Which cost accumulation procedure is most applicable in continuous mass-production manufacturing environments

1. Which cost accumulation procedure is most applicable in continuous mass-production manufacturing environments? (Points : 1)

2. Process costing is used in companies that _______. (Points : 1)

3. A producer of ____ would not use a process costing system. (Points : 1)

4. Equivalent units of production are equal to the _______. (Points : 1)

5. In a process costing system using the weighted average method, cost per equivalent unit for a given cost component is found by dividing which of the following by EUP? (Points : 1)

6. The difference between EUP calculated using FIFO and EUP calculated using weighted average is the equivalent units _______. (Points : 1)

7. In a FIFO process costing system, which of the following are assumed to be completed first in the current period? (Points : 1)

8. The primary difference between the FIFO and weighted average methods of process costing is _______. (Points : 1)

9. In a cost of production report using process costing, transferred-in costs are similar to the ______. (Points : 1)

10. In a process costing system, the journal entry to record the transfer of goods from Department #2 to Finished Goods Inventory is a _______. (Points : 1)

11. Transferred-in cost represents the cost from _______. (Points : 1)

12. A hybrid costing system combines characteristics of _______. (Points : 1)

13. When standard costs are used in process costing, _______. (Points : 1)

14. The cost of abnormal continuous losses is _______. (Points : 1)

15. Normal spoilage units resulting from a continuous process _______. (Points : 1)

16. Listed below are the steps to assign costs to ending inventory using the weighted average method process costing method.
A. Assign the costs to the inventory accounts
B. Calculate the physical units accounted for
C. Calculate the physical units to account for
D. Calculate the equivalent units of production
E. Calculate the total costs to account for
F. Calculate the cost per equivalent units
(Points : 1)

17. Units started and completed during the period equals (Points : 1)

18. In process costing systems, unit costs are found by dividing total costs incurred by (Points : 1)

19. Equivalent units of production using the weighted average method of costing are found using which of the following formulas: (Points : 1)

20. Total costs to account for is: (Points : 1)

Click here for the solution: Which cost accumulation procedure is most applicable in continuous mass-production manufacturing environments

The budget director of Regal Furniture Company requests estimates of sales, production, and other operating data from the various administrative units every month

The budget director of Regal Furniture Company requests estimates of sales, production, and other operating data from the various administrative units every month. Selected information concerning sales and production for August 2010 is summarized as follows:
a. Estimated sales of King and Prince chairs for August by sales territory:
Northern Domestic:
King.........................5,500 units at $750 per unit
Prince......................6,900 units at $520 per unit

Southern Domestic:
King.........................3,200 units at $690 per unit
Prince......................4,000 units at $580 per unit

International:
King........................1,450 units at $780 per unit
Prince......................900 units at $600 per unit

b. Estimated inventories at August 1:
Direct materials:
Finished Products
Fabric................4,500 sq. yds
King.....................950units
Wood.................6,000 lineal ft.
Prince..................280units
Filler...................2,800 cu, ft
Springs..............6,700 units

c. Desired inventories at August 31:
Direct Materials:
Finished Products:
Fabric..................4300 sq yds
King.............800units
Wood..................6,200 lineal ft.
Prince...........400units
Filler....................3,100 cu. ft
Springs................7,500 units

d. Direct materials used in production:
In manufacture of King:
Fabric..................5.0 sq. yds per unit of product
Wood ..................35 lineal ft. per unit of product
 Filler.................... 3.8 cu ft. per units of product
Springs.................14 units per units of product

In manufacture of Prince:
Fabric...............$12.00 per sq. yd.
Filler..............$3.50 per cu. ft.
Wood................ 8.00 per lineal ft.
Springs........... 4.50 per unit

f. Direct labor requirements:
King:
Framing Department............ 2.5hrs. at $12 per hr.
Cutting Department.............. 1.5 hrs. at $11 per hr.
Upholstery Department.......... 2.4hrs. at $14 per hr.
Prince: Framing Department............ 1.8 hrs. at $12 per hr.
Cutting Department............. 0.5 hrs. at $11 per hr.
Upholstery Department......... 2.0hrs. at $14 per hr.

3.) Prepare a direct materials purchases budget for August.

