and output relative to the budget. Department...

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Q: Jag Meerkat owns three upscale hair salons: Hair Suite I,

Jag Meerkat owns three upscale hair salons: Hair Suite I, II, and III. Each of the salons has a manager and 10 stylists who rent space in the salons as independent contractors and who pay a fee of 10%...

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Q: Tuscany Statuary manufactures bust statues of famous historical figures. All statues

Tuscany Statuary manufactures bust statues of famous historical figures. All statues are the same size. Each unit requires the same amount of resources. The following information is from the static bu...

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Q: Stevie McQueen has run Lightning Car Detailing for the past 10 years

Stevie McQueen has run Lightning Car Detailing for the past 10 years. His static budget and actual results for June 2011 are provided next. Stevie has one employee who has been with him for all 10 yea...

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Q: Snark Corporation manufactures a product called the snark, which it sells

Snark Corporation manufactures a product called the snark, which it sells to merchandising firms such as Snark Republic (SR), Snarks-R-Us (SRU), Neiman Snark-us (NS), Snark Buy (SB), Snark-Mart (SM),...

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Q: Styles, Inc., manufactures a full line of well-known

Styles, Inc., manufactures a full line of well-known sunglasses frames and lenses. Styles uses a standard costing system to set attainable standards for direct materials, labor, and overhead costs. St...

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Q: You are a student preparing for a job interview with a Fortune

You are a student preparing for a job interview with a Fortune 100 consumer products manufacturer. You are applying for a job in the finance department. This company is known for its rigorous case-bas...

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Q: KatharineStanley is the owner of Better Bikes, a company that produces

KatharineStanley is the owner of Better Bikes, a company that produces high quality cross-country bicycles. Better Bikes participates in a supply chain that consists of suppliers, manufacturers, distr...

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Q: Morro Bay Surfboards manufactures fiberglass surfboards. The standard cost of direct

Morro Bay Surfboards manufactures fiberglass surfboards. The standard cost of direct materials and direct manufacturing labor is $225 per board. This includes 30 pounds of direct materials, at the bud...

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Q: On May 1, 2012, Bovar Company began the manufacture of

On May 1, 2012, Bovar Company began the manufacture of a new paging machine known as Dandy. The company installed a standard costing system to account for manufacturing costs. The standard costs for a...

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Q: Shayna’s Smart Shawls, Inc., is a small business that Shayna

Shayna’s Smart Shawls, Inc., is a small business that Shayna developed while in college. She began hand-knitting shawls for her dorm friends to wear while studying. As demand grew, she hired some work...

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Q: You are a new junior accountant at Clearview Corporation, maker of

You are a new junior accountant at Clearview Corporation, maker of lenses for eyeglasses. Your company sells generic-quality lenses for a moderate price. Your boss, the Controller, has given you the l...

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Q: Sonnet, Inc., has the following budgeted standards for the month

Sonnet, Inc., has the following budgeted standards for the month of March 2011: Sales of 1,500,000 units are budgeted for March. The expected total market for this product was 7,500,000diskettes. Ac...

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Q: Iceland, Inc., is a fast-growing ice-cream

Iceland, Inc., is a fast-growing ice-cream maker. The company’s new ice-cream flavor, CherryStar, sells for $9 per pound. The standard monthly production level is 300,000 pounds, and...

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Q: Stuckey, Inc., manufactures industrial 55 gallon drums for storing chemicals

Stuckey, Inc., manufactures industrial 55 gallon drums for storing chemicals used in the mining industry. The body of the drums is made from aluminum and the lid is made of chemical resistant plastic....

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Q: The Wellesley Corporation makes printed cloth in two departments: weaving and

The Wellesley Corporation makes printed cloth in two departments: weaving and printing. Currently, all product first moves through the weaving department and then through the printing department befor...

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Q: Kitchen Whiz manufactures premium food processors. The following is some manufacturing

Kitchen Whiz manufactures premium food processors. The following is some manufacturing overhead data for Kitchen Whiz for the year ended December 31, 2012: Budgeted number of output units: 888 Plann...

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Q: Required: 1. Prepare journal entries for variable and fixed

Required: 1. Prepare journal entries for variable and fixed manufacturing overhead (you will need to calculate the various variances to accomplish this). 2. Overhead variances are written off to the C...

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Q: Best Around, Inc., is a manufacturer of vacuums and uses

Best Around, Inc., is a manufacturer of vacuums and uses standard costing. Manufacturing overhead (both variable and fixed) is allocated to products on the basis of budgeted machine-hours. In 2012, bu...

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Q: Consider the following two situations—cases A and B— independently

Consider the following two situations—cases A and B— independently. Data refer to operations for April 2012. For each situation, assume standard costing. Also assum...

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Q: Nolton Products uses standard costing. It allocates manufacturing overhead (both

Nolton Products uses standard costing. It allocates manufacturing overhead (both variable and fixed) to products on the basis of standard direct manufacturing labor-hours (DLH). Nolton develops its ma...

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Q: Sarah Beth’s Art Supply Company produces various types of paints. Actual

Sarah Beth’s Art Supply Company produces various types of paints. Actual direct manufacturing labor hours in the factory that produces paint have been higher than budgeted hours for...

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Q: Pointe’s Fleet Feet, Inc., produces dance shoes for stores all

Pointe’s Fleet Feet, Inc., produces dance shoes for stores all over the world. While the pairs of shoes are boxed individually, they are crated and shipped in batches. The shipping d...

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Q: Jo Nathan Publishing Company specializes in printing specialty textbooks for a small

Jo Nathan Publishing Company specializes in printing specialty textbooks for a small but profitable college market. Due to the high setup costs for each batch printed, Jo Nathan holds the book request...

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Q: Dawn Floral Creations, Inc., makes jewelry in the shape of

Dawn Floral Creations, Inc., makes jewelry in the shape of flowers. Each piece is hand-made and takes an average of 1.5 hours to produce because of the intricate design and scrollwork. Dawn uses direc...

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Q: The Mancusco Company uses a flexible budget and standard costs to aid

The 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 categorie...

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Q: Super Bookstore (SB) is a large city bookstore that sells

Super Bookstore (SB) is a large city bookstore that sells books and music CDs, and has a café. SB operates at capacity and allocates selling, general, and administration (S, G & A) co...

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Q: The Beal Manufacturing Company’s costing system has two direct-cost categories

The Beal Manufacturing Company’s costing system has two direct-cost categories: direct materials and direct manufacturing labor. Manufacturing overhead (both variable and fixed) is a...

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Q: Supreme Canine Products produces high quality dog food distributed only through veterinary

Supreme Canine Products produces high quality dog food distributed only through veterinary offices. To ensure that the food is of the highest quality and has taste appeal, Supreme has a rigorous inspe...

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Q: Eco-Green Company manufactures cloth shopping bags that it plans to

Eco-Green Company manufactures cloth shopping bags that it plans to sell for $5 each. Budgeted production and sales for these bags for 2011 is 800,000bags, with a standard of 400,000 machine hours for...

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Q: The Mavis Company uses an absorption-costing system based on standard

The Mavis 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...

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Q: It is the end of 2011. The All-Fixed Company

It is the end of 2011. The All-Fixed Company began operations in January 2010. The company is so named because it has no variable costs. All its costs are fixed; they do not vary with output. The All-...

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Q: Hinkle Company uses standard costing. Tim Bartina, the new president

Hinkle Company uses standard costing. Tim Bartina, the new president of Hinkle Company, is presented with the following data for 2012: Required: 1 . At what percentage of denominator level was the p...

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Q: University Press produces textbooks for college courses. The company recently hired

University Press produces textbooks for college courses. The company recently hired a new editor, Leslie White, to handle production and sales of books for an introduction to accounting course. Leslie...

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Q: Lucky Lager has just purchased the Austin Brewery. The brewery is

Lucky Lager has just purchased the Austin Brewery. The brewery is two years old and uses absorption costing. It will “sell” its product to Lucky Lager at $45 per ba...

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Q: Required: 1. If the plant manager of the Austin

Required: 1. If the plant manager of the Austin Brewery gets a bonus based on operating income, which denominator level capacity concept would he prefer to use? Explain. 2. What denominator-level capa...

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Q: Koshu Corporation is a manufacturer of computer accessories. It uses absorption

Koshu Corporation is a manufacturer of computer accessories. It uses absorption costing based on standard costs and reports the following data for 2011: There are no price, spending, or efficiency v...

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Q: Borkenstick makes a very popular undyed cloth sandal in one style,

Borkenstick makes a very popular undyed cloth sandal in one style, but in Regular and Deluxe. The Regular sandals have cloth soles and the Deluxe sandals have cloth covered wooden soles. Borkenstick i...

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Q: Carlisle Company is a manufacturer of precision surgical tools. It initiated

Carlisle Company is a manufacturer of precision surgical tools. It initiated standard costing and a flexible budget on January 1, 2011. The company president, Monica Carlisle, has been pondering how f...

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Q: Spirelli Company is about to enter the highly competitive personal electronics market

Spirelli Company is about to enter the highly competitive personal electronics market with a new optical reader. In anticipation of future growth, the company has leased a large manufacturing facility...

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Q: Earth’s Best Light (EBL), a producer of energy-efficient

Earth’s Best Light (EBL), a producer of energy-efficient light bulbs, expects that demand will increase markedly over the next decade. Due to the high fixed costs involved in the bus...

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Q: Required: 1. If EBL sells all 250,000

Required: 1. If EBL sells all 250,000 bulbs produced, what would be the effect on operating income of using each type of capacity as a basis for calculating manufacturing cost per unit? 2. Compare the...

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Q: Cayzer Associates operates a chain of 10 hospitals in the Los Angeles

Cayzer Associates operates a chain of 10 hospitals in the Los Angeles area. Its central food-catering facility, Mealman, prepares and delivers meals to the hospitals. It has the capacity to deliver up...

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Q: In 2013, only 760,500 Mealman meals were produced and

In 2013, only 760,500 Mealman meals were produced and sold to the hospitals. Smith suspects that hospital controllers had systematically inflated their 2013 meal estimates. Required: 1 . Recall that...

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Q: Ken Howard, financial analyst at KMW Corporation, is examining the

Ken Howard, financial analyst at KMW Corporation, is examining the behavior of quarterly maintenance costs for budgeting purposes. Howard collects the following data on machine hours worked and mainte...

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Q: Local Harvest, a cooperative of organic familyowned farms outside of Columbus

Local Harvest, a cooperative of organic familyowned farms outside of Columbus, Ohio, has recently started a fresh produce club to provide support to the group’s member farms, and to...

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Q: Anna Martinez, the financial manager at the Casa Real restaurant,

Anna Martinez, the financial manager at the Casa Real restaurant, is checking to see if there is any relationship between newspaper advertising and sales revenues at the restaurant. She obtains the fo...

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Q: Fitzgerald Manufacturing has been using activity-based costing to determine the

Fitzgerald Manufacturing has been using activity-based costing to determine the cost of product X-678. One of the activities, “Inspection,” occurs just before the p...

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Q: Jayne Barbour is working as a summer intern at Mode, a

Jayne Barbour is working as a summer intern at Mode, a trendy store specializing in clothing for twenty-somethings. Jayne has been working closely with her cousin, Gail Hubbard, who plans promotions f...

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Q: Brickman Apparel produces equipment for the extreme-sports market. It

Brickman Apparel produces equipment for the extreme-sports market. It has four peak periods, each lasting two months, for manufacturing the merchandise suited for spring, summer, fall, and winter. In...

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Q: The Nautilus Company, which is under contract to the U.

The Nautilus Company, which is under contract to the U.S. Navy, assembles troop deployment boats. As part of its research program, it completes the assembly of the first of a new model (PT109) of depl...

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Q: Assume the same information for the Nautilus Company as in Problem 10

Assume the same information for the Nautilus Company as in Problem 10-36 with one exception. This exception is that Nautilus uses a 90% incremental unit-time learning model as a basis for predicting d...

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Q: Tilbert Toys (TT) makes the popular Floppin’ Freddy Frog and

Tilbert Toys (TT) makes the popular Floppin’ Freddy Frog and Jumpin’ Jill Junebug dolls in batches. TT has recently adopted activity-based costing. TT incurs setup...

