FUNDAMENTALS OF COST ACCT.-CONNECT CARD
6th Edition
ISBN: 9781260852349
Author: LANEN
Publisher: MCG
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Chapter 9, Problem 27CADQ
To determine
Determine the best response in accordance with the situation given.
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a. Describe the flow of costs through a product costing system. What specific accounts are involved and how are they used?
b. When a single volume based cost driver is used to apply manufacturing overhead, what is the managerial accountant's primary objective in selecting the cost driver?
c. Assume Kardan university has decided to replace all professors with teaching robots. How might this switch impact on the university's choice of cost driver as the basis for overhead application? Explain.
Chapter 9 Solutions
FUNDAMENTALS OF COST ACCT.-CONNECT CARD
Ch. 9 - Give examples of cost drivers commonly used to...Ch. 9 - What is the death spiral? How is it related to the...Ch. 9 - The product costs reported using either plantwide...Ch. 9 - Why do companies commonly use direct labor-hours...Ch. 9 - What are the costs of moving to an activity-based...Ch. 9 - What are the basic steps in computing costs using...Ch. 9 - Prob. 7RQCh. 9 - Prob. 8RQCh. 9 - What type of organization is most likely to...Ch. 9 - Prob. 10RQ
Ch. 9 - How does complexity lead to higher costs? Why is...Ch. 9 - Prob. 12RQCh. 9 - Prob. 13RQCh. 9 - Why are cost drivers based on direct labor widely...Ch. 9 - Prob. 15CADQCh. 9 - Activity-based costing could not be applied in a...Ch. 9 - Activity-based costing is the same as department...Ch. 9 - Prob. 18CADQCh. 9 - It is clear after reading this chapter that...Ch. 9 - Prob. 20CADQCh. 9 - Prob. 21CADQCh. 9 - Prob. 22CADQCh. 9 - Prob. 23CADQCh. 9 - Activity-based costing is just another inventory...Ch. 9 - Prob. 25CADQCh. 9 - Prob. 26CADQCh. 9 - Prob. 27CADQCh. 9 - One of the issues we identified with traditional...Ch. 9 - The cost accounting manager at your business says...Ch. 9 - Prob. 30CADQCh. 9 - Prob. 31ECh. 9 - Reported Costs and Decisions Kima Company...Ch. 9 - Plantwide versus Department Allocation Munoz...Ch. 9 - Plantwide versus Department Allocation Main Street...Ch. 9 - Unitwide versus Department...Ch. 9 - Prob. 36ECh. 9 - Prob. 37ECh. 9 - Upriver currently applies overhead on the basis of...Ch. 9 - Compute the unit costs for the two products, V-1...Ch. 9 - Prob. 40ECh. 9 - Prob. 41ECh. 9 - Activity-Based Costing in a Nonmanufacturing...Ch. 9 - Activity-Based versus Traditional Costing Maglie...Ch. 9 - Activity-Based Costing versus Traditional Costing...Ch. 9 - Activity-Based Costing in a Service Environment...Ch. 9 - Activity-Based versus Traditional Costing Isadores...Ch. 9 - Prob. 47ECh. 9 - Activity-Based Costing: Cost Flows through...Ch. 9 - Prob. 49ECh. 9 - Activity-Based Costing for an Administrative...Ch. 9 - Prob. 51ECh. 9 - Time-Driven Activity-Based Costing Kim...Ch. 9 - Time-Driven ABC for an Administrative Service The...Ch. 9 - Comparative Income Statements and Management...Ch. 9 - Comparative Income Statements and Management...Ch. 9 - Prob. 56PCh. 9 - Activity-Based Costing and Predetermined Overhead...Ch. 9 - Activity-Based Costing and Predetermined Overhead...Ch. 9 - Choosing an Activity-Based Costing System Pickle...Ch. 9 - Churchill Products is considering updating its...Ch. 9 - Utica Manufacturing (UM) was recently acquired by...Ch. 9 - Cain Components manufactures and distributes...Ch. 9 - Prob. 63PCh. 9 - Prob. 64PCh. 9 - Prob. 65PCh. 9 - Cawker Products has two manufacturing...Ch. 9 - MTI makes three types of lawn tractors: M3100,...Ch. 9 - Prob. 68PCh. 9 - Prob. 69PCh. 9 - Prob. 72IC
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- 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?arrow_forwardDarnell Poston, owner of Poston Manufacturing, Inc., wants to determine the cost behavior of labor and overhead. Darnell pays his workers a salary; during busy times, everyone works to get the orders out. Temps (temporary workers hired through an agency) may be hired to pack and prepare completed orders for shipment. During slower times, Darnell catches up on bookkeeping and administrative tasks while the salaried workers do preventive maintenance, clean the lines and building, etc. Temps are not hired during slow times. Darnell found that workers salaries, temp agency payments, rentals, utilities, and plant and equipment depreciation are the largest dollar accounts. He believes that workers salaries and plant and equipment depreciation are fixed, temp agency payments are associated with the number of orders (since temp workers are used to pack and prepare completed orders for shipment), and electricity is associated with the number of machine hours. When the number of different parts stored by Poston exceeds the space in the materials storeroom, Darnell rents nearby warehouse space. He can rent as much or as little space as he wants on a month-to-month basis. Therefore, he believes warehouse rental payments are variable with the number of parts purchased and stored. The account balances for the past six months as well as the six-month total are as follows: Information on number of machine hours, orders, and parts for the six-month period follows: Required: 1. Calculate the monthly average account balance for each account. Calculate the average monthly amount for each of the three drivers. 