4.)Prepare a direct labor cost budget for August

Click here for the solution: The budget director of Regal Furniture Company requests estimates of sales, production, and other operating data from the various administrative units every month

Douglas Manufacturing Company has two production departments: Cutting and Assembly

ACCT 560 Week 2 Assignment

E3-4 Douglas Manufacturing Company has two production departments: Cutting and Assembly. July 1 inventories are Raw Materials $4,200, Work in Process-Cutting $2,900, Work in Process-Assembly $10,600, and Finished Goods $31,000. During July, the following transactions occurred.
1. Purchased $62,500 of raw materials on account.
2. Incurred $56,000 of factory labor. (Credit Wages Payable.)
3. Incurred $70,000 of manufacturing overhead; $40,000 was paid and the remainder is unpaid.
4. Requisitioned materials for Cutting $15,700 and Assembly $8,900.
5. Used factory labor for Cutting $29,000 and Assembly $27,000.
6. Applied overhead at the rate of $15 per machine hour. Machine hours were Cutting 1,680 and Assembly 1,720.
7. Transferred goods costing $67,600 from the Cutting Department to the Assembly Department.
8. Transferred goods costing $134,900 from Assembly to Finished Goods.
9. Sold goods costing $150,000 for $200,000 on account.

Journalize the transactions.

Click here for the solution: Douglas Manufacturing Company has two production departments: Cutting and Assembly

The Sanding Department of Ortiz Furniture Company has the following production and manufacturing cost data for March 2008, the first month of operation

ACC 560 Week 2 Assignment

E3-7 The Sanding Department of Ortiz Furniture Company has the following production and manufacturing cost data for March 2008, the first month of operation.

Production: 12,000 units finished and transferred out; 3,000 units started that are 100% complete as to materials and 20% complete as to conversion costs.
Manufacturing costs: Materials $33,000; labor $27,000; overhead $36,000.

Prepare a production cost report.

Click here for the solution: The Sanding Department of Ortiz Furniture Company has the following production and manufacturing cost data for March 2008, the first month of operation

Copa Company, a manufacturer of stereo systems, started its production in October 2008 (ACC 560 Week 2)

ACC 560 Week 2 Assignment

P1-2A Copa Company, a manufacturer of stereo systems, started its production in October 2008. For the preceding 3 years Copa had been a retailer of stereo systems. After a thorough survey of stereo system markets, Copa decided to turn its retail store into a stereo equipment factory.

Raw materials cost for a stereo system will total $74 per unit. Workers on the production lines are on average paid $12 per hour. A stereo system usually takes 5 hours to complete. In addition, the rent on the equipment used to assemble stereo systems amounts to $4,900 per month. Indirect materials cost $5 per system. A supervisor was hired to oversee production; her monthly salary is $3,000.

Janitorial costs are $1,300 monthly. Advertising costs for the stereo system will be $8,500 per month. The factory building depreciation expense is $7,200 per year. Property taxes on the factory building will be $9,000 per year.

Required:
(a) Prepare an answer sheet. Assuming that Copa manufactures, on average, 1,300 stereo systems per month, enter each cost item on your answer sheet, placing the dollar amount per month under the appropriate headings. Total the dollar amounts in each of the columns.
(b) Compute the cost to produce one stereo system.

Click here for the solution: Copa Company, a manufacturer of stereo systems, started its production in October 2008 (ACC 560 Week 2)

At Camden Manufacturing Company, production workers in the Painting Department are paid on the basis of productivity

At Camden Manufacturing Company, production workers in the Painting Department are paid on the basis of productivity. The labor time standard of a unit of production is established through periodic time studies conduct by the Lowery Management Department. In a time study, the actual time required to complete a specific task by a worker is observed. Allowances are then made for preparation time, rest periods, and clean-up time. Ron Orlano is one of several veterans in the Painting Department. Ron is informed by Lowery Management that he will be used in the time study for the painting of a new product. The findings will be the basis for establishing the labor time standard for the next 6 months. During the test, Ron deliberately slows his normal work pace in an effort to obtain a labor time standard that will be easy to meet. Because it is a new product, the Lowery Management representative who conducted the test is unaware that Ron did not give the test his best effort.

1. Who was benefited and who was harmed by Ron's action
2. Was Ron ethical in the way he performed the time study test?
3. What measure(s) might the company take to obtain valid data for setting the labor time standard?