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Q: Bebe Williams wonders if she should run a multiple regression with both

Bebe Williams wonders if she should run a multiple regression with both number of setups and number of setup-hours, as cost drivers. Required: 1. Run a multiple regression to estimate the regression...

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Q: Fashion Bling operates a chain of 10 retail department stores. Each

Fashion Bling operates a chain of 10 retail department stores. Each department store makes its own purchasing decisions. Barry Lee, assistant to the president of Fashion Bling, is interested in better...

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Q: Barry Lee decides that the simple regression analysis used in Problem 10

Barry Lee decides that the simple regression analysis used in Problem 10-40 could be extended to a multiple regression analysis. He finds the following results for two multiple regression analyses:...

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Q: Louisville Corporation produces baseball bats for kids that it sells for $

Louisville Corporation produces baseball bats for kids that it sells for $32 each. At capacity, the company can produce 50,000 bats a year. The costs of producing and selling 50,000 bats are as follow...

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Q: Bernie’s Bears, Inc., manufactures plush toys in a facility in

Bernie’s Bears, Inc., manufactures plush toys in a facility in Cleveland, Ohio. Recently, the company designed a group of collectible resin figurines to go with the plush toy line. M...

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Q: Larry Miller, the general manager of Basil Software, must decide

Larry Miller, the general manager of Basil Software, must decide when to release the new version of Basil’s spreadsheet package, Easy spread 2.0. Development of Easy spread 2.0 is co...

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Q: Why is customer-profitability analysis a vitally important topic to managers

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

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Q: Bob Moody manages the Knoxville plant of George Manufacturing. He has

Bob Moody manages the Knoxville plant of George Manufacturing. He has been approached by a representative of Darda Engineering regarding the possible replacement of a large piece of manufacturing equi...

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Q: The Wild Boar Corporation is working at full production capacity producing 13

The Wild Boar Corporation is working at full production capacity producing 13,000 units of a unique product, Rosebo. Manufacturing cost per unit for Rosebo is as follows: Manufacturing overhead cost...

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Q: Pendleton Engineering makes cutting tools for metalworking operations. It makes two

Pendleton Engineering makes cutting tools for metalworking 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...

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Q: The Northern Division of Grossman Corporation makes and sells tables and beds

The Northern Division of Grossman Corporation makes and sells tables and beds. The following estimated revenue and cost information from the division’s activity-based costing system...

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Q: Oxford Engineering manufactures small engines. The engines are sold to manufacturers

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 en...

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Q: The Weaver Company produces gas grills. This year’s expected production is

The Weaver Company produces gas grills. This year’s expected production is 20,000 units. Currently, Weaver makes the side burners for its grills. Each grill includes two side burners...

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Q: The following are the Class Company’s unit costs of manufacturing and marketing

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: Required: The following situations re...

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Q: Belmont Corporation has four operating divisions. The budgeted revenues and expenses

Belmont Corporation has four operating divisions. The budgeted revenues and expenses for each division for 2011 follows: Further analysis of costs reveals the following percentages of variable costs...

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Q: Jack Arnoldson is the management accountant for Valley Restaurant Supply (VRS

Jack Arnoldson is the management accountant for Valley Restaurant Supply (VRS). Bob Gardner, the VRS sales manager, and Jack are meeting to discuss the profitability of one of the customers, Franco&ac...

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Q: Executive Suites operates a 100-suite hotel in a busy business

Executive Suites operates a 100-suite hotel in a busy business park. During April, a 30-day month, Executive Suites experienced a 90% occupancy rate from Monday evening through Thursday evening (weekn...

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Q: The new CEO of Radco Manufacturing has asked for a variety of

The new CEO of Radco 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: Req...

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Q: Ozumo’s Gardening makes several different kinds of mulch. Its busy period

Ozumo’s Gardening makes several different kinds of mulch. Its busy period is in the summer months. In August, the controller suddenly quit due to a stress-related disorder. He took w...

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Q: Cutler Electronics makes an MP3 player, CE100, which has 80

Cutler Electronics makes an MP3 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. Mont...

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Q: Vend-o-licious makes candy bars for vending machines and

Vend-o-licious makes candy bars for vending machines and sells them to vendors in cases of 30 bars. Although Vend-o-licious makes a variety of candy, the cost differences are insignificant, and the ca...

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Q: R & C Mechanical sells and services plumbing, heating, and

R & C Mechanical sells and services plumbing, heating, and air conditioning systems. R & C’s cost accounting system tracks two cost categories: direct labor and direct materi...

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Q: Florida Temps, a large labor contractor, supplies contract labor to

Florida Temps, a large labor contractor, supplies contract labor to building-construction companies. For 2012, Florida Temps has budgeted to supply 84,000 hours of contract labor. Its variable costs a...

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Q: New Life Metal Recycling and Salvage has just been given the opportunity

New Life Metal Recycling and Salvage has just been given the opportunity to salvage scrap metal and other materials from an old industrial site. The current owners of the site will sign over the site...

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Q: Air Eagle is about to introduce a daily round-trip flight

Air Eagle is about to introduce a daily round-trip flight from New York to Los Angeles and is determining how it should price its round-trip tickets. The market research group at Air Eagle segments th...

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Q: Apex Art has been requested to prepare a bid on 500 pieces

Apex Art has been requested to prepare a bid on 500 pieces of framed artwork for a new hotel. Winning the bid would be a big boost for sales representative Jason Grant, who works entirely on commissio...

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Q: Music Master Company manufactures an MP3 player called the Mini. The

Music Master Company manufactures an MP3 player called the Mini. The company sells the player to discount stores throughout the country. This player is significantly less expensive than similar produc...

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Q: Refer to Problem 13-30. As a result of the

Refer to Problem 13-30. As a result of the actions taken, quality has significantly improved in 2011 while rework and unit costs of the Mini have decreased. Music Master has reduced manufacturing capa...

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Q: Suppose that during 2011, the market for MP3 players grew 3

Suppose that during 2011, the market for MP3 players grew 3%. All decreases in the selling price of the Mini and increases in market share (that is, sales increases greater than 3%) are the result of...

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Q: Lester Company makes metal products and has a forging department. In

Lester Company makes metal products and has a forging department. In this department, materials are added at the beginning of the process and conversion takes place uniformly. At the start of November...

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Q: Refer to the information for Music Master Company in 13-31

Refer to the information for Music Master Company in 13-31. Required: 1. Calculate the amount and cost of (a) unused manufacturing capacity and (b) unused selling and customer-service capacity at th...

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Q: Caltex, Inc., refines gasoline and sells it through its own

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 â€...

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Q: Lee Corporation manufactures various types of color laser printers in a highly

Lee Corporation manufactures various types of color laser printers in a highly automated facility with high fixed costs. The market for laser printers is competitive. The various color laser printers...

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Q: Gerhart Company manufactures wallets from fabric. In 2011, Gerhart made

Gerhart Company manufactures wallets from fabric. In 2011, Gerhart made 2,520,000 wallets using 2,000,000 yards of fabric. In 2011, Gerhart has capacity to make 3,307,500 wallets and incurs a cost of...

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Q: Refer to the data for Problem 13-37. Assume the

Refer to the data for Problem 13-37. Assume the fabric costs $3.70 per yard in 2012 and $3.85 per yard in 2011. Required: 1. Compute Gerhart Company’s total factor productivity (TFP) for 2012. 2. Com...

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Q: Dusty Rhodes, controller of Richfield Oil Company, is preparing a

Dusty Rhodes, controller of Richfield Oil Company, is preparing a presentation to senior executives about the performance of its four divisions. Summary data (dollar amounts in millions) related to th...

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Q: Bizzan Manufacturing makes a component called P14-31. This component

Bizzan Manufacturing makes a component called P14-31. This component is manufactured only when ordered by a customer, so Bizzan keeps no inventory of P14-31. The list price is $100 per unit, but custo...

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Q: Chicago Infonautics, Inc., produces handheld Windows CE™-compatible organizers

Chicago Infonautics, Inc., produces handheld Windows CEâ„¢-compatible organizers. Chicago Infonautics markets three different handheld models: Palm Pro is a souped-up version for the e...

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Q: Chicago Infonautics’ senior vice president of marketing prepared his budget at the

Chicago Infonautics’ 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 handheld-organizer market...

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Q: The Split Banana, Inc., operates a chain of Italian gelato

The Split Banana, Inc., operates a chain of Italian gelato stores. Although the Split Banana charges customers the same price for all flavors, production costs vary, depending on the type of ingredien...

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Q: Phish Corporation is the largest manufacturer and distributor of novelty ice creams

Phish Corporation is the largest manufacturer and distributor of novelty ice creams across the East Coast. The company’s products, because of their perishable nature, require careful...

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Q: Nature’s Best Nuts produces specialty nut products for the gourmet and natural

Nature’s Best Nuts produces specialty nut products for the gourmet and natural foods market. Its most popular product is Zesty Zingers, a mixture of roasted nuts that are seasoned wi...

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Q: Trevor Joseph employs two workers in his guitar-making business.

Trevor Joseph employs two workers in his guitar-making business. The first worker, George, has been making guitars for 20 years and is paid $30per hour. The second worker, Earl, is less experienced, a...

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Q: Sarah Reynolds recently started a job as an administrative assistant in the

Sarah Reynolds recently started a job as an administrative assistant in the cost accounting department of Mize Manufacturing. New to the area of cost accounting, Sarah is puzzled by the fact that one...

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Q: Denise Nelson operates Interiors by Denise, an interior design consulting and

Denise Nelson operates Interiors by Denise, an interior design consulting and window treatment fabrication business. Her business is made up of two different distribution channels, a consulting busine...

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Q: Perfection Department Store has a new promotional program that offers a free

Perfection Department Store has a new promotional program that offers a free gift-wrapping service for its customers. Perfection’s customer service department has practical capacity...

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Q: Lee Shu-yu Inc. produces and sells DVDs to business

Lee Shu-yu Inc. produces and sells DVDs to business people and students who are planning extended stays in China. It has been very successful with two DVDs: Beginning Mandarin and Conversational Manda...

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Q: State University completed construction of its newest administrative building at the end

State University completed construction of its newest administrative building at the end of 2011. The University’s first employees moved into the building on January 1, 2012. The bui...

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Q: The Central Valley Company has prepared department overhead budgets for budgeted-

The Central Valley Company has prepared department overhead budgets for budgeted-volume levels before allocations as follows: Management has decided that the most appropriate inventory costs are ach...

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Q: Wright Inc. and Brown Inc. are two small clothing companies

Wright Inc. and Brown Inc. are two small clothing companies that are considering leasing a dyeing machine together. The companies estimated that in order to meet production, Wright needs the machine f...

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Q: Max Systems, Inc., sells computer hardware to end consumers.

Max Systems, Inc., sells computer hardware to end consumers. Its most popular model, the CX30 is sold as a “bundle,” which includes three hardware products: a perso...

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Q: The California Instrument Company (CIC) consists of the semiconductor division

The California Instrument Company (CIC) consists of the semiconductor division and the process-control division, each of which operates as an independent profit center. The semiconductor division empl...

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Q: Spirit Training, Inc., manufactures athletic shoes and athletic clothing for

Spirit Training, Inc., manufactures athletic shoes and athletic clothing for both amateur and professional athletes. The company has two product lines (clothing and shoes), which are produced in separ...

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Q: Sunny Day Juice Company produces oranges from various organic growers in Florida

Sunny Day Juice Company produces oranges from various organic growers in Florida. The juice is extracted from the oranges and the pulp and peel remain. Sunny Day considers the pulp and peel byproducts...

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Q: The Southern Oil Company buys crude vegetable oil. Refining this oil

The Southern Oil Company buys crude vegetable oil. Refining this oil results in four products at the split off point: A, B, C, and D. Product C is fully processed by the split off point. Products A, B...

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Q: The Chocolate Factory manufactures and distributes chocolate products. It purchases cocoa

The Chocolate Factory manufactures and distributes chocolate products. It purchases cocoa beans and processes them into two intermediate products: chocolate-powder liquor base and milk chocolate liquo...

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Q: Sonimad Sawmill, Inc., (SSI) purchases logs from independent

Sonimad Sawmill, Inc., (SSI) purchases logs from independent timber contractors and processes the logs into three types of lumber products: Studs for residential buildings (walls, ceilings) Decorative...

