At a seminar, a cost accountant spoke on identification of different kinds of cost behavior

3-B1 Identifying Cost Behavior Patterns

At a seminar, a cost accountant spoke on identification of different kinds of cost behavior. Tammy Li, a hospital administrator who heard the lecture, identified several hospital costs of concern to her. After her classification, Li presented you with the following list of costs and asked you to (1) classify their behavior as one of the following: variable, step, mixed, discretionary fixed, committed fixed, and (2) to identify a likely cost driver for each variable or mixed cost.

1. Operating costs of X-ray equipment ($95,000 a year plus $3 per film)
2. Health insurance for all full-time employees
3. Costs incurred by Dr. Rath in cancer research
4. Repairs made on hospital furniture
5. Training costs of an administrative resident
6. Straight-line depreciation of operating room equipment
7. Costs of services of King Hospital Consulting
8. Nursing supervisors’ salaries (a supervisor is needed for each 45 nursing personnel)

Click here for the solution: At a seminar, a cost accountant spoke on identification of different kinds of cost behavior

According to the accountant of Ulner Inc., its payroll taxes for the week were as follows

ACC 291 Week 3 Assignment

E10-6 According to the accountant of Ulner Inc., its payroll taxes for the week were as follows: $198.40 for FICA taxes, $19.84 for federal unemployment taxes, and $133.92 for state unemployment taxes.

Instructions
Journalize the entry to record the accrual of the payroll taxes.


Click here for the solution: According to the accountant of Ulner Inc., its payroll taxes for the week were as follows

You are the accountant for a division of a company that is constructing a building for its own use

C10-11 (Ethics and Construction Cost) You are the accountant for a division of a company that is constructing a building for its own use. It is January 2011, and you are working on closing the books for 2010. The CEO of the division stops by your office and says, “I have some questions about our building. Although we started construction at the beginning of “June this year, we started planning it at the beginning of the previous year. I believe we can capitalize interest since then. Check to see if we did capitalize some in 2009. If not we can take it out of this year’s expense and get a double dose. Also I want you to add lots of overhead to the cost of the building so we can increase our profit for this year. For example, you spent quite a bit of time on the project. So perhaps we could add 1/12 of your salary to the cost of the cost of the building. You get the idea?” when the CEO leaves you check the files and find a letter to an architect dated January 2, 2009. There are numerous subsequent letters to and from the architect. From financial reporting and ethical perspectives, how would you reply to the CEO?


Click here for the solution: You are the accountant for a division of a company that is constructing a building for its own use

Before preparing financial statements for the current year, the chief accountant for Springer Company discovered the following errors in the accounts

E11-16 Before preparing financial statements for the current year, the chief accountant for Springer Company discovered the following errors in the accounts.

The declaration and payment of $50,000 cash dividend was recorded as a debit to Interest Expense $50,000 and a credit to Cash $50,000.
A 10% stock dividend (1,000 shares) was declared on the $10 par value stock when the market value per share was $16. The only entry made was: Retained Earnings (Dr.) $10,000 and Dividend Payable (Cr.) $10,000. The shares have not been issued.
A 4-for-1 stock split involving the issue of 400,000 shares of $5 par value common stock for 100,000 shares of $20 par value common stock was recorded as a debit to Retained Earnings $2,000,000 and a credit to Common Stock $2,000,000.

Instructions
Prepare the correcting entries at December 31.

Click here for the solution: Before preparing financial statements for the current year, the chief accountant for Springer Company discovered the following errors in the accounts

The accountant of Weatherspoon Shoe Co. has compiled the following information from the company’s records as a basis for an income statement for the year ended December 31, 2010

E4-6 (Multiple-step and Single-step) The accountant of Weatherspoon Shoe Co. has compiled the following information from the company’s records as a basis for an income statement for the year ended December 31, 2010.

Rental revenue $ 29,000
Interest expense 18,000
Market appreciation on land above cost 31,000
Wages and salaries—sales 114,800
Materials and supplies—sales 17,600
Income tax 30,600
Wages and salaries—administrative 135,900
Other administrative expenses 51,700
Cost of goods sold 516,000
Net sales 980,000
Depreciation on plant assets (70% selling, 30% administrative) 65,000
Cash dividends declared 16,000

There were 20,000 shares of common stock outstanding during the year.

Instructions
(a) Prepare a multiple-step income statement.
(b) Prepare a single-step income statement.
(c) Which format do you prefer? Discuss.

Click here for the solution: The accountant of Weatherspoon Shoe Co. has compiled the following information from the company’s records as a basis for an income statement for the year ended December 31, 2010

(Multiple-step and Single-step). The accountant of Whitney Houston Shoe Co. has compiled the following information from the company’s records as a basis for an income statement for the year ended December 31, 2007

Exercise 4-6 (E4-6) (Multiple-step and Single-step). The accountant of Whitney Houston Shoe Co. has compiled the following information from the company’s records as a basis for an income statement for the year ended December 31, 2007.
Rental revenue $ 29,000
Interest on notes payable 18,000
Market appreciation on land above cost 31,000
Wages and salaries—sales 114,800
Materials and supplies—sales 17,600
Income tax 37,400
Wages and salaries—administrative 135,900
Other administrative expenses 51,700
Cost of goods sold 496,000
Net sales 980,000
Depreciation on plant assets (70% selling, 30% administrative) 65,000
Cash dividends declared 16,000
There were 20,000 shares of common stock outstanding during the year.

Instructions
(a) Prepare a multiple-step income statement.
(b) Prepare a single-step income statement.
(c) Which format do you prefer? Discuss.

Click here for the solution: (Multiple-step and Single-step). The accountant of Whitney Houston Shoe Co. has compiled the following information from the company’s records as a basis for an income statement for the year ended December 31, 2007