Exam 1

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Southwick Furniture started and finished Job 310 during November. The​ company's records show that the following direct materials were requisitioned for Job 310​:

c. Indirect Cost

A cost that is related to a cost object, but cannot be traced specifically to it, is known as (an) a. controllable cost. b. direct cost. c. indirect cost. d. product cost.

1. Keep information confidential except when disclosure is authorized or legally required. Confidentiality 2. Provide all relevant information that could reasonably be expected to influence an intended user's understanding of the reports, analyses, or recommendations. Credibility 3. Report any delays or deficiencies in information, timeliness, processing, or internal controls in conformance with organization policy and/or applicable law. Credibility 4. Communicate information fairly and objectively. Credibility 5. Refrain from using confidential information for unethical or illegal advantage. Confidentiality Part 2 6. Inform all relevant parties regarding the appropriate use of confidential information. Monitor to ensure compliance. Confidentiality 7. Mitigate actual conflicts of interest. Regularly communicate with business associates to avoid apparent conflicts of interest. Advise all parties of any potential conflicts. Integrity 8. Maintain an apporpriate level of professional leadership and expertise by enhancing knowledge and skills. Competence 9. Communicate professional limitations that would preclude responsible judgment or successful performance of an activity. Credibility Part 3 10. Perform professional duties in accordance with relevant laws, regulations, and technical standards. Competence 11. Abstain from engaging in or supporting any activity that might discredit the profession. Integrity 12. Refrain from engaging in any conduct that would prejudice carrying out duties ethically. Integrity 13. Provide decision support information and recommendations that are accurate, clear, concise, and timely. Recognize and help manage risk. Competence

According to the​ IMA's Statement of Ethical Professional Practice​, management accountants should follow four​ standards: competence,​ confidentiality, integrity, and credibility. Each of these standards contains specific responsibilities. Classify each of the following responsibilities according to the standard it addresses. Question content area bottom Part 1 1. Keep information confidential except when disclosure is authorized or legally required. 2. Provide all relevant information that could reasonably be expected to influence an intended user's understanding of the reports, analyses, or recommendations. 3. Report any delays or deficiencies in information, timeliness, processing, or internal controls in conformance with organization policy and/or applicable law. 4. Communicate information fairly and objectively. 5. Refrain from using confidential information for unethical or illegal advantage. Part 2 6. Inform all relevant parties regarding the appropriate use of confidential information. Monitor to ensure compliance. 7. Mitigate actual conflicts of interest. Regularly communicate with business associates to avoid apparent conflicts of interest. Advise all parties of any potential conflicts. 8. Maintain an apporpriate level of professional leadership and expertise by enhancing knowledge and skills. 9. Communicate professional limitations that would preclude responsible judgment or successful performance of an activity. Part 3 10. Perform professional duties in accordance with relevant laws, regulations, and technical standards. 11. Abstain from engaging in or supporting any activity that might discredit the profession. 12. Refrain from engaging in any conduct that would prejudice carrying out duties ethically. I 13. Provide decision support information and recommendations that are accurate, clear, concise, and timely. Recognize and help manage risk.

d. Sunk costs are irrelevant to decisions

Which of the following statements is​ true? a. Differential costs are not relevant to decisions. b.Managers have the ability to influence uncontrollable costs in the​ short-run. c. Sunk costs are costs that will be incurred in the future. d. Sunk costs are irrelevant to decisions

a. Juniors Department sales clerks - Direct b. Cost of Juniors clothing - Direct c. Cost of hangers used to display the clothing in the store - Indirect d. Electricity for the building - Indirect e. Cost of radio advertising for the store - Indirect f. Juniors clothing buyers' salaries (these buyers buy for all the Juniors Departments of Kohl's stores) - Indirect g. Depreciation of the building - Indirect h. Cost of costume jewelry on the mannequins in the Juniors Department - Direct i. Cost of bags used to package customer purchases at the main registers for the store - Indirect j. The Stow Kohl's store manager's salary - Indirect k. Cost of the security staff at the Stow store - Indirect l. Manager of Juniors Department - Direct

