Managerial Accounting: Creating Value in a Dynamic Business Environment
12th Edition
ISBN: 9781260417074
Author: HILTON, Ronald
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Chapter 5, Problem 63P
a.
To determine
Introduction: The budgeting is a process of estimating the future costs, revenues, and profits for the business organizations. The actual results are compared with the budgeted results to know the variances and their causes.
To classify: The steps in the production process into different categories such as process time, inspection time, waiting time, storage time, and move time.
b.
To determine
Introduction: Budgeting is a process of estimating future costs, revenues, and profits for business organizations. The actual results are compared with the budgeted results to know the variances and their causes.
To list: The steps in the production process that could be a candidate for non-value-added activities.
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Tasty Bread makes and supplies bread throughout the state of Kansas. Three types of bread are produced: loaves, rolls, and buns. Seven operations describe the production process.
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Mixing: Flour, milk, yeast, salt, butter, and so on, are mixed in a large vat.
Shaping: A conveyor belt transfers the dough to a machine that weighs it and shapes it into loaves, rolls, or buns, depending on the type being produced.
Rising: The individually shaped dough is allowed to sit and rise.
Baking: The dough is moved to a 100-foot-long funnel oven. (The dough enters the oven on racks and spends 20 minutes moving slowly through the oven.)
Cooling: The bread is removed from the oven and allowed to cool.
Slicing: For loaves and buns (hamburger and hot dog), the bread is sliced.
Packaging: The bread is wrapped (packaged).
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Tasty produces its products in batches. The size of the batch depends on the individual orders that must be filled (orders come from retail grocers throughout the state). Usually, as…
Entries for Materials Cost Flows in a Process Cost System
The Hershey Company manufactures chocolate confectionery products. The three largest raw materials are cocoa, sugar, and dehydrated milk. These raw materials first go into the Blending Department. The blended product is then sent to the Molding Department,
where the bars of candy are formed. The candy is then sent to the Packing Department, where the bars are wrapped and boxed. The boxed candy is then sent to the distribution center, where it is eventually sold to food brokers and retailers.
Show the accounts debited and credited for each of the following business events:
a. Materials used by the Blending Department.
Debit account
Credit account
Credit account
Credit account
b. Transfer of blended product to the Molding Department.
Debit account
Credit account
c. Transfer of chocolate to the Packing Department.
Debit account
Credit account
d. Transfer of boxed chocolate to the distribution center.
Debit account
Credit account
e.…
Your company produces sandwich cookie snack packs. There are three main processes used to make the cookies. The first process preps and mixes the ingredients into the cookie and the filling. The second process shapes, forms and bakes the cookies. The third process packages the cookies. The cookies are sold in cases of 30 cookie packs (1 case is a unit)
Information on the direct materials is listed in table 1. Consider this information the standard.   Direct labor information given in Table 2. Consider this information the standard.Â
Annual overhead information is given in Table 3. Overhead is allocated based direct labor hours. Estimated annual direct labor hours are 221,800. Calculate a predetermined OH rate (round to two decimal places if needed). Use this rate when you need to apply OH.
Table 4 gives you the information for the last six months on the manufacturing overhead cost and machine hours. Using the high/low method of cost estimation and this information, determine…
Chapter 5 Solutions
Managerial Accounting: Creating Value in a Dynamic Business Environment
Ch. 5 - Briefly explain how a traditional, volume-based...Ch. 5 - Prob. 2RQCh. 5 - Explain how an activity-based costing system...Ch. 5 - What are cost drivers? What is their role in an...Ch. 5 - List and briefly describe the four broad...Ch. 5 - How can an activity-based costing system alleviate...Ch. 5 - Prob. 7RQCh. 5 - How is the distinction between direct and indirect...Ch. 5 - Explain the concept of a pool rate in...Ch. 5 - Briefly explain two factors that tend to result in...
