Managerial Accounting
7th Edition
ISBN: 9781337116008
Author: Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher: South Western Educational Publishing
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Textbook Question
Chapter 2, Problem 52P
Cost Assignment, Direct Costs
Harry Whipple, owner of an inkjet printer, has agreed to allow Mary and Natalie, two friends who are pursuing master’s degrees, to print several papers for their graduate courses. However, he has imposed two conditions. First, they must supply their own paper. Second, they must pay Harry a fair amount for the usage of the ink cartridge. Harry’s printer takes two types of cartridges, a black one and a color one that contains the inks necessary to print in color. Black replacement cartridges cost $25.50 each and print approximately 850 pages. The color cartridge replacement cost $31 and prints approximately 310 color pages. One ream of paper costs $2.50 and contains 500 sheets. Mary’s printing requirements are for 500 pages, while Natalie’s are for 1,000 pages.
Required:
- 1. Assuming that both women write papers using text only (i.e., black ink), what is the total amount owed to Harry by Mary? By Natalie?
- 2. What is the total cost of printing (ink and paper) for Mary? For Natalie?
- 3. Now suppose that Natalie illustrates her writing with many large colorful pie charts and pictures and that about 20% of her total printing is primarily color. Mary uses no color illustrations. What is the total amount owed to Harry by Natalie? What is the total cost of printing (ink and paper) for Natalie?
1.
Expert Solution
To determine
Calculate the amount owed to Person H by Person M and Person N.
Answer to Problem 52P
The amount owed to person H by Person M and Person N is $15 and $30 respectively.
Explanation of Solution
Cost:
Cost can be defined as the cash and cash equivalent which is incurred against the products or its related services which will benefit the organization in the future. There are two types of costs that are direct and indirect costs.
Use the following formula to calculate the amount owed to Person H by Person M:
Substitute 500 pages for the number of printing pages and $0.03 for cost per page for black ink in the above formula.
Therefore, the amount owed to person H by Person M is $15.
Use the following formula to calculate the amount owed to Person H by Person N:
Substitute 1,000 pages for the number of printing pages and $0.03 for cost per page for black ink in the above formula.
Therefore, the amount owed to person H by Person N is $30.
Working Note:
Calculation of cost of printing per page of black ink:
Hence, the amount of cost of printing per page for black ink is $0.03.
2.
Expert Solution
To determine
Calculate the amount of printing cost for Person M and N.
Answer to Problem 52P
The total printing cost for Person M and Person N is $17.50 and $35 respectively.
Explanation of Solution
Use the following formula to calculate the total printing cost for Person M:
Substitute 500 pages for the number of printing pages, $0.03 for cost per page for black ink and $0.005 for the cost of one sheet in the above formula.
Therefore, the total printing cost for Person M is $17.50.
Use the following formula to calculate the total printing cost for Person N:
Substitute 1,000 pages for the number of printing pages, $0.03 for cost per page for black ink and $0.005 for the cost of one sheet in the above formula.
Therefore, the total printing cost for Person N is $35.
Working Note:
Calculation of cost of one sheet:
Hence, the amount of cost of one sheet is $0.005.
3.
Expert Solution
To determine
Calculate the amount owed to Person H by Person N if the proportion of primary color is 20%. Also, calculate the amount of total printing cost for Person N.
Answer to Problem 52P
The amount owned to Person H by Person N is $44 and the total printing cost for Person N is $49.
Explanation of Solution
Use the following formula to calculate the amount owed to Person H by Person N is,
Substitute 800 pages for black ink pages, $0.03 for cost per page for black ink, 200 pages for color ink pages and $0.10 for cost per page for color ink in the above formula.
Therefore, the amount owned to Person H by Person N is $44.
Use the following formula to calculate total printing cost for Person N is,
Substitute $0.03 for the cost per page for black ink, $0.005 for cost per sheet, 800 pages for the number of black ink pages, $0.10 for the cost per page for color ink, $0.005 for cost per sheet, 200 pages for the number of color ink pages in the above formula.
Therefore, the total printing cost for Person N is $49.
Working Notes:
Calculation of cost per page of color ink:
Hence, the cost per page of color ink is $0.10.
Calculation of the number of color ink pages:
Therefore, the numbers of color ink pages are 200.
Calculation of the number of black ink pages:
Therefore, the numbers of black ink pages are 800.