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Q: Elsie Dairy Products Corp. buys one input, full-cream

Elsie Dairy Products Corp. buys one input, full-cream milk, and refines it in a churning process. From each gallon of milk Elsie produces three cups of butter and nine cups of buttermilk. During May 2...

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Q: Elsie has decided that buttermilk may sell better if it was marketed

Elsie has decided that buttermilk may sell better if it was marketed for baking and sold in pints. This would involve additional packaging at an incremental cost of $0.35 per pint. Each pint could be...

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Q: Mat Place purchases old tires and recycles them to produce rubber floor

Mat Place purchases old tires and recycles them to produce rubber floor mats and car mats. The company washes, shreds, and molds the recycled tires into sheets. The floor and car mats are cut from the...

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Q: The Mat Place’s accountant needs to record the information about the joint

The Mat Place’s accountant needs to record the information about the joint and byproducts in the general journal, but is not sure what the entries should be. The company has hired you as a consultant...

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Q: Rochester Mining Company (RMC) mines coal, puts it through

Rochester Mining Company (RMC) mines coal, puts it through a one-step crushing process, and loads the bulk raw coal onto river barges for shipment to customers. RMC’s management is c...

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Q: Renewal Resorts, Inc., operates health spas in Ft. Meyers

Renewal Resorts, Inc., operates health spas in Ft. Meyers, Florida, Scottsdale, Arizona, and Monterey, California. The Ft. Meyers spa was the company’s first, opened in 1986. The Sco...

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Q: Memory Manufacturing Company (MMC) produces memory modules in a two

Memory Manufacturing Company (MMC) produces memory modules in a two-step process: chip fabrication and module assembly. In chip fabrication, each batch of raw silicon wafers yields 400 standard chips...

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Q: Taste Freez, Inc., produces two specialty ice cream mix flavors

Taste Freez, Inc., produces two specialty ice cream mix flavors for soft serve ice cream machines. The two flavors, Extreme Chocolate and Very Strawberry, both start with a vanilla base. The vanilla b...

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Q: Larsen Company manufactures car seats in its San Antonio plant. Each

Larsen Company manufactures car seats in its San Antonio plant. Each car seat passes through the assembly department and the testing department. This problem focuses on the assembly department. The pr...

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Q: Required: Prepare a set of summarized journal entries for all

Required: Prepare a set of summarized journal entries for all October 2012 transactions affecting Work in Process— Assembly. Set up a T-account for Work in Process—Assembly and post your entries to it...

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Q: Do Problem 17-30 using the FIFO method of process costing

Do Problem 17-30 using the FIFO method of process costing. Explain any difference between the cost per equivalent unit in the assembly department under the weighted-average method and the FIFO method....

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Q: Larsen Company, as you know, is a manufacturer of car

Larsen Company, as you know, is a manufacturer of car seats. Each car seat passes through the assembly department and testing department. This problem focuses on the testing department. Direct materia...

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Q: Refer to the information in Problem 17-33. Suppose that

Refer to the information in Problem 17-33. Suppose that Larsen Company uses the FIFO method instead of the weighted-average method in all of its departments. The only changes to Problem 17-33 under th...

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Q: Ashworth Handcraft is a manufacturer of picture frames for large retailers.

Ashworth Handcraft is a manufacturer of picture frames for large retailers. Every picture frame passes through two departments: the assembly department and the finishing department. This problem focus...

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Q: Required: Prepare a set of summarized journal entries for all

Required: Prepare a set of summarized journal entries for all April transactions affecting Work in Process—Assembly. Set up a T-account for Work in Process—Assembly and post your entries to it.

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Q: Required: Do Problem 17-35 using the FIFO method

Required: Do Problem 17-35 using the FIFO method of process costing. If you did Problem 17-35, explain any difference between the cost of work completed and transferred out and the cost of ending work...

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Q: Sol Electronics, a fast-growing electronic device producer, uses

Sol Electronics, a fast-growing electronic device producer, uses a standard costing system, with standards set at the beginning of each year. In the second quarter of 2011, Sol faced two challenges: I...

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Q: Bookworm, Inc., has two departments: printing and binding.

Bookworm, Inc., has two departments: printing and binding. Each department has one direct-cost category (direct materials) and one indirect-cost category (conversion costs). This problem focuses on th...

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Q: Refer to the information in Problem 17-38. Suppose that

Refer to the information in Problem 17-38. Suppose that Bookworm, Inc., uses the FIFO method instead of the weighted-average method in all of its departments. The only changes to Problem 17-38 under t...

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Q: Frito-Lay, Inc., manufactures convenience foods, including potato

Frito-Lay, Inc., manufactures convenience foods, including potato chips and corn chips. Production of corn chips occurs in four departments: cleaning, mixing, cooking, and drying and packaging. Consid...

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Q: Penelope’s Pearls Company (PPC) is a manufacturer of knock off

Penelope’s Pearls Company (PPC) is a manufacturer of knock off jewelry. Penelope attends Fashion Week in New York City every September and February to gauge the latest fashion trends...

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Q: The Boston Company is a food-processing company based in San

The Boston Company is a food-processing company based in San Francisco. It operates under the weighted-average method of process costing and has two departments: cleaning and packaging. For the cleani...

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Q: Refer to the information in Problem 18-30.

Refer to the information in Problem 18-30. Required: Do Problem 18-30 using the FIFO method of process costing. (Problem 18-33 explores additional facets of this problem.) Data from Problem 18-30:...

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Q: In Boston Company’s packaging department, conversion costs are added evenly during

In Boston Company’s packaging department, conversion costs are added evenly during the process, and direct materials are added at the end of the process. Spoiled units are detected u...

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Q: Refer to the information in Problem 18-32 except for the

Refer to the information in Problem 18-32 except for the transferred-in costs for May, which equal the total cost of good units completed and transferred out in May from the cleaning department, which...

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Q: Metal Works, Inc., manufactures various metal parts in batches as

Metal Works, Inc., manufactures various metal parts in batches as ordered by customers, and accounts for them using job costing. Job 2346-8, a large job for customer X, incurred $240,000 of direct mat...

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Q: Crystal Clear Machine Shop is a manufacturer of motorized carts for vacation

Crystal Clear Machine Shop is a manufacturer of motorized carts for vacation resorts. Peter Cruz, the plant manager of Crystal Clear, obtains the following information for Job #10 in August 2010. A to...

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Q: Zeller Company uses standard costing. The company has two manufacturing plants

Zeller Company uses standard costing. The company has two manufacturing plants, one in Nevada and the other in Ohio. For the Nevada plant, Zeller has budgeted annual output of 4,000,000 units. Standar...

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Q: Assume that the 7 spoiled units of Whitefish Machine Shop’s Job #

Assume that the 7 spoiled units of Whitefish Machine Shop’s Job #10 can be reworked for a total cost of $1,700. A total cost of $10,150 associated with these units has already been assigned to Job #10...

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Q: Assume that Job #10 of Crystal Clear Machine Shop generates normal

Assume that Job #10 of Crystal Clear Machine Shop generates normal scrap with a total sales value of $650 (it is assumed that the scrap returned to the storeroom is sold quickly). Required: Prepare t...

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Q: Fantastic Furniture manufactures plastic lawn furniture in a continuous process. The

Fantastic Furniture manufactures plastic lawn furniture in a continuous process. The company pours molten plastic into molds and then cools the plastic. Materials are added at the beginning of the pro...

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Q: The Kim Company is a furniture manufacturer with two departments: molding

The Kim Company is a furniture manufacturer with two departments: molding and finishing. The company uses the weighted-average method of process costing. In August, the following data were recorded fo...

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Q: Riposte Corporation manufactures a computer chip called XD1. Manufacturing costs of

Riposte Corporation manufactures a computer chip called XD1. Manufacturing costs of one XD1 chip, excluding rework costs, are direct materials, $60; direct manufacturing labor, $12; and manufacturing...

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Q: The Thomas Corporation sells 300,000 V262 valves to the automobile

The Thomas Corporation sells 300,000 V262 valves to the automobile and truck industry. Thomas has a capacity of 110,000 machine-hours and can produce 3 valves per machine-hour. V262’s contribution mar...

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Q: The Tan Corporation uses multicolor molding to make plastic lamps. The

The Tan Corporation uses multicolor molding to make plastic lamps. The molding operation has a capacity of 200,000 units per year. The demand for lamps is very strong. Tan will be able to sell whateve...

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Q: East Coast Healthcare operates two medical groups, one in Philadelphia and

East Coast Healthcare operates two medical groups, one in Philadelphia and one in Baltimore. The semi-annual bonus plan for each medical group’s president has three components: a. Pr...

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Q: The Seawall Corporation uses an injection molding machine to make a plastic

The Seawall Corporation uses an injection molding machine to make a plastic product, Z39, after receiving firm orders from its customers. Seawall estimates that it will receive 50 orders for Z39 durin...

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Q: Mile-High Foods, Inc., was formed in March 2011

Mile-High Foods, Inc., was formed in March 2011 to provide prepackaged snack boxes for a new low cost regional airline beginning on April 1. The company has just leased warehouse space central to the...

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Q: Seawall is still debating whether it should introduce Y28. The following

Seawall is still debating whether it should introduce Y28. The following table provides information on selling prices, variable costs, and inventory carrying costs for Z39 and Y28: Required: 1. Usin...

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Q: The Brandt Corporation makes wire harnesses for the aircraft industry only upon

The Brandt Corporation makes wire harnesses for the aircraft industry only upon receiving firm orders form its customers. Brandt has recently purchased a new machine to make two types of wire harnesse...

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Q: Aardee Industries manufactures pharmaceutical products in two departments: mixing and tablet

Aardee Industries manufactures pharmaceutical products in two departments: mixing and tablet making. Additional information on the two departments follows. Each tablet contains 0.5 gram of direct mate...

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Q: Fun Time Toys (FTT) produces dolls in two processes:

Fun Time Toys (FTT) produces dolls in two processes: molding and assembly. FTT is currently producing two models: Chatty Chelsey and Talking Tanya. Production in the molding department is limited by t...

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Q: Pauli’s Pizza has recently begun collecting data on the quality of its

Pauli’s Pizza has recently begun collecting data on the quality of its customer order processing and delivery. Pauli’s made 1,800 deliveries during the first quarte...

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Q: Wainwright Corporation manufactures auto parts for two leading Japanese automakers. Nancy

Wainwright Corporation manufactures auto parts for two leading Japanese automakers. Nancy Evans is the management accountant for one of Wainwright’s largest manufacturing plants. The...

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Q: Soothing Meadow, a retailer of bed and bath linen, sells

Soothing Meadow, a retailer of bed and bath linen, sells 380,000 packages of Mona Lisa designer sheets each year. Soothing Meadow incurs an ordering cost of $57 per purchase order placed with Mona Lis...

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Q: Chadwick Shoe Co. produces and sells an excellent quality walking shoe

Chadwick Shoe Co. produces and sells an excellent quality walking shoe. After production, the shoes are distributed to 20 warehouses around the country. Each warehouse services approximately 100 store...

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Q: Global Tunes Corp. produces J-Pods, music players that

Global Tunes Corp. produces J-Pods, music players that can download thousands of songs. Global Tunes forecasts that demand in 2011 will be 48,000 J-Pods. The variable production cost of each J-Pod is...

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Q: Computers 4 U purchases one model of computer at a wholesale cost

Computers 4 U purchases one model of computer at a wholesale cost of $200 per unit and resells it to end consumers. The annual demand for the company’s product is 500,000 units. Ordering costs are $80...

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Q: The Domestic Engines Co. produces the same power generators in two

The Domestic Engines Co. produces the same power generators in two Illinois plants, a new plant in Peoria and an older plant in Moline. The following data are available for the two plants: All fixed...

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Q: The Margro Corporation is an automotive supplier that uses automatic turning machines

The Margro Corporation is an automotive supplier that uses automatic turning machines to manufacture precision parts from steel bars. Margro’s inventory of raw steel averages $600,00...

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Q: The Rippel Corporation manufactures electrical meters. For August, there were

The Rippel Corporation manufactures electrical meters. For August, there were no beginning inventories of direct materials and no beginning or ending work in process. Rippel uses a JIT production syst...