Ch. 5 - List three factors that are important in selecting...Ch. 5 - Prob. 12RQCh. 5 - Explain why a new product-costing system may be...Ch. 5 - Prob. 14RQCh. 5 - Are activity-based costing systems appropriate for...Ch. 5 - Explain why maintaining their medical-services...Ch. 5 - How could the administration at Immunity Medical...Ch. 5 - Prob. 18RQCh. 5 - Prob. 19RQCh. 5 - What is meant by the term activity analysis? Give...Ch. 5 - Prob. 21RQCh. 5 - What is meant by customer-profitability analysis?...Ch. 5 - Explain the relationship between customer profit...Ch. 5 - What is a customer profitability profile?Ch. 5 - Describe the use of practical capacity in a TDABC...Ch. 5 - Tioga Company manufactures sophisticated lenses...Ch. 5 - Urban Elite Cosmetics has used a traditional cost...Ch. 5 - Kentaro Corporation manufactures Digital Video...Ch. 5 - Kentaro Corporation manufactures Digital Video...Ch. 5 - Prob. 31ECh. 5 - Refer to the description given for Wheelco, Inc....Ch. 5 - Prob. 33ECh. 5 - United Technologies Corporation implemented...Ch. 5 - Redwood Company sells craft kits and supplies to...Ch. 5 - Non-value-added costs occur in nonmanufacturing...Ch. 5 - Since you have always wanted to be an...Ch. 5 - Prob. 39ECh. 5 - Prob. 42ECh. 5 - Prob. 44ECh. 5 - Borealis Manufacturing has just completed a major...Ch. 5 - Ontario, Inc. manufactures two products, Standard...Ch. 5 - Kitchen Kings Toledo plant manufactures three...Ch. 5 - Prob. 48PCh. 5 - Maxey Sons manufactures two types of storage...Ch. 5 - Prob. 50PCh. 5 - John Patrick has recently been hired as controller...Ch. 5 - The controller for Tulsa Medical Supply Company...Ch. 5 - Prob. 53PCh. 5 - Prob. 54PCh. 5 - Prob. 55PCh. 5 - World Gourmet Coffee Company (WGCC) is a...Ch. 5 - Knickknack, Inc. manufactures two products: Odds...Ch. 5 - Prob. 58PCh. 5 - Marconi Manufacturing produces two items in its...Ch. 5 - Gigabyte, Inc. manufactures three products for the...Ch. 5 - Refer to the new target prices for Gigabytes three...Ch. 5 - Prob. 62PCh. 5 - Prob. 63PCh. 5 - Midwest Home Furnishings Corporation (MHFC)...Ch. 5 - Fresno Fiber Optics, Inc. manufactures fiber optic...Ch. 5 - Refer to the information given in the preceding...Ch. 5 - Whitestone Company produces two subassemblies,...Ch. 5 - Morelli Electric Motor Corporation manufactures...Ch. 5 - Refer to the product costs developed in...Ch. 5 - Morelli Electric Motor Corporations controller,...
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- Entries for materials cost flows in a process cost system The Hershey Company manufactures chocolate confectionery products. The three largest raw materials are cocoa, sugar, and dehydrated milk. These raw materials first go into the Blending Department. The blended product is then sent to the Molding Department, where the bars of candy are formed. The candy is then sent to the Packing Department, where the bars are wrapped and boxed. The boxed candy is then sent to the distribution center, where it is eventually sold to food brokers and retailers. Show the accounts debited and credited for each of the following business events: A. Materials used by the Blending Department B. Transfer of blended product to the Molding Department C. Transfer of chocolate to the Packing Department D. Transfer of boxed chocolate to the distribution center E. Sale of boxed chocolatearrow_forwardHealthway uses a process-costing system to compute the unit costs of the minerals that it produces. It has three departments: Mixing, Tableting, and Bottling. In Mixing, at the beginning of the process all materials are added and the ingredients for the minerals are measured, sifted, and blended together. The mix is transferred out in gallon containers. The Tableting Department takes the powdered mix and places it in capsules. One gallon of powdered mix converts to 1,600 capsules. After the capsules are filled and polished, they are transferred to Bottling where they are placed in bottles, which are then affixed with a safety seal and a lid and labeled. Each bottle receives 50 capsules. During July, the following results are available for the first two departments (direct materials are added at the beginning in both departments): Overhead in both departments is applied as a percentage of direct labor costs. In the Mixing Department, overhead is 200 percent of direct labor. In the Tableting Department, the overhead rate is 150 percent of direct labor. Required: 1. Prepare a production report for the Mixing Department using the weighted average method. Follow the five steps outlined in the chapter. Round unit cost to three decimal places. 2. Prepare a production report for the Tableting Department. Materials are added at the beginning of the process. Follow the five steps outlined in the chapter. Round unit cost to four decimal places.arrow_forwardProcess activity analysis The Brite Beverage Company bottles soft drinks into aluminum cans. The manufacturing process consists of three activities: 1. Mixing: water, sugar, and beverage concentrate are mixed. 2. Filling: mixed beverage is filled into 12-oz. cans. 3. Packaging: properly filled cans are boxed into cardboard fridge packs. The activity costs associated with these activities for the period are as follows: The activity costs do not include materials costs, which are ignored for this analysis. Each can is expected to contain 12 ounces of beverage. Thus, after being filled, each can is automatically weighed. If a can is too light, it is rejected, or kicked, from the filling line prior to being packaged. The primary cause of kicks is heat expansion. With heat expansion, the beverage overflows during filling, resulting in underweight cans. This process begins by mixing and filling 6,300,000 cans during the period, of which only 6,000,000 cans are actually packaged. Three hundred thousand cans are rejected due to underweight kicks. A process improvement team has determined that cooling the cans prior to filling them will reduce the amount of overflows due to expansion. After this improvement, the number of kicks is expected to decline from 300,000 cans to 63,000 cans, thus increasing the number of filled cans to 6,237,000 [6,000,000 + (300,000 63,000)]. A. Determine the total activity cost per packaged can under present operations. B. Determine the amount of increased packaging activity costs from the expected improvements. C. Determine the expected total activity cost per packaged can after improvements. Round to three decimal places.arrow_forward