Click here for the solution: At Camden Manufacturing Company, production workers in the Painting Department are paid on the basis of productivity

The budget director of Outdoor Gourmet Grill Company requests estimates of sales, production, and other operating data

The budget director of Outdoor Gourmet Grill Company requests estimates of sales, production, and other operating data from the various administrative units every month. Selected information concerning sales and production for July 2010 is summarized as follows:

a. Estimated sales for July by sales territory:
Maine:
Backyard Chef...........................5000 units at $750 per unit
Master Chef..............................1800 units at $1,500 per unit
Vermont:
Backyard Chef..........................4200 units at $800 per unit
Master Chef.............................1600 units at $1,600 per unit
New Hampshire:
Backyard Chef..........................4600 units at $850 per unit
Master Chef.............................1900 units at $1,700 per unit

b. Estimated inventories at July 1:
Direct materials: Finished products:
Grates.....................1000 units Backyard chef........1400 units
Stainless steel...........1800 lbs Master Chef........... 600 units
Burner subassemblies....500 units
Shelves.................... 300 units

c. Desired inventories at July 31:
Direct materials: Finished products:
Grates..................... 800 units Backyard chef........1600 units
Stainless steel........... 2100 lbs Master Chef........... 500 units
Burner subassemblies....550 units
Shelves.................... 350 units

d. Direct materials used in production:
In manufacture of Backyard Chef:
Grates.......................... 3 units per unit of product
Stainless steel................ 20 lbs per unit of product
Burner subassemblies....... 2 units per unit of product
Shelves......................... 5 units per unit of product
In manufacture of Master Chef:
Grates.......................... 6 units per unit of product
Stainless steel................ 45 lbs per unit of product
Burner subassemblies....... 4 units per unit of product
Shelves......................... 6 units per unit of product

e. Anticipated purchase price for direct materials:
Grates.............. $20 per unit Burner subassemblies...... $105 per unit
Stainless steel...... $6 per lb Shelves.........................$7 per unit

f. Direct labor requirements:
Backyard Chef:
Stamping Dept. 0.60 hr at $18 per hr
Forming Dept. 0.80 hr at $14 per hr
Assembly Dept. 1.50 hr at $12 per hr
Master Chef:
Stamping Dept. 0.80 hr at $18 per hr
Forming Dept. 1.50 hr at $14 per hr
Assembly Dept. 2.50 hr at $12 per hr

1. Prepare a sales budget for July.
2. Prepare a production budget for July.
3. Prepare a direct materials purchases budget for July.
4. Prepare a direct labor cost budget for July.

Click here for the solution: The budget director of Outdoor Gourmet Grill Company requests estimates of sales, production, and other operating data

Task time estimates for a production line setup project at Robert Klassen’s Ontario factory are as follows

Problem 3.7 Task time estimates for a production line setup project at Robert Klassen’s Ontario factory are as follows:

Activity Time In HRS Immediate Predecessor
A 6 -
B 7.2 -
C 5 A
D 6 B,C
E 4.5 B,C
F 7.7 D
G 4 E,F

a) Develop an AON network for this problem.
b) What is the critical path?
c) What is the total project completion time?


Click here for the solution: Task time estimates for a production line setup project at Robert Klassen’s Ontario factory are as follows

Why is the salary of a production worker capitalized while the salary of a marketing manager expensed?

7. Why is the salary of a production worker capitalized while the salary of a marketing manager expensed?


Click here for the solution: Why is the salary of a production worker capitalized while the salary of a marketing manager expensed?

Axillar Beauty Products Corporation is considering the production of a new conditioning shampoo

Axillar Beauty Products Corporation is considering the production of a new conditioning shampoo that will require the purchase of new mixing machinery. The machinery will cost $375,000, is expected to have a useful life of 10 years, and is expected to have a salvage value of $50,000 at the end of 10 years. The machinery will also need a $35,000 overhaul at the end of year 6. A $40,000 increase in working capital will be needed for this investment project. The working capital will be released at the end of the 10 years. The new shampoo is expected to generate net cash inflows of $85,000 per year for each of the 10 years. Axillar's discount rate is 16%.

Required:
(a) What is the net present value of this investment opportunity?
(b) Based on your answer to (a) above, should Axillar go ahead with the new conditioning shampoo?