Classify each of the following costs as a direct cost or an indirect​ cost, assuming that the cost object is the Juniors Department​ (clothing and accessories for teenage and young​ women) in the Stow​ Kohl's department store.​ (Kohl's is a chain of department stores and has stores located across the United​ States.) a. Juniors Department sales clerks b. Cost of Juniors clothing c. Cost of hangers used to display the clothing in the store d. Electricity for the building e. Cost of radio advertising for the store f. Juniors clothing buyers' salaries (these buyers buy for all the Juniors Departments of Kohl's stores) g. Depreciation of the building h. Cost of costume jewelry on the mannequins in the Juniors Department i. Cost of bags used to package customer purchases at the main registers for the store j. The Stow Kohl's store manager's salary k. Cost of the security staff at the Stow store l. Manager of Juniors Department

a. Cost of French fries used at a McDonald's restaurant Variable b. Hourly wages paid to cashiers at The Home Depot Variable c. Monthly sugar costs for The Hershey Company Variable d. Cost of fuel used by Old Dominion Freight Line, a national trucking company Variable e. Shipping costs at Amazon.com Variable f. Monthly rent for Onyx Nail Bar, a nail salon in Dallas, Texas Fixed g. Sales commissions at Tampa Honda in Florida Variable h. Monthly insurance costs for the building housing the administrative offices of Panera Bread in St. Louis, Missouri Fixed i. Monthly depreciation of equipment used in the customer service department at Klaben Ford Lincoln, a car dealership in Kent, Ohio Fixed j. Cost of rubber used to manufacture L.L. Bean boots variable k. Cost of oranges sold at a Kroger's grocery store variable l. Monthly office lease costs for the Portland office of E&Y, a global audit firm Fixed m. Monthly cost of coffee at a Dunkin' Donuts store variable n. Property taxes for an Applebees' Neighborhood Grill & Bar Fixed o. Depreciation of exercise equipment at an LA Fitness club Fixed

Classify each of the following costs as fixed or​ variable: a. Cost of French fries used at a McDonald's restaurant b. Hourly wages paid to cashiers at The Home Depot c. Monthly sugar costs for The Hershey Company d. Cost of fuel used by Old Dominion Freight Line, a national trucking company e. Shipping costs at Amazon.com f. Monthly rent for Onyx Nail Bar, a nail salon in Dallas, Texas g. Sales commissions at Tampa Honda in Florida h. Monthly insurance costs for the building housing the administrative offices of Panera Bread in St. Louis, Missouri i. Monthly depreciation of equipment used in the customer service department at Klaben Ford Lincoln, a car dealership in Kent, Ohio j. Cost of rubber used to manufacture L.L. Bean boots k. Cost of oranges sold at a Kroger's grocery store l. Monthly office lease costs for the Portland office of E&Y, a global audit firm m. Monthly cost of coffee at a Dunkin' Donuts store n. Property taxes for an Applebees' Neighborhood Grill & Bar o. Depreciation of exercise equipment at an LA Fitness club

a. Information on a company's past performance is provided to external parties by financial accounting b. Managerial accounting systems are chosen by comparing the costs versus the benefits of the system and are not restricted by GAAP (or International Financial Reporting Standards, IFRS, in the case of companies headquartered in many countries outside of the United States). c. Managerial accounting systems report on various segments or business units of the company. d. Financial accounting develops reports for external parties such as creditors and shareholders e. When managers evaluate the company's performance compared to the plan, they are performing the controlling role of management. f. CPAs audit the financial accounting statements of public companies. g. Companies must follow GAAP (or International Financial Reporting Standards, IRFS, in the case of companies headquartered in many countries outside of the United States) in their financial accounting systems. h. Choosing goals and the means to achieve them is the planning function of management. i. Decision makers inside a company are the managers

Complete the following statements with one of the terms listed here. You may use a term more than​ once, and some terms may not be used at all. Budget Creditors Managerial accounting Planning Controlling Financial accounting Managers Shareholders a. Information on a company's past performance is provided to external parties by __________________ b. _____________________ systems are chosen by comparing the costs versus the benefits of the system and are not restricted by GAAP (or International Financial Reporting Standards, IFRS, in the case of companies headquartered in many countries outside of the United States). c. __________________ systems report on various segments or business units of the company. d. Financial accounting develops reports for external parties such as ________ and ________ e. When managers evaluate the company's performance compared to the plan, they are performing the ____________ role of management. f. CPAs audit the _____________ statements of public companies. g. Companies must follow GAAP (or International Financial Reporting Standards, IRFS, in the case of companies headquartered in many countries outside of the United States) in their ______________ systems. h. Choosing goals and the means to achieve them is the ____________ function of management. i. Decision makers inside a company are the _________

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Dansville Industries uses job costing to calculate the costs of its jobs with direct labor cost as its manufacturing overhead allocation base.

