Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN: 9781337115773
Author: Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter 4, Problem 54P
1.
To determine
Make a
2.
To determine
Explain the reason of exclusion of overhead from the charges. Also explain the method of charging overhead to the clients by SM.
3.
To determine
Prepare a source document and make up the data that will give 510 miles driven in total on the Job A.
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
Donald Waddell got a job at the Boyce Thompson Institute for Plant Research. Waddell did not have an employment contract for a fixed term, and the institute’s employee manual said that his job was “terminable at will.” Soon after he was hired, the institute implemented a whistleblower policy designed to encourage “the highest standards of financial reporting and lawful and ethical behavior.” Waddell repeatedly told his supervisor, Sophia Darling, that she needed to file certain financial documents more promptly. Darling fired Waddell, telling him that he was disrespectful and insubordinate. Define “at will” employment and wrongful termination. Based on the evidence given, was Waddell wrongfully terminated? Why, or why not.
A proper perspective on economics of workplace accidents can be gained by viewing them in the overall context of all accidents. Overall cost of accidents is about 150 million Cedis annually: 1) Wage lost is 20 million Cedis, 2) Medical expenses is 38 million Cedis, 3) Insurance administration is 29 million Cedis, 4) Motor vehicle damage is 27 million Cedis and 5) Fire losses is 15 million Cedis. Against the backdrop:a) Calculate the % wage lost medical expenses, insurance administration, motor vehicle damage and fire lost.
b) Comment on the results in question (a).
c) Propose a model that facilitates cost analysis in question (b).
Boxes-and-Stuff, a box-packing and mailing company in a small town along the Gulf Coast, lost a key employee last month when its accounting manager was fired for embezzling company money. Now, the owners of Boxes-and-Stuff, Jerome and Natalia, need to find another accounting manager fast. But as they hurry to fill the position, they don't want to select a dishonest or incompetent employee. They need to be cautious. Fortunately, the police chief found the embezzled funds in a bank account set up by the former employee and authorized the return of the money. This means that Boxes-and-Stuff will not lose the embezzled amount, after all. However, Jerome and Natalia are already thinking of ways to protect their company from other risks. They want to be prepared for risky situations in the future. Questions: 1. Which risks do you think Boxes-and-Stuff might face?
Chapter 4 Solutions
Managerial Accounting: The Cornerstone of Business Decision-Making
Ch. 4 - What are job-order costing and process costing?...Ch. 4 - Give some examples of service firms that might use...Ch. 4 - What is normal costing? How does it differ from...Ch. 4 - Why are actual overhead rates seldom used in...Ch. 4 - Explain how overhead is assigned to production...Ch. 4 - What is underapplied overhead? When Cost of Goods...Ch. 4 - What is overapplied overhead? When Cost of Goods...Ch. 4 - Suppose that you and a friend decide to set up a...Ch. 4 - Why might a company decide to use departmental...Ch. 4 - What is the role of materials requisition forms in...
