Financial & Managerial Accounting
14th Edition
ISBN: 9781337119207
Author: Carl Warren, James M. Reeve, Jonathan Duchac
Publisher: Cengage Learning
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Question
Chapter 22, Problem 22.7BE
To determine
Process:
The series of activities in order to perform a task is called a process. For example, for the customer service activity, number of employees is the input, and friendly service experience for the customer is the output.
To identify: Whether each of the following items is an input or output to the copying process of a copy shop.
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The following situations describe decision scenarios that could use managerial accounting information:
The manager of High Times Restaurant wishes to determine the price to charge for various lunch plates.
By evaluating the cost of leftover materials, the plant manager of a precision tool facility wishes to determine how effectively the plant is being run.
The division controller of West Coast Supplies needs to determine the cost of products left in inventory.
The manager of the Maintenance Department of a large manufacturing company wishes to plan next year’s anticipated expenditures. For each situation, discuss how managerial accounting information could be used.
b) What are the major differences between managerial accounting and financial accounting?
The following situations describe decision scenarios that could use managerial accounting information:1. The manager of High Times Restaurant wants to determine the price to charge for various lunch plates.2. By evaluating the cost of leftover materials, the plant manager of a precision tool facility wants to determine how effectively the plant is being run.3. The division controller of West Coast Supplies needs to determine the cost of products left in inventory.4. The manager of the Maintenance Department of a large manufacturing company wants to plan next year’s anticipated expenditures.For each situation, discuss how managerial accounting information could be used.
Dropping a customer, activity-based costing, ethics. Justin Anders is the management accountant for Carey Restaurant Supply (CRS). Sara Brinkley, the CRS sales manager, and Justin are meeting to discuss the profitability of one of the customers, Donnelly’s Pizza. Justin hands Sara the following analysis of Donnelly’s activity during the last quarter, taken from CRS’s activity-based costing system:
Sara looks at the report and remarks, “I’m glad to see all my hard work is paying off with Donnelly’s. Sales have gone up 10% over the previous quarter!”
Justin replies, “Increased sales are great, but I’m worried about Donnelly’s margin, Sara. We were showing a profit with Donnelly’s at the lower sales level, but now we’re showing a loss. Gross margin percentage this quarter was 40%, down five percentage points from the prior quarter. I’m afraid that corporate will push hard to drop them as a customer if things don’t turn around.”
“That’s crazy,” Sara responds. “A lot of that overhead for…
Chapter 22 Solutions
Financial & Managerial Accounting
Ch. 22 - What are the basic objectives in the use of...Ch. 22 - What is meant by reporting by the principle of...Ch. 22 - Prob. 3DQCh. 22 - The materials cost variance report for Nickols...Ch. 22 - Prob. 5DQCh. 22 - Prob. 6DQCh. 22 - Prob. 7DQCh. 22 - A. Describe the two variances between the actual...Ch. 22 - If variances are recorded in the accounts at the...Ch. 22 - Briefly explain why firms might use non financial...
Ch. 22 - Direct materials variances Bellingham Company...Ch. 22 - Direct labor variances Bellingham (Company...Ch. 22 - Factory overhead controllable variance Bellingham...Ch. 22 - Factory overhead volume variance Bellingham...Ch. 22 - Standard cost journal entries Bellingham Company...Ch. 22 - Income statement with variances Prepare an income...Ch. 22 - Prob. 22.7BECh. 22 - Standard direct materials cost per unit Roanoke...Ch. 22 - Standard product cost Sana Rosa Furniture Company...Ch. 22 - Budget performance report Genie in a Bottle...Ch. 22 - Direct materials variances The following data...Ch. 22 - Direct materials variances Silicone Engine Inc....Ch. 22 - Standard direct materials cost per unit from...Ch. 22 - Standard product cost, direct materials variance...Ch. 22 - Direct labor variances The following data relate...Ch. 22 - Direct labor variances La Batre Bicycle Company...Ch. 22 - Direct labor variances Greeson Clothes Company...Ch. 22 - Direct labor variances for a service company...Ch. 22 - Direct materials and direct labor variances At the...Ch. 22 - Flexible overhead budget Leno Manufacturing...Ch. 22 - Flexible overhead budget Wiki Wiki Company has...Ch. 22 - Factory overhead cost variances The following