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Alter's Home Center (AHC) sells renovation and remodeling products to both contractors and individual home owners. One of the services AHC offers is delivery of the purchased products to the customer's work site. Because not all customers take advantage of the delivery service option, ACH adds 10 percent to the cost of the products purchased to cover the delivery cost. A business intern spent the summer at ACH. The intern's assignment was to analyze the delivery service and recommend a better way to charge customers for using it. The intern, who had studied activity-based costing, identified the following activities and the data related to them:
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Activity
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Annual Driver Volume
Picking order
Number of items
$ 330,750
367,500
items
Delivering order
Number of orders
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Handling complaints
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Chapter 2 Solutions
Managerial Accounting
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Ch. 2 - Define selling cost. Give five examples of selling...Ch. 2 - What is the cost of goods manufactured?Ch. 2 - What is the difference between cost of goods...Ch. 2 - What is the difference between the income...Ch. 2 - Why do firms like to calculate a percentage column...Ch. 2 - Accumulating costs means that a. costs must be...Ch. 2 - Product (or manufacturing) costs consist of a....Ch. 2 - Use the following information for Multiple-Choice...Ch. 2 - Prob. 4MCQCh. 2 - The accountant in a factory that produces biscuits...Ch. 2 - Which of the following is an indirect cost? a. The...Ch. 2 - Prob. 7MCQCh. 2 - Kelloggs makes a variety of breakfast cereals....Ch. 2 - Prob. 9MCQCh. 2 - Stone Inc. is a company that purchases goods...Ch. 2 - JackMan Company produces die-cast metal bulldozers...Ch. 2 - Prob. 12MCQCh. 2 - Use the following information for Multiple-Choice...Ch. 2 - Use the following information for Multiple-Choice...Ch. 2 - Use the following information for Multiple- Choice...Ch. 2 - Prob. 16MCQCh. 2 - Use the following information for Multiple-Choice...Ch. 2 - 2-18 Use the following information for Multiple-...Ch. 2 - Use the following information for Brief Exercises...Ch. 2 - Use the following information for Brief Exercises...Ch. 2 - Direct Materials Used in Production Slapshot...Ch. 2 - Cost of Goods Manufactured Slapshot Company makes...Ch. 2 - Cost of Goods Sold Slapshot Company makes ice...Ch. 2 - Use the following information for Brief Exercises...Ch. 2 - Use the following information for Brief Exercises...Ch. 2 - Prob. 26BEACh. 2 - Prob. 27BEBCh. 2 - Prob. 28BEBCh. 2 - Direct Materials Used in Production Morning Smiles...Ch. 2 - 2-30 Cost of Goods Manufactured Morning Smiles...Ch. 2 - Cost of Goods Sold Morning Smiles Coffee Company...Ch. 2 - Use the following information for Brief Exercises...Ch. 2 - Use the following information for Brief Exercise:...Ch. 2 - Service Organization Income Statement Healing...Ch. 2 - Prob. 35ECh. 2 - Products versus Services, Cost Assignment Holmes...Ch. 2 - Assigning Costs to a Cost Object, Direct and...Ch. 2 - Total and Unit Product Cost Martinez Manufacturing...Ch. 2 - Cost Classification Loring Company incurred the...Ch. 2 - Classifying Cost of Production A factory...Ch. 2 - Use the following information for Exercises 2-41...Ch. 2 - Use the following information for Exercises 2-41...Ch. 2 - Direct Materials Used Hannah Banana Bakers makes...Ch. 2 - Cost of Goods Sold Allyson Ashley makes jet skis....Ch. 2 - Use the following information for Exercises 2-45...Ch. 2 - Use the following information for Exercises 2-45...Ch. 2 - Use the following information for Exercises 2-47...Ch. 2 - Use the following information for Exercises 2-47...Ch. 2 - Use the following information for Exercises 2-47...Ch. 2 - Understanding the Relationship between Cost Flows,...Ch. 2 - Manufacturing, Cost Classification, Product Costs...Ch. 2 - Cost Assignment, Direct Costs Harry Whipple, owner...Ch. 2 - Cost of Direct Materials, Cost of Goods...Ch. 2 - Preparation of Income Statement: Manufacturing...Ch. 2 - Cost of Goods Manufactured, Cost of Goods Sold...Ch. 2 - Cost Identification Following is a list of cost...Ch. 2 - Income Statement, Cost of Services Provided,...Ch. 2 - Cost of Goods Manufactured, Income Statement W. W....Ch. 2 - Cost Definitions Luisa Giovanni is a student at...Ch. 2 - Cost Identification and Analysis, Cost Assignment,...Ch. 2 - Cost Analysis, Income Statement Five to six times...Ch. 2 - Cost Classification, Income Statement Gateway...Ch. 2 - Cost Information and Ethical Behavior, Service...
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