Ch. 4 - Carver Company uses a plantwide overhead rate...Ch. 4 - Prob. 12DQCh. 4 - Is the cost of a job related to the price charged?...Ch. 4 - If a company decides to increase advertising...Ch. 4 - How can a departmental overhead system be...Ch. 4 - (Appendix 4B) Describe the difference between...Ch. 4 - Prob. 17DQCh. 4 - Prob. 18DQCh. 4 - Prob. 19DQCh. 4 - (Appendix 4B) Explain the difference between the...Ch. 4 - Which of the following statements is true? a....Ch. 4 - The ending balance of which of the following...Ch. 4 - In a normal costing system, the cost of a job...Ch. 4 - The predetermined overhead rate equals a. actual...Ch. 4 - Prob. 5MCQCh. 4 - Applied overhead is a. an important part of normal...Ch. 4 - The overhead variance is overapplied if a. actual...Ch. 4 - Which of the following is typically a job-order...Ch. 4 - Which of the following is typically a...Ch. 4 - Prob. 10MCQCh. 4 - Prob. 11MCQCh. 4 - Prob. 12MCQCh. 4 - Wilson Company has a predetermined overhead rate...Ch. 4 - (Appendix 4A) When a job costing 2,000 is finished...Ch. 4 - (Appendix 4B) Those departments responsible for...Ch. 4 - Prob. 16MCQCh. 4 - (Appendix 4B) An example of a producing department...Ch. 4 - (Appendix 4B) An example of a support department...Ch. 4 - (Appendix 4B) The method that assigns support...Ch. 4 - (Appendix 4B) The method that assigns support...Ch. 4 - (Appendix 4B) The method that assigns support...Ch. 4 - Predetermined Overhead Rate, Overhead Application...Ch. 4 - Overhead Variance (Over- or Underapplied), Closing...Ch. 4 - Use the following information for Brief Exercises...Ch. 4 - Use the following information for Brief Exercises...Ch. 4 - Prepare Job-Order Cost Sheets, Predetermined...Ch. 4 - Use the following information for Brief Exercises...Ch. 4 - Use the following information for Brief Exercises...Ch. 4 - Predetermined Overhead Rate, Overhead Application...Ch. 4 - Overhead Variance (Over- or Underapplied), Closing...Ch. 4 - Use the following information for Brief Exercises...Ch. 4 - Use the following information for Brief Exercises...Ch. 4 - Prepare Job-Order Cost Sheets, Predetermined...Ch. 4 - Use the following information for Brief Exercises...Ch. 4 - Use the following information for Brief Exercises...Ch. 4 - Job-Order Costing versus Process Costing a....Ch. 4 - Job-Order Costing versus Process Costing a. Auto...Ch. 4 - Calculating the Predetermined Overhead Rate,...Ch. 4 - Calculating the Predetermined Overhead Rate,...Ch. 4 - Calculating Departmental Overhead Rates and...Ch. 4 - Job-Order Costing Variables On July 1, Job 46 had...Ch. 4 - Source Documents For each of the following...Ch. 4 - Applying Overhead to Jobs, Costing Jobs Jagjit...Ch. 4 - Applying Overhead to Jobs, Costing Jobs Gorman...Ch. 4 - Balance of Work in Process and Finished Goods,...Ch. 4 - Job-Order Cost Sheets, Balance in Work in Process...Ch. 4 - Cost Flows Consider the following independent...Ch. 4 - Job Cost Flows Roseler Company uses a normal...Ch. 4 - Calculation of Work in Process and Cost of Goods...Ch. 4 - (Appendix 4A) Journal Entries Yurman Inc. uses a...Ch. 4 - (Appendix 4B) Direct Method of Support Department...Ch. 4 - (Appendix 4B) Sequential Method of Support...Ch. 4 - Overhead Application and Job-Order Costing Heurion...Ch. 4 - Prob. 54PCh. 4 - Calculating Ending Work in Process, Income...Ch. 4 - Overhead Applied to Jobs, Departmental Overhead...Ch. 4 - Overhead Rates, Unit Costs Folsom Company...Ch. 4 - Calculate Job Cost and Use It to Calculate Price...Ch. 4 - (Appendix 4A) Unit Cost, Ending Work in Process,...Ch. 4 - (Appendix 4A) Journal Entries, Job Costs The...Ch. 4 - (Appendix 4A) Predetermined Overhead Rates,...Ch. 4 - (Appendix 4A) Overhead Application, Journal...Ch. 4 - (Appendix 4A) Journal Entries, T-Accounts Lowder...Ch. 4 - (Appendix 4B) Support Department Cost Allocation...Ch. 4 - (Appendix 4B) Support Department Cost Allocation:...Ch. 4 - Overhead Assignment: Actual and Normal Activity...Ch. 4 - Tonya Martin, CMA and controller or the Parts...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Materiality Joseph Knapp, a newly hired accountant wanting to impress his boss, stayed late one night to analyze the office supplies expense. He determined the cost by month for the previous 12 months of each of the following: computer paper, copy paper, fax paper, pencils and pens, notepads, postage, stationery, and miscellaneous items. Required What did Joseph think his boss would learn from this information? What action might be taken as a result of knowing it? Would this information be more relevant if Joseph worked for a hardware store or for a real estate company? Discuss.arrow_forwardAssume you are the manager for the semi-trucks division at the Speedy Delivery Company. The semi-truck division is a cost center and you are reviewing the driver overtime costs for the previous year, shown here: A. Microsoft Excel or another spreadsheet application, create a line chart with markers showing the driver overtime expense. Describe your observations. B. Knowing that safety is important in your industry and weather plays a significant role in the safety