data...Ch. 22 - Factory overhead cost variances Blumen Textiles...Ch. 22 - Factory overhead variance corrections The data...Ch. 22 - Factory overhead cost variance report Tannin...Ch. 22 - Recording standards in accounts Cioffi...Ch. 22 - Recording standards in accounts "The Assembly...Ch. 22 - Prob. 22.21EXCh. 22 - Nonfinancial performance measures Diamond Inc. is...Ch. 22 - Prob. 22.23EXCh. 22 - Direct materials and direct labor variance...Ch. 22 - Flexible budgeting and variance analysis I Love My...Ch. 22 - Direct materials, direct labor, and factory...Ch. 22 - Factory overhead cost variance report Tiger...Ch. 22 - Standards for nonmanufacturing expenses Code Head...Ch. 22 - Direct materials and direct labor variance...Ch. 22 - Flexible budgeting and variance analysis I'm...Ch. 22 - Direct materials, direct labor, and factory...Ch. 22 - Factory overhead cost variance report Feeling...Ch. 22 - Prob. 22.5BPRCh. 22 - Genuine Spice Inc. began operations on January 1...Ch. 22 - Admissions time variance Valley Hospital began...Ch. 22 - United States Postal Service: Mail sorting time...Ch. 22 - Direct labor time variance Maywood City Police...Ch. 22 - Ethics in Action Dash Riprock is a cost analyst...Ch. 22 - Prob. 22.3TIF
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Similar questions
For each of the activities listed, choose the manufacturing concept that applies: (i) just-in-time inventory, (ii) continuous improvement, or (iii) total quality management. A company receives inventory daily based on customer orders. Manufacturing factories have been arranged in such a fashion to reduce inefficiencies. Companies organize customer focus groups in order to look at customer needs and expectations. The entire production process is standardized and written down with procedures. Each customer receives a survey of satisfaction with their product. All orders are complete and shipped within three business days.
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A quality control activity analysis indicated the following four activity costs of a hotel:
Inspecting cleanliness of rooms
$181,350
Processing lost customer reservations
60,450
Rework incorrectly prepared room service meal
241,800
Employee training
120,900
Total
$604,500
Sales are $3,100,000.
This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the question below.
Open spreadsheet
Prepare a cost of quality report. Round the percents of total quality cost to the nearest whole number and the percents of total sales to one decimal place.
Cost of Quality Report
Quality Cost Classification
Quality Cost
Percent of Total Quality Cost
Percent of Total Sales
Prevention
$
%
%
Appraisal
%
%
Internal failure
%
%
External failure
%
%
Total
$
%
%
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Cost Classification
Match each cost to the appropriate cost behavior pattern shown in graphs (a) through (l). Any graph can fit two or more patterns.
The cost of lumber used to manufacture wooden kitchen tables.
The cost of order fillers in a warehouse. When demand increases significantly, the number of order fillers is increased, and when demand falls off significantly, the number is decreased.
The salary of the plant’s quality control inspector, who inspects each batch of products.
The cost of water and sewer service to the manufacturing plant. The local municipality charges a fixed rate per gallon for usage up to 10,000 gallons and a higher charge per gallon for usage above that point.
The cost of an internet connection of $23 per month.
The cost of an internet connection of $10 per month plus $2 per hour of usage above 10 hours.
The cost to make copies of a given document at a printing shop, where the per-copy charge is reduced for customers who make more than…
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ctivity-Based Costing for a Service Business
Sterling Hotel uses activity-based costing to determine the cost of servicing customers. There are three activity pools: guest check-in, room cleaning, and meal service. The activity rates associated with each activity pool are $8 per guest check-in, $25 per room cleaning, and $4 per served meal (not including food). Ginny Campbell visited the hotel for a three-night stay. Campbell had three meals in the hotel during her visit.
Determine the total activity-based cost for Campbell's visit.
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Step-Down Method
Madison Park Co-op, a whole foods grocery and gift shop, has provided the following data to be used in its service department cost allocations:
Required:
Using the step-down method, allocate the costs of the service departments to the two operating departments. Allocate Administration first on the basis of employee-hours and then Janitorial on the basis of space occupied.