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Enjoy It Industries manufactures​custom-designed playground equipment for schools and city parks. Enjoy It expected to incur $533,000 of manufacturing overhead​cost, 41,000 of direct labor​hours, and $902,000 of direct labor cost during the year​(the cost of direct labor is ​$22 per​hour). The company allocates manufacturing overhead on the basis of direct labor hours. During February​, Enjoy It completed Job 309. The job used 155 direct labor hours and required $15,100 of direct materials. The City of Westlake has contracted to purchase the playground equipment at a price of 23% over manufacturing cost.

Cost-Benefit Analysis Expected Benefits (Cost Savings): Wages $17,500 Payroll taxes 1,339 Total expected benefits $18,839 Expected Costs: Machine cost $7,000 Delivery cost 550 Annual operating costs 2,000 Total expected costs 9,550 Net expected benefit (cost) $9,289

Faced with rising pressure for a $14 per hour minimum wage​ rate, the farming industry is currently exploring the possible use of robotics to replace some farm workers. The Farmhand is one such​ robot; its job is to thin out a field of​ lettuce, removing the least promising buds of lettuce. By removing these weaker​ plants, the stronger lettuce plants have more room to grow. Assume the following​ facts: 1. One Farmhand would do the work of 25 farm workers. 2. Each farm worker typically works 50 hours on the lettuce thinning process each year. 3. Each farm worker would earn $14 per hour plus 7.65​% payroll tax. 4. The Farmhand is estimated to cost $7,000 plus $550 for delivery. 5. Annual costs of operating the Farmhand are expected to be $2,000. While the Farmhand itself may be in workable condition for up to five​ years, assume that the farm would view its implementation as a​ one-year experiment. Requirement Perform a​ cost-benefit analysis for the first year of implementation to determine whether the Farmhand would be a financially viable investment if the minimum wage is raised to $14 per hour. ​(Round your answers to the nearest whole​ dollar.) Cost-Benefit Analysis Expected Benefits (Cost Savings): Wages Payroll taxes Total expected benefits Expected Costs: Machine cost Delivery cost Annual operating costs Total expected costs Net expected benefit (cost)

Fantasy Frames Computation of Total Manufacturing Overhead Manufacturing overhead: Plant janitor's salary $1,400 Glue for picture frames 350 Oil for manufacturing equipment 45 Plant supervisor's salary 3,200 Plant depreciation expense. 7,500 Total Manufacturing Overhead $12,495

Fantasy Frames manufactures picture frames. Suppose the​ company's July records include the items described below. Oil for manufacturing equipment $45 Wood for frames $53,000 Company president's salary $23,500 Interest expense $1,700 Plant supervisor's salary $3,200 Depreciation expense on company cars used by sales force $2,500 Plant janitor's salary $1,400 Plant depreciation expense $7,500 Glue for picture frames $350 What is Fantasy Frame's total manufacturing overhead cost in July?

1. Reporter from "The Wall Street Journal" Financial accounting information 2. Regional division managers Managerial accounting information 3. Potential investors Financial accounting information 4. Bookkeeping Department Financial accounting information 5. Manager of the Service Department Managerial accounting information Part 2 6. Wall Street analyst Financial accounting information 7. Division controller Both financial and managerial accounting information 8. State tax agency auditor Financial accounting information 9. External auditor (public accounting firm) Financial accounting information 10. Loan officer at the company's bank Financial accounting information Part 3 11. Board of directors Both financial and managerial accounting information 12. Internal auditor Both financial and managerial accounting information 13. SEC examiner Financial accounting information 14. Current stockholders Financial accounting information