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Q: Assume that the second trigger point for Rippel Corporation is the sale

Assume that the second trigger point for Rippel Corporation is the sale—rather than the completion—of finished goods. Also, the inventory account is confined solely to direct materials, whether these...

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Q: Assume the same facts as in Problem 20-32 except now

Assume the same facts as in Problem 20-32 except now there are only two trigger points: Completion of good finished units of product and Sale of finished goods. Required: 1. Prepare summary journal e...

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Q: Flexible Security Devices (FSD) has introduced a just-in

Flexible Security Devices (FSD) has introduced a just-in-time production process and is considering the adoption of lean accounting principles to support its new production philosophy. The company has...

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Q: Pro Chips is a manufacturer of prototype chips based in Dublin,

Pro Chips is a manufacturer of prototype chips based in Dublin, Ireland. Next year, in 2012, Pro Chips expects to deliver 552 prototype chips at an average price of $80,000. Pro Chipsâ€...

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Q: Assume the same facts as in Problem 21-27, except

Assume the same facts as in Problem 21-27, except that the plant is located in Austin, Texas. Pro Chips has no special waiver on income taxes. It pays a 30% tax rate on all income. Proceeds from sales...

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Q: Whimsical Corporation is an international manufacturer of fragrances for women. Management

Whimsical Corporation is an international manufacturer of fragrances for women. Management at Whimsical is considering expanding the product line to men’s fragrances. From the best estimates of the ma...

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Q: Crumbly Cookie Company is considering expanding by buying a new (additional

Crumbly Cookie Company is considering expanding by buying a new (additional) machine that costs $62,000, has zero terminal disposal value, and has a 10-year useful life. It expects the annual increase...

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Q: You have the opportunity to expand your business by purchasing new equipment

You have the opportunity to expand your business by purchasing new equipment for $159,000. The equipment has a useful life of nine years. You expect to incur cash fixed costs of $96,000 per year to us...

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Q: Define cost-volume-profit analysis.

Define cost-volume-profit analysis.

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Q: Halsey Company sells women’s clothing. Halsey’s strategy is to offer a

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. Halse...

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Q: The Smacker Company is a family-owned business that produces fruit

The Smacker Company is a family-owned business that produces fruit jam. The company has a grinding machine that has been in use for three years. On January 1, 2011, Smacker is considering the purchase...

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Q: Jack Garrett, a manager of the plate division for the Marble

Jack Garrett, a manager of the plate division for the Marble Top Manufacturing company, has the opportunity to expand the division by investing in additional machinery costing $420,000. He would depre...

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Q: Ludmilla Quagg owns a fitness center and is thinking of replacing the

Ludmilla Quagg owns a fitness center and is thinking of replacing the old Fit-O-Matic machine with a brand new Flab-Buster 3000. The old Fit-O-Matic has a historical cost of $50,000 and accumulated de...

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Q: Unbreakable Manufacturing manufactures over 20,000 different products made from metal

Unbreakable Manufacturing manufactures over 20,000 different products made from metal, including building materials, tools, and furniture parts. The manager of the furniture parts division has propose...

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Q: Best-Cost Foods is considering replacing all 10 of its old

Best-Cost Foods is considering replacing all 10 of its old cash registers with new ones. The old registers are fully depreciated and have no disposal value. The new registers cost $749,700 (in total)....

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Q: Sally wants to purchase a Burgers-N-Fries franchise.

Sally wants to purchase a Burgers-N-Fries franchise. She can buy one for $500,000. Burgers-N-Fries headquarters provides the following information: Sally will also have to pay Burgers-N-Fries a fran...

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Q: Europa, Inc., has two divisions, A and B,

Europa, Inc., has two divisions, A and B, that manufacture expensive bicycles. Division A produces the bicycle frame, and division B assembles the rest of the bicycle onto the frame. There is a market...

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Q: Refer to Problem 22-28. Required:

Refer to Problem 22-28. Required: 1. Suppose the manager of division A has the option of (a) cutting the external price to $195, with the certainty that sales will rise to 1,000 units or (b) maintain...

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Q: Crango Products is a cranberry cooperative that operates two divisions, a

Crango Products is a cranberry cooperative that operates two divisions, a harvesting division and a processing division. Currently, all of harvesting’s output is converted into cranb...

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Q: Assume that Pat Borges, CEO of Crango, had mandated a

Assume that Pat Borges, CEO of Crango, had mandated a transfer price equal to 200% of full cost. Now he decides to decentralize some management decisions and sends around a memo that states the follow...

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Q: Cam Cody schedules book signings for science fiction authors and creates e

Cam Cody schedules book signings for science fiction authors and creates e-books and books on CD to sell at each signing. Cody uses a normal-costing system with two direct cost pools, labor and materi...

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Q: Industrial Diamonds, Inc., based in Los Angeles, has two

Industrial Diamonds, Inc., based in Los Angeles, has two divisions: South African mining division, which mines a rich diamond vein in South Africa U.S. processing division, which polishes raw diamonds...

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Q: Argone division of Gemini Corporation is located in the United States.

Argone division of Gemini Corporation is located in the United States. Its effective income tax rate is 30%. Another division of Gemini, Calcia, is located in Canada, where the income tax rate is 42%....

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Q: The Bosh Corporation makes and sells 20,000 multisystem music players

The Bosh Corporation makes and sells 20,000 multisystem music players each year. Its assembly division purchases components from other divisions of Bosh or from external suppliers and assembles the mu...

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Q: Jeremiah Industries manufactures high-grade aluminum luggage made from recycled metal

Jeremiah Industries manufactures high-grade aluminum luggage made from recycled metal. The company operates two divisions: metal recycling and luggage fabrication. Each division operates as a decentra...

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Q: Doorchime Company makes doorbells. It has a weighted average cost of

Doorchime Company makes doorbells. It has a weighted average cost of capital of 9%, and total assets of $5,550,000. Doorchime has current liabilities of $800,000. Its operating income for the year was...

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Q: Nature’s Elixir Corporation operates three divisions that process and bottle natural fruit

Nature’s Elixir Corporation operates three divisions that process and bottle natural fruit juices. The historical-cost accounting system reports the following information for 2011:...

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Q: P. F. Skidaddle’s operates casual dining restaurants in three regions

P. F. Skidaddle’s operates casual dining restaurants in three regions: Denver, Seattle, and Sacramento. Each geographic market is considered a separate division. The Denver division...

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Q: Konekopf Corporation has a division in the United States, and another

Konekopf Corporation has a division in the United States, and another in France. The investment in the French assets was made when the exchange rate was $1.30 per euro. The average exchange rate for t...

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Q: Zynga Multinational, Inc., has divisions in the United States,

Zynga Multinational, Inc., has divisions in the United States, Germany, and New Zealand. The U.S. division is the oldest and most established of the three, and has a cost of capital of 8%. The German...

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Q: Global Event Group has two major divisions: print and Internet.

Global Event Group has two major divisions: print and Internet. Summary financial data (in millions) for 2011 and 2012 are as follows: The two division managers’ annual bonuses are...

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Q: An auditor for the Internal Revenue Service is trying to reconstruct some

An auditor for the Internal Revenue Service is trying to reconstruct some partially destroyed records of two taxpayers. For each of the cases in the accompanying list, find the unknowns designated by...

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Q: Chris Moreno seeks your advice on revising the existing bonus plan for

Chris Moreno seeks your advice on revising the existing bonus plan for division managers of Global Event Group. Assume division managers do not like bearing risk. Moreno is considering three ideas: Ma...

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Q: Community Bank recently introduced a new bonus plan for its business unit

Community Bank recently introduced a new bonus plan for its business unit executives. The company believes that current profitability and customer satisfaction levels are equally important to the bank...

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Q: Hamilton Semiconductors manufactures specialized chips that sell for $25 each.

Hamilton Semiconductors manufactures specialized chips that sell for $25 each. Hamilton’s manufacturing costs consist of variable cost of $3 per chip and fixed costs of $8,000,000. Hamilton also incur...

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Q: Monroe Moulding is a large manufacturer of wood picture frame moulding.

Monroe Moulding is a large manufacturer of wood picture frame moulding. The company operates distribution centers in Dallas and Philadelphia. The distribution centers cut frames to size (called “chops...

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Q: WebNews.com offers its subscribers several services, such as an

WebNews.com offers its subscribers several services, such as an annotated TV guide and local-area information on weather, restaurants, and movie theaters. Its main revenue sources are fees for banner...

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Q: A series of independent situations in which a firm is about to

A series of independent situations in which a firm is about to make a strategic decision follow. Decisions: a. Roger Phones is about to decide whether to launch production and sale of a cell phone wit...

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Q: Burst, Inc., cans peaches for sale to food distributors.

Burst, Inc., cans peaches for sale to food distributors. All costs are classified as either manufacturing or marketing. Burst prepares monthly budgets. The March 2012 budgeted absorption-costing incom...

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Q: George Perez is the controller at Allied Electronics, a manufacturer of

George Perez is the controller at Allied Electronics, a manufacturer of devices for the computer industry. He is being considered for a promotion to chief financial officer. Required: 1. In this tabl...

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Q: Eric Johnson was recently promoted to Controller of Research and Development (

Eric Johnson was recently promoted to Controller of Research and Development (R&D) for Pharma Cor, a Fortune 500 pharmaceutical company, which manufactures prescription drugs and nutritional supplemen...

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Q: How can the sales-volume variance be decomposed further to obtain

How can the sales-volume variance be decomposed further to obtain useful information?

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Q: The University of Chicago Press is wholly owned by the university.

The University of Chicago Press is wholly owned by the university. It performs the bulk of its work for other university departments, which pay as though the press were an outside business enterprise....

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Q: How can the sales-quantity variance be decomposed further?

How can the sales-quantity variance be decomposed further?

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Q: Explain how the direct materials mix and yield variances provide additional information

Explain how the direct materials mix and yield variances provide additional information about the direct materials efficiency variance.

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Q: How can the extent of price discounting be tracked on a customer

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

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Q: ABC systems only apply to manufacturing companies.” Do you agree?

ABC systems only apply to manufacturing companies.” Do you agree? Explain

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Q: Name the four areas in which standards of ethical conduct exist for

Name the four areas in which standards of ethical conduct exist for management accountants in the United States. What organization sets forth these standards?

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Q: Match each of the following items with one or more of the

Match each of the following items with one or more of the denominator-level capacity concepts by putting the appropriate letter(s) by each item: a. Theoretical capacity b. Practical capacity c. Normal...

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Q: How does management accounting differ from financial accounting?

How does management accounting differ from financial accounting?

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Q: Management accounting should not fit the straitjacket of financial accounting.” Explain

Management accounting should not fit the straitjacket of financial accounting.” Explain and give an example.

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Q: Define cost pool, cost tracing, cost allocation, and cost

Define cost pool, cost tracing, cost allocation, and cost-allocation base.

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Q: What is broad averaging and what consequences can it have on costs

What is broad averaging and what consequences can it have on costs?

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Q: Donnell Transport assembles prestige manufactured homes. Its job costing system has

Donnell Transport assembles prestige manufactured homes. Its job costing system has two direct-cost categories (direct materials and direct manufacturing labor) and one indirect-cost pool (manufacturi...

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Q: Rafael Company produces pipes for concert quality organs. Each job is

Rafael Company produces pipes for concert quality organs. Each job is unique. In April 2011, it completed all outstanding orders, and then, in May 2011, it worked on only two jobs, M1 and M2: Direct...

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Q: Job costing; actual, normal, and variation from normal costing

Job costing; actual, normal, and variation from normal costing. Chico & Partners, a Quebec-based public accounting partnership, specializes in audit services. Its job-costing system has a single d...

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Q: Braden Brothers, Inc., is an architecture firm specializing in high

Braden Brothers, Inc., is an architecture firm specializing in high-rise buildings. Its job-costing system has a single direct-cost category (architectural labor) and a single indirect-cost pool, whic...

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Q: The Ride-On-Wave Company (ROW) produces a

The Ride-On-Wave Company (ROW) produces a line of non-motorized boats. ROW uses a normal-costing system and allocates manufacturing overhead using direct manufacturing labor cost. The following data a...