of drivers, you decide to talk with the safety manager and obtained the following information: Using Microsoft Excel or another spreadsheet application, create individual line charts with markers showing the average snowfall and non-company highway accidents. Describe your observations and actions you might consider.arrow_forwardSharon is an intern with a local CPA firm. Prior to returning to school, her supervisor goes on sick leave and asks her to do some complicated reconciliation work for him. She is given what seems to her to be an unrealistic deadline. Sharon looks at the workpapers and supporting documentation and realizes she doesn’t have the skills to complete the work without help. She contacts her supervisor who tells her to talk to Holly, a good friend of Sharon and former intern at the firm, for help. Holly returned to school one semester ago. What ethical considerations do you have in this matter? What would you do and why?arrow_forward
- Accounting treatment for contingencies Analyze the following independent situations. Weaver, Inc. is being sued by a former employee. Weaver believes that there is a remote chance that the employee will win. The employee is suing Weaver or damages of $40,000. Gulf Oil Refinery had a gas explosion on one of its oil rigs. Gulf believes it is likely that it will have to pay environmental Clean-up Costs and damages in the future due to the gas explosion. Gulf cannot estimate the amount of the damages. Lawson Enterprises estimates that it will have to pay $75,000 in-warranty repairs next year. Determine how each contingency should be treatedarrow_forwardCheck My Work A small air conditioning repair and parts supply company employs 25 workmen who perform services tasks and 3 office staff: One of the office staff, Harold Jones, has been with the company since it opened its doors. During that time, he has earned the trust of the owner and has proven to be a diligent employee who often works late, occasionally comes in on weekend for no additional pay, and hasn’t taken a substantial vacation in over 10 years. Instead, he staggers his vacation days throughout the year to avoid the need for a replacement and ensuring that none of the other office staff is burdened with his work. Harold’s primary tasks include: Responsible for POS cash and credit sales Bills those customers who purchase on credit Opens the mail and posts cash receipts to AR records, and Prepares the daily cash deposits for the business. Another office worker, Mike Larkin, handles purchasing of inventory and supplies from vendors, stocking, shipping merchandise,…arrow_forwardEthics in ActionAvett Manufacturing Company allows employees to purchase materials, such as metal and lumber, for personal use at a price equal to the company’s cost. To purchase materials, an employee must complete a materials requisition form, which must then he approved by the employee’s immediate supervisor. Brian Dadian, an assistant cost accountant, then charges the employee an amount based on Avett’s net purchase cost. Brian is in the process of replacing a deck on his home and has requisitioned lumber for personal use, which has been approved in accordance with company policy. In computing the cost of the lumber, Brian reviewed all the purchase invoices for the past year, He then used the lowest price to compute the amount due the company for the lumber.The Institute of Management Accountants (IMA) is the professional organization for managerial accountants. The IMA has established four principles of ethical conduct for its members: honesty, fairness, objectivity, and…arrow_forward
- Jessminder Hotels The operations vice president of Jessminder Hotels has been interested in investigating the efficiency of the hotel's operations. She has been particularly concerned about the costs of handling routine check ins and would like to compare these costs at the hote'l various loocations. If the locations with the most efficient operations cam be identified, their methods can be studied and then replicated elsewhere. While the hotel maintains good records of wages and other costs, there has been no attempt to show how those costs are related to the various services. The operations VP has asked for an activity-based costing study of hotel operations. In particular, she would like to know the cost of check in, check out, and the costs of other customer interactions. The San Francisco Hotel has submitted the following cost data for last year: Totals Front desk wages 200,000 Assistant manager salary 105,000 General manager salary 150,000 Total cost 455,000…arrow_forwardCost Information and Ethical Behavior, Service Organization Jean Erickson, manager and owner of an advertising company in Charlotte, North Carolina, arranged a meeting with Leroy Gee, the chief accountant of a large, local competitor. The two are lifelong friends. They grew up together in a small town and attended the same university. Leroy is a competent, successful accountant but is having some personal financial difficulties after some of his investments turned sour, leaving him with a 15,000 personal loan to pay offjust