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Sleep Late, a large hotel chain, has been using activity-based costing to determine the cost of a night’s stay at their hotels. One of the activities, “Inspection,” occurs after a customer has checked out of a hotel room. Sleep Late inspects every 10th room and has been using “number of rooms inspected” as the cost driver for inspection costs. A significant component of inspection costs is the cost of the supplies used in each inspection Mary Adams, the chief inspector, is wondering whether inspection labor-hours might be a better cost driver for inspection costs. Mary gathers information for weekly inspection costs, rooms inspected, and inspection labor-hours as follows:
Q.Explain why rooms inspected and inspection labor-hours are plausible cost drivers of inspection costs.
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Sleep Late, a large hotel chain, has been using activity-based costing to determine the cost of a night’s stay at their hotels. One of the activities, “Inspection,” occurs after a customer has checked out of a hotel room. Sleep Late inspects every 10th room and has been using “number of rooms inspected” as the cost driver for inspection costs. A significant component of inspection costs is the cost of the supplies used in each inspection Mary Adams, the chief inspector, is wondering whether inspection labor-hours might be a better cost driver for inspection costs. Mary gathers information for weekly inspection costs, rooms inspected, and inspection labor-hours as follows:
Q.Mary expects inspectors to inspect 300 rooms and work for 105 hours next week. Using the cost driver , what amount of inspection costs should Mary budget?
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Required information Skip to question [The following information applies to the questions displayed below.] Zenon Computer competes at the retail level on the basis of customer service. It has invested significant resources in its customer service department. Recently, the company has installed a traditional activity-based costing (ABC) system to provide better cost information for pricing, decision making, and customer profitability analysis. Most of the costs of running the customer service department are considered committed (i.e., short-term fixed) costs (principally, personnel and equipment costs). The budgeted cost for the upcoming period is $832,000. Activity analysis, recently conducted when the ABC system was implemented, revealed the following information: Activities Percentage of Employee Time Estimated (Budgeted) Cost Driver Quantity Handling customer orders 75% 8,320 customer orders Processing customer complaints 10 416 customer complaints Conducting customer credit checks…
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Cost of Quality Report A quality control activity analysis indicated the following four activity costs of a hotel: Inspecting cleanliness of rooms $67,600 Processing lost customer reservations 16,900 Rework incorrectly prepared room service meal 33,800 Employee training50,700 Total$169,000 Sales are $1,300,000. Prepare a cost of quality report. Round percent of sales to one decimal place. Cost of Quality Report
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Following items belong to the revenue, expenditure, human resources/payroll, production, or financing cycle. Classify each item based on the cycle it belongs to.
a. Pay pay-as-you-earn (PAYE) payroll taxes
b. Send material requisition to inventory
c. Issue stock to investors
d. Borrow money from the bank to purchase a new factory
e. Complete receiving report
f. Appoint replacement purchasing clerk
g. Measure employee performance using a performance management system
h. Choose suitable supplier of raw materials
i. Ensure employees are up to date with the latest tax provisions
j. Record personal and tax information for new employees
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Regression, activity-based costing, choosing cost drivers. Sleep Late, a large hotel chain, has been using activity-based costing to determine the cost of a night’s stay at their hotels. One of the activities, “Inspection,” occurs after a customer has checked out of a hotel room. Sleep Late inspects every 10th room and has been using “number of rooms inspected” as the cost driver for inspection costs. A signicant component of inspection costs is the cost of the supplies used in each inspection.
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Cost of Quality Report
A quality control activity analysis indicated the following four activity costs of a hotel:
Inspecting cleanliness of rooms
$167,400
Processing lost customer reservations
55,800
Rework incorrectly prepared room service meal
223,200
Employee training
111,600
Total
$558,000
Sales are $3,100,000. Prepare a cost of quality report. Round percent of sales to one decimal place.
Cost of Quality Report
Quality CostClassification
Quality Cost
Percent of TotalQuality Cost
Percent ofTotal Sales
Prevention
$fill in the blank 1
fill in the blank 2%
fill in the blank 3%
Appraisal
fill in the blank 4
fill in the blank 5%
fill in the blank 6%
Internal failure
fill in the blank 7
fill in the blank 8%
fill in the blank 9%
External failure
fill in the blank 10
fill in the blank 11%
fill in the blank 12%
Total
$fill in the blank 13
fill in the blank 14%
fill in the blank 15%
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