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Q: Hamilton, Inc., manufactures boom boxes (music systems with radio

Hamilton, Inc., manufactures boom boxes (music systems with radio, cassette, and compact disc players) for several well-known companies. The boom boxes differ significantly in their complexity and the...

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Q: Describe two ways in which a house construction company may use job

Describe two ways in which a house construction company may use job-cost information.

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Q: The Walliston Group (WG) provides tax advice to multinational firms

The Walliston Group (WG) provides tax advice to multinational firms. WG charges clients for (a) direct professional time (at an hourly rate) and (b) support services (at 30% of the direct professional...

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Q: Automotive Products (AP) designs and produces automotive parts. In

Automotive Products (AP) designs and produces automotive parts. In 2011, actual variable manufacturing overhead is $308,600. AP’s simple costing system allocates variable manufacturi...

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Q: Tarquin’s Trophies makes trophies and plaques and operates at capacity. Tarquin

Tarquin’s Trophies makes trophies and plaques and operates at capacity. Tarquin does large custom orders, such as the participant trophies for the Mishawaka Little League. The contro...

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Q: Parker Company produces mathematical and financial calculators and operates at capacity.

Parker Company produces mathematical and financial calculators and operates at capacity. Data related to the two products are presented here: Total manufacturing overhead costs are as follows: Req...

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Q: Quikprint Corporation owns a small printing press that prints leaflets, brochures

Quikprint Corporation owns a small printing press that prints leaflets, brochures, and advertising materials. Quikprint classifies its various printing jobs as standard jobs or special jobs. Quikprint...

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Q: Open Doors, Inc., produces two types of doors, interior

Open Doors, Inc., produces two types of doors, interior and exterior. The company’s simple costing system has two direct cost categories (materials and labor) and one indirect cost p...

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Q: Family Supermarkets (FS) operates at capacity and decides to apply

Family Supermarkets (FS) operates at capacity and decides to apply ABC analysis to three product lines: baked goods, milk and fruit juice, and frozen foods. It identifies four activities and their act...

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Q: Ramirez Wholesalers operates at capacity and sells furniture items to four department

Ramirez Wholesalers operates at capacity and sells furniture items to four department-store chains (customers). Mr. Ramirez commented, “We apply ABC to determine product-line profita...

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Q: Idaho Potatoes (IP) operates at capacity and processes potatoes into

Idaho Potatoes (IP) operates at capacity and processes potatoes into potato cuts at its highly automated Pocatello plant. It sells potatoes to the retail consumer market and to the institutional marke...

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Q: The job costing system at Smith’s Custom Framing has five indirect cost

The job costing system at Smith’s Custom Framing has five indirect cost pools (purchasing, material handling, machine maintenance, product inspection, and packaging). The company is...

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Q: A given cost may be allocated for one or more purposes.

A given cost may be allocated for one or more purposes. List four purposes.

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Q: National Savings Bank (NSB) is examining the profitability of its

National Savings Bank (NSB) is examining the profitability of its Premier Account, a combined savings and checking account. Depositors receive a 7% annual interest rate on their average deposit. NSB e...

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Q: In 2011, Rouse & Sons, a small environmental-testing

In 2011, Rouse & Sons, a small environmental-testing firm, performed 12,200 radon tests for $290 each and 16,400 lead tests for $240 each. Because newer homes are being built with lead-free pipes, lea...

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Q: The Mendez Company expects sales in 2012 of 200,000 units

The Mendez Company expects sales in 2012 of 200,000 units of serving trays. Mendez’s beginning inventory for 2012 is 15,000 trays and its target ending inventory is 25,000trays. Compute the number of...

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Q: Inglenook Co. produces wine. The company expects to produce 2

Inglenook Co. produces wine. The company expects to produce 2,500,000two-liter bottles of Chablis in 2012. Inglenook purchases empty glass bottles from an outside vendor. Its target ending inventory o...

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Q: The Mahoney Company has prepared a sales budget of 45,000

The Mahoney Company has prepared a sales budget of 45,000 finished units for a three-month period. The company has an inventory of 16,000 units of finished goods on hand at December 31 and has a targe...

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Q: Purity, Inc., bottles and distributes mineral water from the company’s

Purity, Inc., bottles and distributes mineral water from the company’s natural springs in northern Oregon. Purity markets two products: twelve-ounce disposable plastic bottles and four-gallon reusable...

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Q: Xerxes Manufacturing Company manufactures blue rugs, using wool and dye as

Xerxes Manufacturing Company manufactures blue rugs, using wool and dye as direct materials. One rug is budgeted to use 36skeins of wool at a cost of $2 per skein and 0.8 gallons of dye at a cost of $...

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Q: The Suzuki Co. in Japan has a division that manufactures two

The Suzuki Co. in Japan has a division that manufactures two-wheel motorcycles. Its budgeted sales for Model G in 2013 is 900,000 units. Suzuki’s target ending inventory is 80,000 units, and its begin...

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Q: Roletter Company makes and sells artistic frames for pictures of weddings,

Roletter Company makes and sells artistic frames for pictures of weddings, graduations, and other special events. Bob Anderson, the controller, is responsible for preparing Roletter’...

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Q: The Chelsea store of Family Supermarket (FS), a chain of

The Chelsea store of Family Supermarket (FS), a chain of small neighborhood grocery stores, is preparing its activity-based budget for January 2011. FS has three product categories: soft drinks, fresh...

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Q: As a new controller ,reply to this comment by a plant

As a new controller ,reply to this comment by a plant manager: “As I see it, our accountants may be needed to keep records for shareholders and Uncle Sam, but I don’t want them sticking their noses in...

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Q: Family Supermarkets (FS) has a kaizen (continuous improvement)

Family Supermarkets (FS) has a kaizen (continuous improvement) approach to budgeting monthly activity costs for each month of 2011. Each successive month, the budgeted cost-driver rate decreases by 0....

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Q: Consider each of the following independent situations for Anderson Forklifts. Anderson

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JR Co. Ltd’s budgeted overheads for the forthcoming period applicable to its production departments, are as follows: (£000) 1 ……...

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One of the production departments in A Ltd’s factory employs 52 direct operatives and nine indirect operatives. Basic hourly rates of pay are £14.40 and £11...

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Just-in-Time (JIT) manufacturing and inventory systems have been operated by many companies to reduce manufacturing time, reduce waste and ultimately increase profitability. The JIT concept is based o...

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Almost all beer contains four basic ingredients – a grain (typically barley), water, hops and yeast. While the process of brewing can be complex and some ingredients varied, the basic process is quite...

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A manufacturing company has prepared the following budgeted information for the forthcoming year: £ Direct material ………………………………………………………………………… 800 000 Direct labour …………………………………………………………………………… 20...

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A company produces several products which pass through the two production departments in its factory. These two departments are concerned with filling and sealing operations. There are two service dep...

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A large firm of solicitors uses a job costing system to identify costs with individual clients. Hours worked by professional staff are used as the basis for charging overhead costs to client services....

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On 30 October the following were among the balances in the cost ledger of a company manufacturing a single product (Product X) in a single process operation: The raw material ledger comprised the fo...

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Bushmills Irish Whiskey, a world-renowned brand of Diageo plc, is distilled in County Antrim in Northern Ireland. The Old Bushmills distillery has been in operation since 1608 and currently markets fi...

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Milo plc has a number of chemical processing plants in the UK. At one of these plants, it takes an annual input of 400 000 gallons of raw material A and converts it into two liquid products, B and C....

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On 1 October Bland Ltd opened a plant for making verniers. Data for the first two months’ operations are shown below: At 31 October the units in closing work in progress were 100 p...

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AB plc makes two products, Alpha and Beta. The company made a £500 000 profit last year and proposes an identical plan for the coming year. The relevant data for last year are summarized...

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Until recently, Xu Ji Electric Co Ltd was a typical state-owned Chinese enterprise manufacturing electrical product such as relays. From an accounting point of view, this implied a manual book-keeping...

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Raab, Shoemaker and Mayer (2007) developed a workable ABC model for a restaurant operation in the USA that enabled previously undistributed indirect operating expenses to be traced to individual menu...

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According to Gillian Lees, a blogger on www.cimaglobal .com, the typical risk assessment model for a management accountant reads like this: identify risks, assess their impact and probability, and dev...

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Revisions to China’s budget law, passed on 31 August 2014, represent a significant reform, providing a framework for significantly greater transparency and accountability for local government says Fit...

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Big data is a term that describes the large volume of raw data, both structured and unstructured, that inundates a business on a daily basis. It includes information such as email messages, social med...

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Although the apex of ZBB’s popularity in the late 1970s is long past, there has been renewed interest in ZBB in today’s environment of fiscal constraint, says Shayne Kavanagh in an article published i...

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Consider the Business Application “Components of Cost of Goods Sold for a Retailer.” During the COVID-19 pandemic, Target continued operations at its retail stores, after taking steps to ensure the he...

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Q: The accountant at Roland Industries provides you with the following information for

The accountant at Roland Industries provides you with the following information for the first quarter: Required Compute for the first quarter: a. Total prime costs. b. Total conversion costs. c. Total...

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Q: The controller at Bethune Chemicals asks for your help in sorting out

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Q: Loretto Audio produced and sold 750 units of the company’s signature (

Loretto Audio produced and sold 750 units of the company’s signature (and only) product in November. You have collected the following information from the accounting records: Require...

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Q: Sawyer’s Lubricants produces a specialty oil for machine lubrication. The production

Sawyer’s Lubricants produces a specialty oil for machine lubrication. The production facility can operate one shift, two shifts, or three shifts. The shift decision is made on a week...

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Q: Refer to the information and data in Problem 3-65 (

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Q: Ford Legal Services (FLS) is considering adding a new line

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Q: The Norfolk School of Commerce (NSC) operates a Career Counseling

The Norfolk School of Commerce (NSC) operates a Career Counseling Center (CCC) to advise students and help with job placement. The CCC is available for both undergraduate and graduate degree students....

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Q: Davis Devices makes an electronic bathroom scale that can connect to a

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Q: Many companies, especially in the travel industry (airlines, hotels

Many companies, especially in the travel industry (airlines, hotels, and so on), have socalled loyalty programs offering members benefits that depend on the frequency of purchases, miles traveled, or...

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Q: Refer to the information in Problem 2-71. Consider the

Refer to the information in Problem 2-71. Consider the Business Application “Indirect Costs and Allocating Costs to Contracts.” Required a. How should Woodrow Econo...

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Q: Salvay Company is a small manufacturer that produces and sells one product

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Q: Refer to the information in Problem 2-73. Stacey Choo

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Q: Cheyenne Contractors makes fixtures for aircraft fueling and hydraulic systems. As

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Q: Maxwell Professional Coaching (MPC) offers three coaching services for individuals

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Q: Alpine Township contracts with Dragoon Environmental Services (DES) to provide

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Q: Melville Manufacturing produces metal components for automotive suppliers. Financial records for

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Q: Consider the Business Application “Break-Even Analysis Used by Big

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Q: Why is a value income statement useful to managers?

Why is a value income statement useful to managers?

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Q: The friend in question 2-19 decides that she does not

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Q: Value Chain and Classification of Costs Tesla, Inc., incurs

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Q: Ferdinand Construction (FC) manages the design and construction of hospitals

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Q: For each of the following costs incurred in a manufacturing firm,

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Q: The following balances (in thousands of dollars) are from the

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Q: Refer to the data for Grove Audio in Exercise 3-31

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Q: Refer to the data for Rochester Street Taco Shop in Exercise 3

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Q: Refer to Exercise 2-54. Required Compute:

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Q: Refer to Exercise 2-56. Required Prepare:

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Q: Refer to the information in Exercise 5-36 for Fiske Corporation

Refer to the information in Exercise 5-36 for Fiske Corporation. Required Prepare a scattergraph based on the factory cost and machine-hour data in Exercise 5-36. Exercise 5-36:

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Q: Results from a regression of factory costs on labor-hours using

Results from a regression of factory costs on labor-hours using the data of Fiske Corporation (Exercise 5-36) are as follows: Required Managers expect the plant to operate at 16,000 labor-hours next q...

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Q: Results from a regression of factory costs on machine-hours using

Results from a regression of factory costs on machine-hours using the data of Fiske Corporation (Exercise 5-36) are as follows: Required Managers expect the plant to operate at 21,000 machine-hours ne...