Click here for the solution: Axillar Beauty Products Corporation is considering the production of a new conditioning shampoo

The budget director of Heads Up Athletic Co., with the assistance of the controller, treasurer, production manager, and sales manager

PR 22-3A The budget director of Heads Up Athletic Co., with the assistance of the controller, treasurer, production manager, and sales manager, has gathered the following data for use in developing the budgeted income statement for January 2010.

a. Estimated sales for January:
Batting helmet 3,700 units at $70 per unit
Football helmet 7,200 units at $142 per unit

AND SO ON

INSTRUCTIONS:
1. Prepare a sales budget for January.
2. Prepare a production budget for January.
3. Prepare a direct materials purchases budget for January.
4. Prepare a direct labor cost budget for January.
5. Prepare a factory overhead cost budget for January.
6. Prepare a cost of goods sold budget for January. Work in process at the beginning of January is estimated to be $12,500, and work in process at the end of January is desired to be $13,500.
7. Prepare a selling and administrative expenses budget for January.
8. Prepare a budgeted income statement for January.


Click here for the solution: The budget director of Heads Up Athletic Co., with the assistance of the controller, treasurer, production manager, and sales manager

How does a product's life cycle stage influence production cost management?

How does a product's life cycle stage influence production cost management?


Click here for the solution: How does a product's life cycle stage influence production cost management?

Wayne Terrago, controller for Robbin Industries, was reviewing production cost reports for the year

BYP1-7 Wayne Terrago, controller for Robbin Industries, was reviewing production cost reports for the year. One amount in these reports continued to bother him—advertising. During the year, the company had instituted an expensive advertising campaign to sell some of its slower-moving products. It was still too early to tell whether the advertising campaign was successful. There had been much internal debate as how to report advertising cost. The vice president of finance argued that advertising costs should be reported as a cost of production, just like direct materials and direct labor. He therefore recommended that this cost be identified as manufacturing overhead and reported as part of inventory costs until sold. Others disagreed. Terrago believed that this cost should be reported as an expense of the current period, based on the conservatism principle. Others argued that it should be reported as Prepaid Advertising and reported as a current asset.

The president finally had to decide the issue. He argued that these costs should be reported as inventory. His arguments were practical ones. He noted that the company was experiencing financial difficulty and expensing this amount in the current period might jeopardize a planned bond offering. Also, by reporting the advertising costs as inventory rather than as prepaid advertising, less attention would be directed to it by the financial community.

Instructions
1. Who are the stakeholders in this situation?
2. What are the ethical issues involved in this situation?
3. What would you do if you were Wayne Terrago?


Click here for the solution: Wayne Terrago, controller for Robbin Industries, was reviewing production cost reports for the year

On January 1, 2008, Pele Company purchased the following two machines for use in its production process

On January 1, 2008, Pele Company purchased the following two machines for use in its production process.

Machine A: The cash price of this machine was $38,000. Related expenditures included: sales tax $1,700, shipping costs $150, insurance during shipping $80, installation and testing costs $70, and $100 of oil and lubricants to be used with the machinery during its first year of operations. Pele estimates that the useful life of the machine is 5 years with a $5,000 salvage value remaining at the end of that time period. Assume that the straight-line method of depreciation is used.

Machine B: The recorded cost of this machine was $160,000. Pele estimates that the useful life of the machine is 4 years with a $10,000 salvage value remaining at the end of that time period.

Instructions
(a) Prepare the following for Machine A.
(1) The journal entry to record its purchase on January 1, 2008.
(2) The journal entry to record annual depreciation at December 31, 2008.
(b) Calculate the amount of depreciation expense that Pele should record for machine B each year of its useful life under the following assumptions.
(1) Pele uses the straight-line method of depreciation.
(2) Pele uses the declining-balance method. The rate used is twice the straight-line rate.
(3) Pele uses the units-of-activity method and estimates that the useful life of the machine is 125,000 units. Actual usage is as follows: 2008, 45,000 units; 2009, 35,000 units; 2010, 25,000 units; 2011, 20,000 units


Click here for the solution: On January 1, 2008, Pele Company purchased the following two machines for use in its production process

Monthly production costs in Pesavento Company for two levels of production are

BE5-1 Monthly production costs in Pesavento Company for two levels of production are:

Cost 2,000 units 4,000 units

Indirect labor $10,000 $20,000
Supervisory salaries 5,000 5,000
Maintenance 4,000 7,000

Indicate which costs are variable, fixed, and mixed, and give the reason for each answer.

