Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN: 9781305970663
Author: Don R. Hansen, Maryanne M. Mowen
Publisher: Cengage Learning
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Textbook Question
Chapter 5, Problem 31P
Warren’s Sporting Goods Store sells a variety of sporting goods and clothing. In a back room, Warren’s has set up heat transfer equipment to personalize T-shirts for Little League teams. Typically, each team has the name of the individual player put on the back of the T-shirt. Last week, Shona Kohlmia, coach of the Terrors, brought in a list of names for her team. Her team consisted of 12 players with the following names: Mary Kate, Kayla, Katie, Tara, Heather, Emma, Kimberleigh, Jennifer, Dayna, Elizabeth, Kyle, and Wendy. Shona was quoted a price of $0.60 per letter.
Chip Russell, Warren’s newest employee, took Shona’s order and worked on the job. He selected the appropriate letters, arranged the letters in each name carefully on a shirt, and heat-pressed them on. When Shona returned, she was appalled to see that the names were on the front of the shirts. Jim Warren, owner of the sporting goods store, assured Shona that the letters could easily be removed by applying more heat and lifting them off. This process ruins the old letters, so new letters must then be placed correctly on the shirt backs. He promised to correct the job immediately and have it ready in an hour and a half.
Costs for heat transferring are as follows:
Shona’s job originally took one hour and 12 minutes of direct labor time. The removal process goes more quickly and should take only 30 minutes.
Required:
- 1. What was the original cost of Shona’s job?
- 2. What is the cost of rework on Shona’s job? Assume that Chip failed to ask whether the names should be placed on the back or the front of the shirts. How should the rework cost be treated?
- 3. Now assume that Shona had mistakenly told Chip to put the names on the front of the shirts. In an effort to keep his customer happy, Jim suggested that Shona pay only for the new letters and the firm would pay for the labor cost. How much did Jim charge Shona in addition to the orginal price of the job?
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Warren’s Sporting Goods Store sells a variety of sporting goods and clothing. In a back room, Warren’s has set up heat transfer equipment to personalize T-shirts for Little League teams.Typically, each team has the name of the individual player put on the back of the T-shirt. Last week, Shona Kohlmia, coach of the Terrors, brought in a list of names for her team. Her teamconsisted of 12 players with the following names: Mary Kate, Kayla, Katie, Tara, Heather, Emma, Kimberleigh, Jennifer, Dayna, Elizabeth, Kyle, and Wendy. Shona was quoted a priceof $0.60 per letter. Chip Russell, Warren’s newest employee, took Shona’s order and worked on the job. He selected the appropriate letters, arranged the letters in each name carefully on a shirt, and heat pressed them on. When Shona returned, she was appalled to see that the names were on the front of the shirts. Jim Warren, owner of the sporting goods store, assured Shona that the letters could easily be removed by applying more heat and…
Andrea is ordering supplies for summer camp and notices the supplier has a special offer on four items on her list: caps, T-shirts, socks, and shoes. The supplier packaged these items for some special orders, and a number were returned that the supplier would like to move. There are three types of packages, I, II, III.
I contains 5 caps, 10 pairs of socks, 2 T-shirts, and 4 pairs of shoes.II contains 5 caps, 6 pairs of socks, 3 T-shirts, and 3 pairs of shoes.III contains 4 caps, 5 pairs of socks, 6 T-shirts, and no shoes.
Andrea estimates they will need up to 200 caps, up to 300 pairs of socks, up to 210 T-shirts, and up to 60 pairs of shoes.Based on the special price and their published camp fees, the camp can make a profit of $18 on each package I, $15 on each package II, and $6 on each package III. How many of each type of package should Andrea order to achieve maximum profit?
A maximum profit of $ ? is possible if Andrea orders 15 of package I and ? of package III, or 20 of package…
At Cleveland Hopkins International Airport in northeastern Ohio, a vending machine that dispenses socks was recently installed. Located in the C concourse, the Stance sock vending machine offers a variety of what Stance refers to as “uncommon” socks. The designs on the socks in the Cleveland airport vending machine include Cleveland Browns, Cleveland Indians, patriotic flag designs, Hawaiian tropical flowers, and others.
The machine is stocked with an assortment of socks. The airport traveler inserts a credit card, makes a sock selection in the keypad, and the socks are dispensed to the purchaser.
Stance sells its socks through retailers, at its own stores, via vending machines, and through monthly subscriptions.
Are Stance’s costs mostly variable or fixed? What impact does this cost structure have on the break-even volume for Stance’s operation of that vending machine?
Now classify each of the costs you listed for Question 1 as direct or indirect, assuming that the vending machine is…
Chapter 5 Solutions
Cornerstones of Cost Management (Cornerstones Series)
Ch. 5 - What is cost measurement? Cost accumulation? What...Ch. 5 - Why is actual costing rarely used for product...Ch. 5 - Explain the differences between job-order costing...Ch. 5 - What are some differences between a manual...Ch. 5 - Prob. 5DQCh. 5 - How do firms collect job-related information on...Ch. 5 - Explain the role of activity drivers in assigning...Ch. 5 - Define the following terms: expected actual...Ch. 5 - Why would some prefer normal activity to expected...Ch. 5 - When using normal costing, how are jobs charged...
Ch. 5 - Wilson Company has a predetermined overhead rate...Ch. 5 - Why are the accounting requirements for job-order...Ch. 5 - Explain the difference between normal cost of...Ch. 5 - Amber Company produces custom framing. For one...Ch. 5 - Amber Company produces custom framing. For one...Ch. 5 - Naranjo Company designs industrial prototypes for...Ch. 5 - Naranjo Company designs industrial prototypes for...Ch. 5 - Heitger Company is a job-order costing firm that...Ch. 5 - Frieling Company installs granite countertops in...Ch. 5 - Frieling Company installs granite countertops in...Ch. 5 - Prob. 6ECh. 5 - Vince Melders, of EcoScape Company, designs and...Ch. 5 - Refer to the data in Exercise 5.7. Vince Melders,...Ch. 5 - Reggie Wilmore has just started a new...Ch. 5 - Reggie Wilmore has just started a new...Ch. 5 - During March, Aragon Company worked on three jobs....Ch. 5 - Job Cost On April 1, Sangvikar Company had the...Ch. 5 - Job Cost On April 1, Sangvikar Company had the...Ch. 5 - On August 1, Cairle Companys work-in-process...Ch. 5 - On August 1, Cairle Companys work-in-process...Ch. 5 - Ehrling Brothers Company makes jobs to customer...Ch. 5 - During August, Skyler Company worked on three...Ch. 5 - Feldspar Company uses an ABC system to apply...Ch. 5 - Kapoor Company uses job-order costing. During...Ch. 5 - Salazar Company is a job-order costing firm that...Ch. 5 - Lorrimer Company has a job-order cost system. The...Ch. 5 - CleanCom Company specializes in cleaning...Ch. 5 - Prob. 23ECh. 5 - Geneva, Inc., makes two products, X and Y, that...Ch. 5 - Prob. 25ECh. 5 - During May, the following transactions were...Ch. 5 - Firenza Company manufactures specialty tools to...Ch. 5 - Prob. 28PCh. 5 - Cherise Ortega, marketing manager for Romer...Ch. 5 - Lieu Company is a specialty print shop. Usually,...Ch. 5 - Warrens Sporting Goods Store sells a variety of...Ch. 5 - Sutton Construction Inc. is a privately held,...Ch. 5 - Dr. Alyx Hemmings is employed by Mesa Dental. Mesa...Ch. 5 - Prob. 34P
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