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Q: Results from a multiple regression of factory costs on labor-hours

Results from a multiple regression of factory costs on labor-hours and machine-hours using the data of Fiske Corporation (Exercise 5-36) are as follows: Required Managers expect the plant to operate a...

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Q: Refer to the information in Exercise 5-44. Required

Refer to the information in Exercise 5-44. Required Prepare a scattergraph based on the store cost and revenue data for Waveney DIY Centers in Exercise 5-44. Exercise 5-44:

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Q: Refer to the information in Exercise 5-44. Required

Refer to the information in Exercise 5-44. Required Prepare a scattergraph based on the store cost and store area data for Waveney DIY Centers in Exercise 5-44. Exercise 5-44:

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Q: Results from a regression of store costs on revenues using the data

Results from a regression of store costs on revenues using the data of Waveney DIY Centers (Exercise 5-44) are as follows. Required The managers in the region are interested in opening a new store wit...

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Q: The following information is available for Alcoy Partners for the year just

The following information is available for Alcoy Partners for the year just ended: Required Select the answer for each of the following costs. a. Variable cost per unit. 1. $12 2. $18 3. $21 4. $25 b....

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Q: Results from a regression of store costs on store area using the

Results from a regression of store costs on store area using the data of Waveney DIY Centers (Exercise 5-44) are as follows: Required The managers in the region are interested in opening a new store w...

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Q: Results from a multiple regression of store costs on revenues and area

Results from a multiple regression of store costs on revenues and area using the data of Waveney DIY Centers (Exercise 5-44) are as follows: Required The managers in the region are interested in openi...

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Q: Assume that the following events occurred at Lakewood, Inc. last

Assume that the following events occurred at Lakewood, Inc. last month. 1. Incurred direct labor costs of $300,000. 2. Completed work on 70 percent of the work in process. Costs are assigned equally a...

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Q: Fill in the missing items for the following inventories: /

Fill in the missing items for the following inventories:

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Q: Fill in the missing items for the following inventories: /

Fill in the missing items for the following inventories:

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Q: Lenox Solvents manufactures a special fluid at its Hazelridge plant. Operating

Lenox Solvents manufactures a special fluid at its Hazelridge plant. Operating data for June follow. The Hazelridge plant produced 1,050,000 liters in June. The plant never has any beginning or ending...

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Q: Seville Chemicals produces a fuel additive. Operating data for January follow

Seville Chemicals produces a fuel additive. Operating data for January follow. Seville Chemicals produced 25,125 barrels of the additive in January. Required Compute the cost per barrel of the additiv...

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Q: In May, Seville Chemicals produced 26,000 barrels of the

In May, Seville Chemicals produced 26,000 barrels of the additive. Labor costs were $16,800 and manufacturing overhead was $313,000. The cost per barrel was $15.80. Required What was the materials cos...

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Q: In October, Seville Chemicals produced 22,500 barrels of the

In October, Seville Chemicals produced 22,500 barrels of the additive. Manufacturing overhead was $285,000 and the cost per barrel was $16.30. Materials costs were four times greater than labor costs....

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Q: Bostwick Chemicals started business on April 1. The following operations data

Bostwick Chemicals started business on April 1. The following operations data are available for April for the one solvent it produces. Costs incurred in April follow. There are never any finished good...

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Q: For each of the following statements, indicate whether it is true

For each of the following statements, indicate whether it is true, false, or uncertain. Explain why. Give examples in your answer. a. A cost is something used up to produce revenues in a particular ac...

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Q: Duffield Lubricants produces oil-based machine lubricants. On December 1

Duffield Lubricants produces oil-based machine lubricants. On December 1, it had no work-inprocess inventory. It starts production of 86,000 gallons of lubricant in December and completes 72,000 gallo...

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Q: Bremen Fitness Products produces a sports drink. On October 1,

Bremen Fitness Products produces a sports drink. On October 1, it had no work-in-process inventory. It started production of 9,000 cases of the drink in October and shipped 7,800 cases to retailers. (...

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Q: Gullen Partners produces cleaning solvents. On September 1, it had

Gullen Partners produces cleaning solvents. On September 1, it had no work-in-process inventory. It started production of 56,000 gallons of solvent in September and completed production of 47,000 gall...

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Q: Redfern Audio produces audio equipment including headphones. At the Campus Facility

Redfern Audio produces audio equipment including headphones. At the Campus Facility, it produces two wireless models, Standard and Enhanced, which differ both in the materials and components used and...

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Q: Refer to the data in Exercise 6-38. Required

Refer to the data in Exercise 6-38. Required Compute the predetermined overhead rate assuming that Redfern Audio uses direct labor costs to allocate overhead costs. Exercise 6-38:

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Q: Refer to the data in Exercise 6-38. Required

Refer to the data in Exercise 6-38. Required Compute the predetermined overhead rate assuming that Redfern Audio uses the number of units to allocate overhead costs. Exercise 6-38:

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Q: Refer to the data in Exercise 6-38. Required

Refer to the data in Exercise 6-38. Required Compute the predetermined overhead rate assuming that Redfern Audio uses direct material costs to allocate overhead costs. Exercise 6-38:

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Q: Refer to the data in Exercise 6-38. Required

Refer to the data in Exercise 6-38. Required Compute the predetermined overhead rate assuming that Redfern Audio uses machine-hours to allocate overhead costs. Exercise 6-38:

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Q: Refer to the data in Exercise 6-38. Required

Refer to the data in Exercise 6-38. Required Draw the cost flow diagram assuming that Redfern Audio uses machine-hours to allocate overhead costs. Exercise 6-38:

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Q: Kilbourne Appliances produces two models of beverage coolers for homes and offices

Kilbourne Appliances produces two models of beverage coolers for homes and offices, the KA-15 and the KA-24. Data on operations and costs for March follow. Required a. Compute the predetermined overhe...

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Q: What are predatory pricing, dumping, and price discrimination? What

What are predatory pricing, dumping, and price discrimination? What role would a cost accountant play in determining whether dumping or price discrimination has occurred?

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Q: Gregorie Tool & Die reports the following information for the quarter:

Gregorie Tool & Die reports the following information for the quarter: Required Select the answer for each of the following costs. a. Variable cost per unit. 1. $30 2. $35 3. $42 4. $45 b. Variabl...

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Q: Refer to the data in Exercise 6-44. Required

Refer to the data in Exercise 6-44. Required a. Compute the predetermined overhead rate assuming that Kilbourne Appliances uses direct labor costs to allocate overhead costs. b. Draw the cost flow dia...

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Q: Harmon Recycling Services (HRS), a not-for-profit

Harmon Recycling Services (HRS), a not-for-profit organization, has two drop-off centers, Westside and Eastside. Data for the expected operation in the next quarter follow. Required a. Compute the pre...

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Q: Refer to the data in Exercise 6-46. Required

Refer to the data in Exercise 6-46. Required a. Compute the predetermined overhead rate used to apply general operating costs to the two centers assuming HRS uses revenue to allocate general operating...

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Q: Refer to the data in Exercise 6-46. Required

Refer to the data in Exercise 6-46. Required a. Compute the predetermined overhead rate used to apply general operating costs to the two centers assuming HRS uses the staff hours to allocate general o...

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Q: Refer to the data in Exercise 6-46. Required

Refer to the data in Exercise 6-46. Required a. Compute the predetermined overhead rate used to apply general operating costs to the two centers assuming HRS uses the staff cost to allocate general op...

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Q: Refer to the data in Exercise 6-50 Required

Refer to the data in Exercise 6-50 Required Draw the cost flow diagram that represents the cost system used by Tacoma Accessories. Exercise 6-50:

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Q: Refer to the data in Exercise 6-52. Required

Refer to the data in Exercise 6-52. Required Draw the cost flow diagram that represents the cost system used by Westover Travel. Exercise 6-52:

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Q: Consider the cost allocation system used at Tacoma Accessories and Westover Travel

Consider the cost allocation system used at Tacoma Accessories and Westover Travel in Exercises 6-50 through 6-54. Required The system is referred to as a two-stage cost allocation system because a. C...

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Q: Witt Recreation Company (WRC) makes e-bikes. The

Witt Recreation Company (WRC) makes e-bikes. The company currently manufactures two models, the Coaster and the Traveler, in one of the WRC factories. Both models require the same assembling operation...

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Q: Refer to the data in Exercise 6-55. Required

Refer to the data in Exercise 6-55. Required Witt Recreation Company uses operations costing and assigns conversion costs based on the the direct materials costs. Compute the cost of each model assemb...

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Q: Refer to the opening vignette of Adam Mercer and The AM Bakery

Refer to the opening vignette of Adam Mercer and The AM Bakery. Adam has hired you to help him make the decisions he needs to make. Required Answer the four questions in the critical thinking framewor...

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Q: Piper Recreational Vehicles (PRV) modifies vans into recreational vehicles.

Piper Recreational Vehicles (PRV) modifies vans into recreational vehicles. PRV offers two models, the XC-2 and XC-6, which differ in the quality of the basic van and the workmanship and machining det...

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Q: Refer to the data in Exercise 6-57. Required

Refer to the data in Exercise 6-57. Required Piper Recreational Vehicles uses operations costing and assigns conversion costs based on materials cost. Compute the expected cost of each model assembled...

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Q: Spring Garden Vegetables (SGV) processes two brands of frozen vegetables

Spring Garden Vegetables (SGV) processes two brands of frozen vegetables, Valu-PAK and Gourmet. The two brands are processed in one factory using the same production process. The only difference betwe...

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Q: Refer to the data in Exercise 6-59. Required

Refer to the data in Exercise 6-59. Required Spring Garden Vegetables uses operations costing and assigns conversion costs based on materials cost. Compute the cost per unit of each brand of frozen ve...

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Q: Cranbrook Used Books experienced the following events during the current year:

Cranbrook Used Books experienced the following events during the current year: 1. Incurred $12,000 in selling costs. 2. Took an inventory at year-end and learned that goods costing $55,000 were on han...

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Q: Whitcomb Foods is a small company in Oregon that packages and sells

Whitcomb Foods is a small company in Oregon that packages and sells organic juices. Recently, a sales rep from one of the company’s suppliers suggested that Whitcomb could increase i...

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Q: Clifton Instruments is a small components maker located in Kansas. The

Clifton Instruments is a small components maker located in Kansas. The company specializes in aircraft instruments and focuses its production around a single family of products. Recently, one of the n...

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Q: Refer to the information in Problem 4-55 requirement (c

Refer to the information in Problem 4-55 requirement (c) for Spinnaker Museum of Sailing. The museum director continues to be a bit uncertain about the attendance for the upcoming fiscal year and woul...

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Q: Refer to the information in Problem 4-57 requirement (c

Refer to the information in Problem 4-57 requirement (c) for Platt Instruments. The CMO would like a visual representation of the analysis done to arrive at the decision whether to staff internally or...

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Q: East Ferry Tool & Die, a manufacturer of parts for agricultural

East Ferry Tool & Die, a manufacturer of parts for agricultural equipment, provides the following financial information for the most recent fiscal year (all costs are in thousands of dollars): Req...

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Q: Refer to Exhibit 1.10 (Panel A), which is

Refer to Exhibit 1.10 (Panel A), which is a heat map based on the profitability of the six districts for The AM Bakery. A new intern tells you that a better heat map is the one shown here, â ...

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Q: Mount Elliott Fixtures produces a variety of hardware products, primarily for

Mount Elliott Fixtures produces a variety of hardware products, primarily for the home construction and remodeling business. The cost accountant provides you with the following data for the year (in $...

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Q: Alwar Brothers is a small, family-owned business that produces

Alwar Brothers is a small, family-owned business that produces animal feed for dairy farms. The administrative offices and manufacturing plant of Alwar share the same building. Financial records provi...

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Q: Merton Electronics operates two retail outlets in Port Wren, one downtown

Merton Electronics operates two retail outlets in Port Wren, one downtown and the other in Docklands. The stores share the use of a corporate staff responsible for functions such as personnel, IT, mar...

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Q: Algonac Moldings produces a product made from a metal alloy. Two

Algonac Moldings produces a product made from a metal alloy. Two suppliers, Liebold Metal and Cecil Distributors, supply the alloy. Neither supplier can meet Algonac’s typical demand...