For each of the following users of financial accounting information and managerial accounting​ information, specify whether the user would primarily use financial accounting information or managerial accounting information or both. 1. Reporter from "The Wall Street Journal" 2. Regional division managers 3. Potential investors 4. Bookkeeping Department 5. Manager of the Service Department Part 2 6. Wall Street analyst 7. Division controller 8. State tax agency auditor 9. External auditor (public accounting firm) 10. Loan officer at the company's bank Part 3 11. Board of directors 12. Internal auditor 13. SEC examiner 14. Current stockholders

a. Janitorial services company Job costing b. Soup manufacturer Process costing c. Commercial plumbing contractor Job costing d. Toothpaste manufacturer Process costing e. Catering service Job costing Part 2 f. Shipbuilder Job costing g. Company providing Web design services Job costing h. Medical practice of six doctors and four physician assistants Job costing i. Soft drink bottler Process costing j. Movie studio Job costing Part 3 k. Plastic bottle manufacturer Process costing l. Architect Job costing m. Temporary staffing agency Job costing n. Oil refinery Process costing

For each of the following​ companies, specify whether each company would be more likely to use job costing or process costing. a. Janitorial services company b. Soup manufacturer c. Commercial plumbing contractor d. Toothpaste manufacturer e. Catering service f. Shipbuilder g. Company providing Web design services h. Medical practice of six doctors and four physician assistants i. Soft drink bottler j. Movie studio k. Plastic bottle manufacturer l. Architect m. Temporary staffing agency n. Oil refinery

c. Lease payments on equipment used in the manufacturing plant.

Which of the following costs would be classified as manufacturing​ overhead? a. Depreciation on the fleet of distribution trucks. b. Electricity used in the sales and marketing building. c. Lease payments on equipment used in the manufacturing plant. d. Wages of​ assembly-line workers.

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Martinez Foundry in Youngstown, Ohio​, uses a predetermined manufacturing overhead rate to allocate overhead to individual jobs based on the machine hours required. At the beginning of the​ year, the company expected to incur the​ following:

a. Sugar in the Pez candies - product cost b. Wrappers around each PEZ candy - product cost c. Quality control testing in the PEZ manufacturing plant - product cost d. Manufacturing plant employees' salary and wages - product cost e. Fringe benefits associated with manufacturing plant employees - product cost. f. Employees who work in the PEZ visitor center - period cost g. Fringe benefits associated with employees who work in the PEZ Visitor center - period cost h. Touch screen PEZ video game in the Visitor's center - period cost i. Food and goodie bags for birthday parties held in the PEZ Visitor center - period cost

PEZ Candy Inc. produces the popular small candy that is dispensed in collectible​ flip-top dispensers. In the United​ States, PEZ candies are produced in a factory in Connecticut. The Connecticut location also houses​ PEZ's U.S. headquarters and a PEZ Visitors Center. PEZ candy is made from​ sugar, fruit​ flavoring, coloring, and corn​ syrup; the ingredients are put under pressure to form the hard tablets. About​ 95% of a PEZ tablet is sugar. The PEZ dispensers are popular with​ collectors; there are several PEZ collector conventions throughout the world. PEZ Candy Inc. operates a​ 6,000-square-foot Visitors Center in Connecticut. The Visitors Center houses the​ world's largest collection of PEZ memorabilia on public display. Visitors can also view the factory through special viewing windows. The center also has a​ touch-screen PEZ trivia game and interactive reviews of PEZ history. Birthday party packages are also offered in the Visitors​ Center; partygoers receive goodie bags that include a blank customizable PEZ​ dispenser, PEZ​ candy, a PEZ​ lanyard, and discount coupons. Classify each of the following costs as a product cost or period cost. a. Sugar in the Pez candies b. Wrappers around each PEZ candy c. Quality control testing in the PEZ manufacturing plant d. Manufacturing plant employees' salary and wages e. Fringe benefits associated with manufacturing plant employees f. Employees who work in the PEZ visitor center g. Fringe benefits associated with employees who work in the PEZ Visitor center h. Touch screen PEZ video game in the Visitor's center i. Food and goodie bags for birthday parties held in the PEZ Visitor centera. Sugar in the Pez candies