Click here for the solution: Monthly production costs in Pesavento Company for two levels of production are

For Lobes Company, the relevant range of production is 40-80% of capacity

BE5-2 For Lobes Company, the relevant range of production is 40-80% of capacity. At 40% of capacity, a variable cost is $4,000 and fixed cost is 6,000. Diagram the behavior of each cost within the relevant range assuming the behavior is linear.

Click here for the solution: For Lobes Company, the relevant range of production is 40-80% of capacity

Cleveland Metals uses a job cost system and applies factory overhead to production at a predetermined rate of 180% of direct labor cost

Cost flows and overhead application

Cleveland Metals uses a job cost system and applies factory overhead to production at a predetermined rate of 180% of direct labor cost. Data pertaining to recent operations follow.

• Job no. 636 was the only job in process on January 1 of the current year. The Work in Process account contained a $24,600 balance on this date.
• Jobs no. 637, 638, and 639 were started during January.
• Total direct material requisitions and direct labor incurred during January amounted to $89,200 and $114,500, respectively.
• The only job that remained in process on January 31 was job no. 638, with costs of $15,000 for direct materials and $20,000 for direct labor.

a. Compute the total cost of the work in process inventory on January 31.
b. Compute the cost of jobs completed during January, and present the proper journal entry to reflect job completion.

Click here for the solution: Cleveland Metals uses a job cost system and applies factory overhead to production at a predetermined rate of 180% of direct labor cost

The budget director of Feathered Friends Inc., with the assistance of the controller, treasurer, production manager, and sales manager

The budget director of Feathered Friends Inc., with the assistance of the controller, treasurer, production manager, and sales manager, has gathered the following data for use in developing the budgeted income statement for October 2012

a. Estimated sales for December:
Bird House . . . . . . . . . . . . . . . . . . . . 3,500 units at $45 per unit
Bird Feeder. . . . . . . . . . . . . . . . . . . . 3,700 units at $65 per unit

AND SO ON

Instructions
1. Prepare a sales budget for October.
2. Prepare a production budget for October.
3. Prepare a direct materials purchases budget for October.
4. Prepare a direct labor cost budget for October.
5. Prepare a factory overhead cost budget for October.
6. Prepare a cost of goods sold budget for October. Work in process at the beginning of October is estimated to be $27,000, and work in process at the end of October is estimated to be $32,400.
7. Prepare a selling and administrative expenses budget for October.
8. Prepare a budgeted income statement for October.

Check: 4. Total Direct Labor Cost in Fabrication Dept., $32,760

Click here for the solution: The budget director of Feathered Friends Inc., with the assistance of the controller, treasurer, production manager, and sales manager

Dimaggio Sports Equipment, Inc. is considering a switch to level production

Dimaggio Sports Equipment, Inc. is considering a switch to level production. Cost efficiencies would occur under level production, and after-tax costs would decline by $35,000, but inventory would increase by $400,000. Dimaggio would have to finance the extra inventory at a cost of 10.5 percent.

a. Should the company go ahead and switch to level production?
b. How low would interest rates need to fall before level production would be feasible?

Click here for the solution: Dimaggio Sports Equipment, Inc. is considering a switch to level production

The budget director of Outdoor Chef Grill Company requests estimates of sales, production, and other operating data from the various administrative units every month

The budget director of Outdoor Chef Grill Company requests estimates of sales, production, and other operating data from the various administrative units every month. Selected information concerning sales and production for May 2012 is summarized as follows:

a. Estimated sales for May by sales territory:
b. Estimated inventories at May 1:
c. Desired inventories at May 31:
d. Direct materials used in production:
e. Anticipated purchase price for direct materials:
f. Direct labor requirements:

Required;
1. Prepare a sales budget for May.
2. Prepare a production budget for May.
3. Prepare a direct materials purchases budget for May.
4. Prepare a direct labor cost budget for May

Check: 3. Total Direct Materials Purchases, $939,065

Click here for the solution: The budget director of Outdoor Chef Grill Company requests estimates of sales, production, and other operating data from the various administrative units every month