2. Calculate fixed monthly cost and the variable rates for temp agency payments, warehouse rent, and electricity. Express the results in the form of an equation for total cost. 3. In July, Darnell predicts there will be 420 orders, 250 parts, and 5,900 machine hours. What is the total labor and overhead cost for July? 4. What if Darnell buys a new machine in July for 24,000? The machine is expected to last 10 years and will have no salvage value at the end of that time. What part of the cost equation will be affected? How? What is the new expected cost in July?arrow_forwardAccounting Direct labor or machine hours may not be the appropriate cost driver for overhead in all areas of manufacturing due to the complexities of many manufacturing processes. Many companies use activity-based costing (ABC) which uses multiple drivers (items that consume resources) rather than just one driver to apply overhead to their activities. With ABC, a company can use a cost driver that has a direct cause/effect relationship in its applied overhead costs. Waterways looked into ABC as a method of costing because of the variety of items it produces and the many different activities in which it is involved. The activities listed below area sample of possible cost pools for Waterways. Assembling Payroll Billing Plant supervision Digging trenches Product design Janitorial Purchasing materials Machine maintenance Selling Machine setups Testing Molding Welding Packaging Using the following information, determine the overhead rates and the actual cost assigned for each of the…arrow_forward
- Which of the following statements are true? 1. A cost driver is a factor, such as machine-hours, beds occupied, computer time, or flight-hours, that causes direct costs. II. Job-order costing systems often use allocation bases that do not reflect how jobs actually use overhead resources. III. An employee time ticket is an hour-by-hour summary of the employee's activities throughout the day.arrow_forwardWhat costs associated with a job are allocated to manufacturing overhead. I always get this question wrong when I look at a sheet of expenses in my managerial accounting class. Does insurance and utilities always count as overhead, for example.arrow_forwardFrom the choices presented in parentheses, choose the appropriate term for completing each of the following sentences:a. The phase of the management process that uses process information to eliminate the source of problems in a process so that the process delivers the correct product in the correct quantities is called (directing, improving).b. Direct labor costs combined with factory overhead costs are called (prime, conversion) costs.c. The salaries of salespeople are normally considered a (period, product) cost.d. The plant manager’s salary would be considered (direct, indirect) to the product.e. Long-term plans are called (strategic, operational) plans.f. Materials for use in production are called (supplies, materials inventory).g. An example of factory overhead is (electricity used to run assembly line, CEO salary).arrow_forward
- Overhead application to costs is a critical issue for the costing of your products. We are studying several ways to handle this situation. What would cause an overhead to be overapplied, or underapplied. Discuss the results to your decision making and the financial statements for each of those two situations.arrow_forward5) Which one of the following best describes a job cost sheet? a. It is a form used to record the costs chargeable to a specific job and to de total and unit costs of the completed job. b. It is used to track manufacturing overhead costs to specific jobs. C. It is used by management to understand how direct costs affect profitabi d. It is a daily form that management uses for tracking worker producti employee raises are based.arrow_forward1. What is a predetermined overhead rate and explain why many companies use it? 2. Many accountants believe that overhead costs are the main source of product cost distortions. Do you agree or disagree? 3. Explain activity-based product costing.arrow_forward
- Please help me understand why is direct labor a poor base for allocating overhead in many companies? Please Explain thoroghly so I can understand better. Thank Youarrow_forwardWhich of the following would be true for a service company? a. ABC helps the company make more informed decisions about services. b. Service companies use only a few activities, so a plantwide overhead allocation is always appropriate. c. Most of the company’s costs are for direct materials and direct labor. Indirect costs are a small proportion of total costs. d. All of the above are true.arrow_forwardThe printing industry has become highly automated. Job costing in the printing industry would likely have the following general framework. Job cost equals: None of these answer choices are correct. direct materials cost, plus outside purchase costs, plus overhead cost applied on the basis of labor hours. direct materials cost, plus conversion costs applied on the basis of labor hours. direct materials cost, plus direct labor cost plus applied overhead based on machine hours. materials purchases, labor incurred and applied overhead based on labor hoursarrow_forward
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