Pamela's Trim and Perm Calculation of Cost of Goods Sold For the Year Ended Beginning inventory $2,500,000 Plus: Purchases 23,010,000 Cost of goods available for sale $25,510,000 Less: Ending inventory 3,245,000 Cost of goods sold $22,265,000 Part 2 Now prepare Pamela's Trim and Perms' income statement for the year. Pamela's Trim and Perm Income Statement For the Year Ended Sales revenues $39,150,000 Less: Cost of goods sold 22,265,000 Gross profit. $16,885,000 Less: Operating expenses 7,185,000 Operating income $9,700,000

Pamela's Trim and Perm is a retail chain specializing in​ salon-quality hair-care products. During the​ year, Pamela's Trim and Perm had sales of $39,150,000. The company began the year with $2,500,000 of merchandise inventory and ended the year with $3,245,000 of inventory. During the​ year, Pamela's Trim and Perm purchased $23,010,000 of merchandise inventory. The​ company's selling,​ general, and administrative expenses totaled $7,185,000 for the year. Prepare Pamela's Trim and Perms' income statement for the year. Begin by calculating Pamela's Trim and Perms' cost of goods sold using the table below. Pamela's Trim and Perm Calculation of Cost of Goods Sold For the Year Ended Beginning inventory Plus: Purchases Cost of goods available for sale Less: Ending inventory Cost of goods sold Part 2 Now prepare Pamela's Trim and Perms' income statement for the year. Pamela's Trim and Perm Income Statement For the Year Ended Sales revenues Less: Cost of goods sold Gross profit. Less: Operating expenses Operating income

d. direct materials and direct labor

Prime costs consist of: a. direct​ materials, direct​ labor, and manufacturing overhead. b. direct labor and manufacturing overhead. c. direct materials and manufacturing overhead. d. direct materials and direct labor.

Robinson Manufacturing Calculation of Cost of Goods Manufactured For Current Year Beginning work in process inventory $65,100 Plus: Manufacturing costs incurred Direct materials used $517,200 Direct labor. 224,500 Manufacturing overhead 773,175 Total manufacturing costs to account for 1,579,975 Less: Ending work in process inventory. 86,100 Cost of goods manufactured $1,493,875

Robinson Manufacturing found the following information in its accounting​ records: $517,200 of direct materials​ used, $224,500 of direct​ labor, and $773,175 of manufacturing overhead. The Work in Process Inventory account had a beginning balance of $65,100 and an ending balance of $86,100. Compute the​ company's Cost of Goods Manufactured. Complete the following table to determine the cost of goods manufactured. Robinson Manufacturing Calculation of Cost of Goods Manufactured For Current Year Beginning work in process inventory $65,100 Plus: Manufacturing costs incurred Direct materials used $517,200 Direct labor. 224,500 Manufacturing overhead 773,175 Total manufacturing costs to account for 1,579,975 Less: Ending work in process inventory. 86,100 Cost of goods manufactured $1,493,875

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Rocky River Fast Lube does oil changes on vehicles in 15 minutes or less. The variable cost associated with each oil change is $12 ​(oil, filter, and 15 minutes of employee​ time). The fixed costs of running the shop are $8,000 each month​ (store manager​ salary, depreciation on shop and​ equipment, insurance, and property​ taxes). The shop has the capacity to perform 4,000 oil changes each month. Calculate the​ following: a. Total cost of performing 1,000 oil changes in May b. Average cost of performing each oil change in May c. Marginal cost of performing an oil change in May d. If the company could reach full capacity one​ month, what would the total cost​ be? e. At full​ capacity, what would the average cost be of each oil​ change? f. Could Rocky River Fast Lube offer more competitive pricing if it operated closer to full​ capacity? Explain. Requirement a. Total cost of performing 1,000 oil changes in May. Determine the​ formula, then calculate the current total product cost of performing 1,000 oil changes in May.

a. The cost of the cheese in the sandwich the customer ordered

Which one of the following costs would be considered a direct cost of serving a particular customer at a McDonald's restaurant? a. The cost of the cheese in the sandwich the customer ordered b. The depreciation on the restaurant building c. The salary of the restaurant manager d. The cost of heating the restaurant