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Q: Roxford Plastics manufactures and sells model airplane kits for hobbyists for a

Roxford Plastics manufactures and sells model airplane kits for hobbyists for a price of $14. The fixed costs amount to $170,000 per year, of which $105,000 is manufacturing related. At an annual sale...

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Q: Woodrow Economic Advisors (WEA) is a for-profit consulting

Woodrow Economic Advisors (WEA) is a for-profit consulting firm that offers economic analyses and policy recommendations. WEA is organized into two divisions: the Commercial Division and the Defense D...

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Q: Dobel Devices manufactures an electronic lock used in dockless bicycles and scooters

Dobel Devices manufactures an electronic lock used in dockless bicycles and scooters. The product’s price and cost characteristics are as follows: Required The company must sell 23,0...

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Q: Gates Manufacturing reports based on an October 31 fiscal year. As

Gates Manufacturing reports based on an October 31 fiscal year. As a part of your interview for a cost analyst position, the interviewer provides you with the information on the following page. Requir...

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Q: Paul & Paul, Inc. is a manufacturing firm. The

Paul & Paul, Inc. is a manufacturing firm. The following selected pieces of information are from July operations:

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Q: What is the function in Microsoft Excel that you can use for

What is the function in Microsoft Excel that you can use for CVP analysis?

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Q: A local coffee shop has two major product lines—drinks and

A local coffee shop has two major product lines—drinks and pastries. If the manager allocates common costs on any objective basis discussed in this chapter, the drinks are profitable, but the pastries...

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Q: Write out the equation for the target volume (in units)

Write out the equation for the target volume (in units) profit equation when the income tax rate is t.

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Q: What are three practical implementation problems when using regression analysis to estimate

What are three practical implementation problems when using regression analysis to estimate costs?

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Q: Explain why it is important to consider the concepts of value and

Explain why it is important to consider the concepts of value and value creation in a textbook about cost accounting.

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Q: Why is cost estimation important for managerial decision making?

Why is cost estimation important for managerial decision making?

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Q: Refer to the information in Exercise 1-33. The cost

Refer to the information in Exercise 1-33. The cost analyst working in the CFO’s office at the City Art Museum learns that the space to be rented for the Weekend Lecture Series is owned by a company i...

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Q: In one of its divisions, an aircraft components manufacturer produces experimental

In one of its divisions, an aircraft components manufacturer produces experimental navigational equipment for spacecraft and for private transportation companies. Although the products are essentially...

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Q: Braile Gear Works sells a single gear for a price of $

Braile Gear Works sells a single gear for a price of $55 per unit. The variable costs are $23 per gear and annual fixed costs are $448,000. Required a. What is the break-even level of annual sales for...

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Q: Annchester Car Service offers limousine service to the local airport. The

Annchester Car Service offers limousine service to the local airport. The cost of a trip (one-way) is $95 and the variable costs of a trip are $42, which covers fuel, variable car maintenance, labor,...

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Q: Waterman’s WaterWorld Tourist Park has collected the following data for operations for

Waterman’s WaterWorld Tourist Park has collected the following data for operations for the year: Required a. What is the average selling price for a ticket? b. What is the average va...

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Q: Sheffield Advisors offers financial counseling services to self-employed business owners

Sheffield Advisors offers financial counseling services to self-employed business owners. Sheffield’s operating profits average 22 percent of revenues and its marketing and administrative costs averag...

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Q: Explain how cost accounting supports value creation in the organization.

Explain how cost accounting supports value creation in the organization.

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Q: The following balances are from the accounts of Santa Maria Parts:

The following balances are from the accounts of Santa Maria Parts: Direct materials purchased during the quarter amount to $480,000, and the cost of goods sold for the quarter was $1,740,000. Required...

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Q: The following data refer to the month of May for Bonita Components

The following data refer to the month of May for Bonita Components. Fill in the blanks.

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Q: The following data refer to the most recent fiscal year for Sterritt

The following data refer to the most recent fiscal year for Sterritt Company. Amounts are in thousands of dollars. Required Find the following amounts. a. Direct materials used for the year. b. Gross...

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Q: The manager of Gratiot Flooring estimates operating costs for the year will

The manager of Gratiot Flooring estimates operating costs for the year will include $540,000 in fixed costs. Required a. Find the break-even point in sales dollars with a contribution margin ratio of...

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Q: Mark Ting desperately wants his proposed new product, DNA-diamond

Mark Ting desperately wants his proposed new product, DNA-diamond, to be accepted by top management. DNA-diamond is a piece of jewelry that contains the DNA of a partner, spouse, or other loved one. T...

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Q: Trumball Catering served 4,000 meals last month. Trumball recorded

Trumball Catering served 4,000 meals last month. Trumball recorded the following costs with those meals: Required Unit variable costs and total fixed costs are expected to remain unchanged next month....

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Q: Otsego Industries manufactured 300,000 units of product last year and

Otsego Industries manufactured 300,000 units of product last year and identified the following costs associated with the manufacturing activity: Required Unit variable costs and total fixed costs are...

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Q: Refer to the original data (based on 4,000 meals

Refer to the original data (based on 4,000 meals catered) in Exercise 2-51. Trumball expects to serve 30 percent more meals in the next month. Unit variable costs are expected to remain unchanged. The...

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Q: Acacia Manufacturing has compiled the following information from the accounting system for

Acacia Manufacturing has compiled the following information from the accounting system for the one product it sells: Required Determine each of the following unit costs: a. Variable manufacturing cost...

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Q: Refer to the data for Grove Audio in Exercise 3-31

Refer to the data for Grove Audio in Exercise 3-31. Assume that the projected number of units sold for the year is 3,750. Consider requirements (b), (c), and (d) independently of each other. Required...

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Q: As the owner of a wholesale firm that only sells to retailers

As the owner of a wholesale firm that only sells to retailers, should you be interested in the efficiency of your customers (the retailers)? Why?

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Q: The controller at Wesson Company’s manufacturing plant has provided you with the

The controller at Wesson Company’s manufacturing plant has provided you with the following information for the first quarter’s operations: Required Determine each o...

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Q: Refer to the data for Charlevoix Cases in Exercise 3-33

Refer to the data for Charlevoix Cases in Exercise 3-33. Assume that the company plans to sell 75,000 units annually. Consider requirements (b), (c), and (d) independently of each other. Required a. W...

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Q: Stahelin Valves produces a single component, a valve. The valve

Stahelin Valves produces a single component, a valve. The valve sells for $23 per unit. Fixed costs are $1,585,000 annually. Production and sales of 405,000 units annually result in profit before taxe...

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Q: Tracey Packaged Snax reports the following information for November: /

Tracey Packaged Snax reports the following information for November: Required Prepare: a. A gross margin income statement. b. A contribution margin income statement.

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Q: Coastal Bistro has the following information for July, when several new

Coastal Bistro has the following information for July, when several new employees were added to the waitstaff: Required a. Using the traditional income statement format, prepare a value income stateme...

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Q: Baubee Meal Delivery Service (BMDS) provides restaurant to customer meal

Baubee Meal Delivery Service (BMDS) provides restaurant to customer meal deliveries for food establishments in a suburban neighborhood. The company provides you with the following information for the...

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Q: Bewick Company and Stout, Inc. both earn annual operating profits

Bewick Company and Stout, Inc. both earn annual operating profits of $40 million on revenues of $150 million. Bewick Company has an operating leverage of 2.4 and Stout, Inc. has an operating leverage...

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Q: Grandville Fittings earns a quarterly operating profit of $1,500

Grandville Fittings earns a quarterly operating profit of $1,500,000 and has an operating leverage of 1.8. Wheeler Works, Inc. earns a quarterly operating profit of $660,000 and has an operating lever...

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Q: Cruse Cleaning offers residential and small office cleaning services. An average

Cruse Cleaning offers residential and small office cleaning services. An average cleaning service has the following price and costs. Cruse Cleaning is subject to an income tax rate of 22 percent. a. H...

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Q: Preston Products produces a disinfecting liquid. The liquid is sold in

Preston Products produces a disinfecting liquid. The liquid is sold in one gallon containers and has the following price and cost characteristics. Preston Products is subject to an income tax rate of...

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Q: What do the terms target cost and target price mean? Explain

What do the terms target cost and target price mean? Explain how they are developed.

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Q: Gardendale Associates offers landscape consultations, where they provide design advice and

Gardendale Associates offers landscape consultations, where they provide design advice and plans to residential customers. A single consultation is priced at $750. The variable costs of a consultation...

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Q: Georgeland Cycles makes and sells two models of electric bicycles. The

Georgeland Cycles makes and sells two models of electric bicycles. The Commuter (a folding model) sells for $2,500 and the Tour-X (a fat-tire trail model) sells for $4,500. Unit variable costs for the...

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Q: Grixdale Tax Services prepares taxes for individuals. Grixdale offers a simplified

Grixdale Tax Services prepares taxes for individuals. Grixdale offers a simplified pricing model with two alternatives for taxpayers: Standard Deduction (Standard) or Itemized Deductions (Itemized). P...

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Q: Pierson Pet Products produces two models of dog beds: Basic and

Pierson Pet Products produces two models of dog beds: Basic and Custom. Price, cost, and expected sales volume data for the two models are as follows: Required The total fixed costs for the company ar...

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Q: Nardin Outfitters has the capacity to produce 12,000 of its

Nardin Outfitters has the capacity to produce 12,000 of its special arctic tents per year. The company is currently producing and selling 5,000 tents per year at a selling price of $900 per tent. The...

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Q: Parkview Fish Tacos sells tacos for $4.50 each.

Parkview Fish Tacos sells tacos for $4.50 each. The cost of each taco follows: One of Parkview’s regular customers asked the company to fill a special order of tacos at a selling pri...

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Q: Dwight Furniture makes desks specially designed for small spaces, such as

Dwight Furniture makes desks specially designed for small spaces, such as studio apartments and extended-stay hotels. Each desk sells for $110 (without chair). The cost of each desk follows: The local...

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Q: Alpena Corporation manufactures smartphone and tablet cases. The following is the

Alpena Corporation manufactures smartphone and tablet cases. The following is the cost of each unit. Decatur Devices has approached Alpena with an offer to buy 3,000 cases at a price of $17.50 each fo...

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Q: Schweizer Products produces smart thermostats for home heating, ventilation, and

Schweizer Products produces smart thermostats for home heating, ventilation, and air-conditioning (HVAC) systems and markets them to vendors who sell them under their own label. The cost of one of its...

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Q: Refer to the data for Rowe Tool and Die (RTD)

Refer to the data for Rowe Tool and Die (RTD) in Exercise 4-26. Suppose RTD’s capacity is limited to 50,000 units per quarter. Endicott will not accept any quantity other than the 10...

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Q: Why is it important to incorporate learning into cost estimates? Is

Why is it important to incorporate learning into cost estimates? Is learning only important in manufacturing?

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Q: Refer to the data for Nardin Outfitters in Exercise 4-27

Refer to the data for Nardin Outfitters in Exercise 4-27. Suppose Nardin’s capacity is limited to 5,300 per year. Chipman Outdoor Center will not accept any quantity other than the 5...

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Q: Mather, Inc. makes and sells enclosures for external hard drives

Mather, Inc. makes and sells enclosures for external hard drives. Mather management believes that a new model of enclosure made out of a hard plastic would sell well at a price of $17.00. Labor costs...

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Q: Short Bakers makes baked goods for catered events and for sale at

Short Bakers makes baked goods for catered events and for sale at local grocery stores. The owner of Short Bakers believes that a new type of breakfast pastry would sell well for a price of $9 per doz...

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Q: Coram Audio makes wireless headphones. Each pair of headphones comes with

Coram Audio makes wireless headphones. Each pair of headphones comes with a travel case. Since its founding, Coram has manufactured its own travel cases. Recently, Holmur Travel Gear (HTG), a local ou...

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Q: Refer to the facts in Exercise 4-39. Harbortown management

Refer to the facts in Exercise 4-39. Harbortown management is concerned about future changes in material prices arising from volatility in the commodities market. Required At what unit costs for mater...

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Q: Lantz Family Restaurant operates in a suburb of a major city.