when his oldest son is starting college. Jean, on the other hand, is struggling to establish a successful advertising business. She had recently acquired the rights to open a branch office of a large regional advertising firm headquartered in Atlanta, Georgia. During her first 2 years, she was able to build a small, profitable practice. However, the chance to gain a significant foothold in Charlotte hinged on the success of winning a bid to represent the state of North Carolina in a major campaign to attract new industry and tourism. The meeting she had scheduled with Leroy concerned the bid she planned to submit. Jean: Leroy, Im at a critical point in my business venture. If I can win the bid for the states advertising dollars, Ill be set. Winning the bid will bring 600,000 to 700,000 of revenues into the firm. On top of that, I estimate that the publicity will bring another 200,000 to 300,000 of new business. Leroy: I understand. My boss is anxious to win that business as well. It would mean a huge increase in profits for my firm. Its a competitive business, though. As new as you are, I doubt that youll have much chance of winning. Jean: Youre forgetting two very important considerations. First, I have the backing of all the resources and talent of a regional firm. Second, I have some political connections. Last year, I was hired to run the publicity side of the governors campaign. He was impressed with my work and would like me to have this business. I am confident that the proposals I submit will be very competitive. My only concern is to submit a bid that beats your firm. If I come in with a lower bid and good proposals, the governor can see to it that I get the work. Leroy: Sounds promising. If you do win, however, there will be a lot of upset people. After all, they are going to claim that the business should have been given to local advertisers, not to some out-of-state firm. Given the size of your office, youll have to get support from Atlanta. You could take a lot of heat. Jean: True. But I am the owner of the branch office. That fact alone should blunt most of the criticism. Who can argue that Im not a local? Listen, with your help, I think I can win this bid. Furthermore, if I do win it, you can reap some direct benefits. With that kind of business, I can afford to hire an accountant, and Ill make it worthwhile for you to transfer jobs. I can offer you an up-front bonus of 15,000. On top of that, Ill increase your annual salary by 20%. That should solve most of your financial difficulties. After all, we have been friends since day oneand what are friends for? Leroy: Jean, my wife would be ecstatic if I were able to improve our financial position as quickly as this opportunity affords. I certainly hope that you win the bid. What kind of help can I provide? Jean: Simple. To win, all I have to do is beat the bid of your firm. Before I submit my bid, I would like you to review it. With the financial skills you have, it should be easy for you to spot any excessive costs that I may have included. Or perhaps I included the wrong kind of costs. By cutting excessive costs and eliminating costs that may not be directly related to the project, my bid should be competitive enough to meet or beat your firms bid. Required: 1. What would you do if you were Leroy? Fully explain the reasons for your choice. What do you suppose the code of conduct for Leroys company would say about this situation? 2. What is the likely outcome if Leroy agrees to review the bid? Is there much risk to him personally if he reviews the bid? Should the degree of risk have any bearing on his decision?arrow_forwardGeek Chic Company provides computer repair services for the community. Obie Wons computer was not working, and he called Geek Chic for a home repair visit. Geek Chic Companys technician arrived at 2:00 PM to begin work. By 4:00 PM, the problem was diagnosed as a failed circuit board. Unfortunately, the technician did not have a new circuit board in the truck because the technicians previous customer had the same problem and a board was used on that visit. Replacement boards were available back at Geek Chic Companys shop. Therefore, the technician drove back to the shop to retrieve a replacement board. From 4:00 to 5:00 PM, Geek Chic Companys technician drove the round trip to retrieve the replacement board from the shop. At 5:00 PM, the technician was back on the job at Obies home. The replacement procedure is somewhat complex because a variety of tests must be performed once the board is installed. The job was completed at 6:00 PM. Obies repair bill showed the following: Obie was surprised at the size of the bill and asked for more detail supporting the calculations. Geek Chic Company responded with the following explanations: The labor charge per hour is detailed as follows: Further explanations in the differences in the hourly rates are as follows: a. If you were in Obies position, how would you respond to the bill? Are there parts of the bill that appear incorrect to you? If so, what argument would you employ to convince Geek Chic Company that the bill is too high? b. Use the headings that follow to construct a table. Fill in the table by listing the costs identified in the activity in the left-hand column. For each cost, place a check mark in the appropriate column identifying the correct cost classification. Assume that each service call is a job.arrow_forward