- Christie's Co. manufactures cookies. The company has two departments, Mixing and Baking. For the Baking Department, material is added at the beginning of the process. Work happens evenly throughout the process, so Conversion Costs are added evenly to the product. Once mixing is complete, the cookies pieces are immediately transferred to the Baking Department. Once the baking is complete, the final product is transferred to Finished Goods Inventory. Data for the Baking Department is as follows:  Units Transfer $ DirectMaterials $ % Complete Conv Costs % Complete Opening WIP          550 $3,500 $2,800 100% $2,100 30% New units & Costs       2,000 $12,300 $8,100  $14,000  Ending WIP          680   ???  65% Calculate the physical and equivalent units for Transferred-In, Direct Materials and Conversion Costsarrow_forwardsolve A and B Bread makes and supplies bread throughout the state of Kansas. Three types of bread are produced: loaves, rolls, and buns. Seven operations describe the production process.a. Mixing: Flour, milk, yeast, salt, butter, and so on, are mixed in a large vat.b. Shaping: A conveyor belt transfers the dough to a machine that weighs it andshapes it into loaves, rolls, or buns, depending on the type being produced.c. Rising: The individually shaped dough is allowed to sit and rise.d. Baking: The dough is moved to a 100-foot-long funnel oven. (The dough entersthe oven on racks and spends 20 minutes moving slowly through the oven.)e. Cooling: The bread is removed from the oven and allowed to cool.f. Slicing: For loaves and buns (hamburger and hot dog), the bread is sliced.g. Packaging: The bread is wrapped (packaged).Tasty produces its products in batches. The size of the batch depends on the individ- ual orders that must be filled (orders come from retail grocers throughout the…arrow_forwardBavarian Chocolate Company processes chocolate into candy bars. The process begins by placing direct materials (raw chocolate, milk, and sugar) into the Blending Department. All materials are placed into production at the beginning of the blending process. After blending, the milk chocolate is then transferred to the Molding Department, where the milk chocolate is formed into candy bars. The following is a partial work in process accountof the Blending Department at October 31:AttachmentInstructions1. Prepare a cost of production report and identify the missing amounts for Work in Process—Blending Department.2. Assuming that the October 1 work in process inventory includes direct materials of $38,295, determine the increase or decrease in the cost per equivalent unit for direct materials and conversion between September and October.arrow_forward
- Rich company produces a variety of stationery products. One product, sealing wax sticks,passes through two processes: blending and molding. The weighted average method is used toaccount for the cost of production. Two ingredients, paraffin and pigment are added at thebeginning of the process and heated and mixed for several hours. After blending, the resultingproduct is sent to the Molding department, where it is poured into molds and cooled. Thefollowing information relates to the blending process for November:a) Work in process, November 1, had 20,000 pounds, 20% complete with respect toconversion costs. Costs associated with partially completed units withParaffin $ 120,000Pigment $ 100,000Direct Labor $ 30,000Overhead applied $ 10,000b) Work in process, August 31, had 30,000 pounds, 70% complete with respect toconversion costs.c) Units completed and transferred out totaled 500,000 pounds. Costs added during themonth were:Paraffin $ 3,060,000Pigment $ 2,550,000Direct Labor $…arrow_forwardFor all Problems, assume the weighted-average method is to be used unless you are told otherwise. Preparing a production cost report, second department, with beginning WIP and transferred in costs; journal entries; FIFO method Happy Colors manufactures crayons in a three-step process: mixing, molding packaging. The Mixing Department combines the direct materials of paraffin wax and pigments. The heated mixture is pumped to the Molding Department, where it is poured into molds. After the molds cool, the crayons are removed from the molds and are transferred to the Packaging Department, where paper wrappers are added and the crayons are boxed. In the Mixing Department, the direct materials are added at the beginning of the process and the conversion costs are incurred evenly throughout the process. Work in process of the Mixing Department on April 1, 2018, consisted of 300 batches of crayons that were 30% of the way through the production process. The beginning balance in Work-in-Process…arrow_forwardBenson Pharmaceuticals uses a process-costing system to compute the unit costs of the over-the-counter cold remedies that it produces. It has three departments: mixing, encapsulating, and bottling. In mixing, the ingredients for the cold capsules are measured, sifted, and blended (with materials assumed to be uniformly added throughout the process). The mix is transferred out in gallon containers. The encapsulating department takes the powdered mix and places it in capsules (which are necessarily added at the beginning of the process). One gallon of powdered mix converts into 1,500 capsules. After the capsules are filled and polished, they are transferred to bottling, where they are placed in bottles that are then affixed with a safety seal, lid, and label. Each bottle receives 50 capsules. During March, the following results are available for the first two departments: Overhead in both departments is applied as a percentage of direct labor costs. In the mixing department, overhead is 200% of direct labor. In the encapsulating department, the overhead rate is 150% of direct labor. Required: 1. Prepare a production report for the mixing department using the weighted average method. Follow the five steps outlined in the chapter. (Note: Round to two decimal places for the unit cost.) 2. Prepare a production report for the encapsulating department using the weighted average method. Follow the five steps outlined in the chapter. (Note: Round to four decimal places for the unit cost.) 3. CONCEPTUAL CONNECTION Explain why the weighted average method is easier to use than FIFO. Explain when weighted average will give about the same results as FIFO.arrow_forward
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