Lantz Family Restaurant operates in a suburb of a major city. Recently, the managers at Lantz have noticed an increase in the use of delivery apps such as Grubhub and DoorDash by their customers. The...

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Q: Refer to the information in Exercise 4-42. A new

Refer to the information in Exercise 4-42. A new customer has approached Rathbone Industries and asked if it could make an instrument for the customer’s medical testing equipment. If...

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Q: ASA Tours operates a network of offices around the globe specializing in

ASA Tours operates a network of offices around the globe specializing in local tours given by local residents and academics. Depending on the year, it operates at between 60 and 70 percent of capacity...

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Q: Wing Sporting Goods (WSG) is a small company that makes

Wing Sporting Goods (WSG) is a small company that makes two models of a metal baseball bat— Sport and Collegiate. Both models are produced on a single machine. The price and costs of...

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Q: Brandon Technology makes two models of a specialized sensor for the aerospace

Brandon Technology makes two models of a specialized sensor for the aerospace industry. The difference in the two models relates to the required accuracy of the sensor. The Standard model is used for...

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Q: How does a value income statement differ from a gross margin income

How does a value income statement differ from a gross margin income statement? From a contribution margin income statement?

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Q: Leach Finishing makes various metal fittings for the construction industry. Three

Leach Finishing makes various metal fittings for the construction industry. Three of the fittings, models X-12, X-24, and X-30, require grinding on a patented machine of which Leach has only one. The...

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Q: Kirby Fasteners supplies the electronics industry with accessories for cases, disc

Kirby Fasteners supplies the electronics industry with accessories for cases, disc enclosures, and so on. Below are the costs and volumes for the past six months at its Plant #6: Required a. Use the h...

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Q: Witherell Musum of Technology (WMT) provides the following data on

Witherell Musum of Technology (WMT) provides the following data on the costs of maintenance and the number of visitors for the last four quarters: Required a. Use the high-low method to estimate the f...

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Q: Fiske Corporation manufactures a popular regional brand of kitchen utensils. The

Fiske Corporation manufactures a popular regional brand of kitchen utensils. The design and variety have been fairly constant over the last three years. The managers at Fiske are planning for some cha...

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Q: Refer to the information in Exercise 5-36 for Fiske Corporation

Refer to the information in Exercise 5-36 for Fiske Corporation. Required a. Use the high-low method to estimate the fixed and variable portions of factory costs based on machine-hours. b. Managers ex...

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Q: Refer to the data and results from Exercises 5-36 through

Refer to the data and results from Exercises 5-36 through 5-42 for Fiske Corporation. Managers at Fiske Corporation are unsure which estimate of factory costs should be used next quarter and have aske...

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Q: Waveney DIY Centers (WDC) operates a few dozen stores in

Waveney DIY Centers (WDC) operates a few dozen stores in the eastern United States. The stores are popular with home remodelers, contractors, and do-it-yourself customers. The managers at Waveney are...

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Q: Refer to the information in Exercise 5-44 for Waveney DIY

Refer to the information in Exercise 5-44 for Waveney DIY Centers. Required a. Use the high-low method to estimate the fixed and variable portions of store costs based on store area. b. The managers i...

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Q: Refer to the data and results from Exercises 5-44 through

Refer to the data and results from Exercises 5-44 through 5-50 for Waveney DIY Centers. Managers at Waveney are unsure which estimate of store costs should be used when planning new stores and have as...

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Q: Talon Services offers standardized job counseling services. The company is planning

Talon Services offers standardized job counseling services. The company is planning a new service line targeted to active seniors who are retiring and looking forward to a new career. The service will...

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Q: How would cost accounting information help managers in a not-for

How would cost accounting information help managers in a not-for-profit organization? Is it as important as in a publicly traded, for-profit firm?

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Q: Belfast Export-Import Partners has a large staff of buyers and

Belfast Export-Import Partners has a large staff of buyers and sales personnel who travel extensively on company business. The CFO is trying to manage travel costs for the sales staff and has collecte...

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Q: Point Products produces field hockey balls, which are packaged in cases

Point Products produces field hockey balls, which are packaged in cases. The balls are produced in a single plant. Because of the nature of the production process at Point Products, overhead includes...

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Q: Refer to the information for Point Products in Exercise 5-54

Refer to the information for Point Products in Exercise 5-54. The managers at Point Products are uncertain what to do with these costs estimation results. Specifically, they are uncertain which, if ei...

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Q: Clarion Clinics operates a chain of 24-hour walk-in

Clarion Clinics operates a chain of 24-hour walk-in clinics. The administrator is trying to understand the variation in Clarion’s costs across the different clinics. The chief medica...

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Q: Shrewsbury Technologies, which manufactures high-technology instruments for spacecraft,

Shrewsbury Technologies, which manufactures high-technology instruments for spacecraft, is considering the sale of a navigational unit to a private company that wishes to launch its own communications...

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Q: Winkleman Associates requires prospective recruits to take an examination that includes both

Winkleman Associates requires prospective recruits to take an examination that includes both computational and essay questions. It employs contract workers to grade the exams. Hiring of Winkleman recr...

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Q: Fountain Precision Products (FPP) manufactures high-technology measurement systems

Fountain Precision Products (FPP) manufactures high-technology measurement systems. The systems are both complex and unique in the sense that only a handful are sold, usually to a single customer’s sp...

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Q: Refer to the example in Appendix B. The numbers in Exhibit

Refer to the example in Appendix B. The numbers in Exhibit 5.21 for the fifth, sixth, and seventh units were given. Required Using the formula Y = aXb and the data given in the problem, verify the lab...

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Q: Barrett eSellers is an online retail store offering a variety of products

Barrett eSellers is an online retail store offering a variety of products. As a part of its business model, it offers free returns. The returns are processed at the Returns Processing Facility (RPF) n...

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Q: Cedargrove Cider processes and bottles apple cider for sale through retail and

Cedargrove Cider processes and bottles apple cider for sale through retail and big box grocery outlets. It had no work in process on May 31 in its only inventory account. The company started 19,100 ca...

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Q: How is computing the cost of customers the same as computing the

How is computing the cost of customers the same as computing the cost of products? How is the computation different?

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Q: The controller of a local firm that uses a continuous production process

The controller of a local firm that uses a continuous production process asks you to recommend whether the company should use weighted-average or FIFO process costing. What factors would you consider...

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Q: Atwater Chemicals produces an engine additive for machinery. The additive is

Atwater Chemicals produces an engine additive for machinery. The additive is produced by adding various ingredients to a petroleum-based lubricant. Atwater purchases the lubricant from two suppliers,...

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Q: Refer to the information and data in Exercise 7-47 for

Refer to the information and data in Exercise 7-47 for Clarita Contracting. Required Prepare a graphical analysis of the current status of the cost and timing of the project at the current time. Note:...

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Q: Refer to the information and data in Exercise 7-48 for

Refer to the information and data in Exercise 7-48 for Fulton Construction. Required Prepare a graphical analysis of the current status of the cost and timing of the project at the current time. Note:...

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Q: The production team at Schaefer Manufacturing has been working on improving quality

The production team at Schaefer Manufacturing has been working on improving quality and has been approaching the problem from the technical side (measuring defects, and so on), but also from the finan...

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Q: How does complexity lead to higher costs? Why is it important

How does complexity lead to higher costs? Why is it important for the cost system design to consider complexity?

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Q: What two questions must a manager answer if a company is implementing

What two questions must a manager answer if a company is implementing time-driven activity-based costing?

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Q: In the context of time-driven ABC, what are time

In the context of time-driven ABC, what are time equations?

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Q: What costs are irrelevant for the decision of whether to sell a

What costs are irrelevant for the decision of whether to sell a joint product or process it further?

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Q: Why would a number of accountants express a preference for the net

Why would a number of accountants express a preference for the net realizable value method of joint cost allocation over the physical quantities method?

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Q: How are activity-based costing and activity-based management similar

How are activity-based costing and activity-based management similar? How do they differ?

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Q: You can get the cost of customers by first computing the cost

You can get the cost of customers by first computing the cost of the products they buy and then multiplying by the number of units each customer buys.” Do you think this approach would assist in cost...

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Q: Can activity-based management be implemented without an activity-based

Can activity-based management be implemented without an activity-based costing system? Explain.

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Q: What are the three methods of allocating service department costs?

What are the three methods of allocating service department costs?

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Q: What are the five steps to follow when computing costs using a

What are the five steps to follow when computing costs using a process costing system?

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Q: Why do companies allocate costs? What are some of the advantages

Why do companies allocate costs? What are some of the advantages and disadvantages to doing so?

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Q: What is the death spiral? How is it related to the

What is the death spiral? How is it related to the cost accounting system?

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Q: Why is it important for managers to assess whether activities are value

Why is it important for managers to assess whether activities are value-added or nonvalue added? What are some common nonvalue-added activities found in many businesses?

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Q: What are some ways in which customers affect a firm’s costs?

What are some ways in which customers affect a firm’s costs? What are some ways in which suppliers affect a firm’s costs?

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Q: What are two different ways of treating the difference between applied overhead

What are two different ways of treating the difference between applied overhead and actual overhead at the end of the accounting period?

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Q: What are the basic steps in computing costs using activity-based

What are the basic steps in computing costs using activity-based costing?

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Q: Why does it matter how capacity costs are assigned to products?

Why does it matter how capacity costs are assigned to products?

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Q: Interview the manager of a campus print shop or a print shop

Interview the manager of a campus print shop or a print shop in the local area about how the company bids on prospective jobs. Does it use cost information from former jobs that are similar to prospec...

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Q: Under what conditions should the cost of excess capacity be assigned to

Under what conditions should the cost of excess capacity be assigned to products or customers? When should excess capacity costs not be assigned to products or customers?

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Q: In what ways does quality affect cost?

In what ways does quality affect cost?

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Q: What is the difference between resources supplied and resources consumed? Why

What is the difference between resources supplied and resources consumed? Why is the difference important?

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Q: If cost allocations are arbitrary and potentially misleading, why do companies

If cost allocations are arbitrary and potentially misleading, why do companies, including successful ones, continue to allocate costs?

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Q: One critic of cost allocation noted, “You can avoid the

One critic of cost allocation noted, “You can avoid the problem of arbitrary cost allocations by not allocating any common costs to other cost objects.” What are your thoughts on this comment?

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Q: If the reciprocal method is conceptually superior, why don’t all firms

If the reciprocal method is conceptually superior, why don’t all firms use it?

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Q: Service department cost allocation is the first stage in a two-

Service department cost allocation is the first stage in a two-stage system. Suppose a company has a purchasing department that is responsible for buying all materials, including miscellaneous supplie...

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Q: Throughout the chapter, we treated conversion costs (direct labor and

Throughout the chapter, we treated conversion costs (direct labor and manufacturing overhead) as a single resource. Why could we do this without distorting the resulting costs? When would we need to t...

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Q: Consider the Business Application feature “Technology, Data Analysis, Customer

Consider the Business Application feature “Technology, Data Analysis, Customer Profitability, and Cost of Quality.” Do you think it is easier to estimate the cost savings from adapting a lean manufact...

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Q: In the chapter, we said that the costs from a prior

In the chapter, we said that the costs from a prior department are often excluded when comparing a department’s cost with its standards or budgets. However, when a department buys materials from an ou...

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Q: Consider a manufacturing firm with multiple departments all using continuous production processes

Consider a manufacturing firm with multiple departments all using continuous production processes and process costing. Suppose Department A transfers product to Department B for completion to the fina...

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Q: Consider two firms in the same industry. Is it possible that

Consider two firms in the same industry. Is it possible that one uses job costing and the other uses process costing? Explain.

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Q: A firm produces a product by sending it through three production departments

A firm produces a product by sending it through three production departments (A, B, and C). A uses job costing, B uses operations costing, and C uses process costing. Is this possible? Why? Is this li...

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Q: Many if not most schools in the United States have large excess

Many if not most schools in the United States have large excess capacity cost because they are underutilized in the summer months. The dean at the local business school is developing a cost of custome...

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Q: Can you think of any products for which one or several of

Can you think of any products for which one or several of the elements of service, quality, and cost are not important to the customer? If so, explain why.

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Q: How might a manufacturing system differ under a quality-based view

How might a manufacturing system differ under a quality-based view versus the traditional view of managing quality?

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