- Types of Responsibility Centers Consider each of the following independent scenarios: a. Terrin Belson, plant manager for the laser printer factory of Compugear Inc., brushed his hair back and sighed. December had been a bad month. Two machines had broken down, and some factory production workers (all on salary) were idled for part of the month. Materials prices increased, and insurance premiums on the factory increased. No way out of it; costs were going up. He hoped that the marketing vice president would be able to push through some price increases, but that really wasnt his department. b. Joanna Pauly was delighted to see that her ROI figures had increased for the third straight year. She was sure that her campaign to lower costs and use machinery more efficiently (enabling her factories to sell several older machines) was the reason why. Joanna planned to take full credit for the improvements at her semiannual performance review. c. Gil Rodriguez, sales manager for ComputerWorks, was not pleased with a memo from headquarters detailing the recent cost increases for the laser printer line. Headquarters suggested raising prices. Great, thought Gil, an increase in price will kill sales and revenue will go down. Why cant the plant shape up and cut costs like every other company in America is doing? Why turn this into my problem? d. Susan Whitehorse looked at the quarterly profit and loss statement with disgust. Revenue was down, and cost was upwhat a combination! Then she had an idea. If she cut back on maintenance of equipment and let a product engineer go, expenses would decreaseperhaps enough to reverse the trend in income. e. Shonna Lowry had just been hired to improve the fortunes of the Southern Division of ABC Inc. She met with top staff and hammered out a 3-year plan to improve the situation. A centerpiece of the plan is the retiring of obsolete equipment and the purchasing of state-of-the-art, computer-assisted machinery. The new machinery would take time for the workers to learn to use, but once that was done, waste would be virtually eliminated. Required: For each of the above independent scenarios, indicate the type of responsibility center involved (cost, revenue, profit, or investment).arrow_forwardAlexia Jones is a worker at a local 24-hour pharmacy. Alexia works the night shift and is the only worker. Because management is cost-conscious and business is slow at night, Alexia has been given the responsibility to do the accounting from the previous day. Alexia has two children, and her husband does not work. Alexia has strong pressure to provide well for her family. Assuming that you were recently hired by the pharmacy as a business consultant, what information would you provide to the owner of the pharmacy concerning fraud?arrow_forwardAssigning Overhead to Jobs—Ethical Issues Tonya Martin, CMA and controller of the Parts Division of Gunderson Inc., was meeting with Doug Adams, manager of the division. The topic of discussion was the assignment of overhead costs to jobs and their impact on the division's pricing decisions. Their conversation was as follows: Tonya: Doug, as you know, about 25% of our business is based on government contracts, with the other 75% based on jobs from private sources won through bidding. During the last several years, our private business has declined. We have been losing more bids than usual. After some careful investigation, I have concluded that we are overpricing some jobs because of improper assignment of overhead costs. Some jobs are also being underpriced. Unfortunately, the jobs being overpriced are coming from our higher-volume, labor-intensive products, so we are losing business. Doug: I think I understand. Jobs associated with our high-volume products are being assigned more…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Managerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage LearningPrinciples of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax CollegeManagerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub
- Financial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage LearningCollege Accounting, Chapters 1-27AccountingISBN:9781337794756Author:HEINTZ, James A.Publisher:Cengage Learning,
Managerial Accounting: The Cornerstone of Busines...
Accounting
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Cengage Learning
Principles of Accounting Volume 2
Accounting
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax College
Managerial Accounting
Accounting
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:South-Western College Pub
Financial Accounting: The Impact on Decision Make...
Accounting
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Cengage Learning
College Accounting, Chapters 1-27
Accounting
ISBN:9781337794756
Author:HEINTZ, James A.
Publisher:Cengage Learning,