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Ôn tập tổng hợp môn Kế toán quản trị phần 1, tất cả bài tập chi tiết bao gồm Exercise (bài tập nhỏ) và Problem (bài tập lớn). Rất hữu ích cho dân kế toán. Có kèm theo giải một số chương mà mình kiếm đc trên mạng, sẽ up lên sau nếu có ai wtam có thể mail cho m.
CHAPTER MANAGERIAL ACCOUNTING: AN OVERVIEW Glossary Budget A detailed plan for the future that is usually expressed in formal quantitative terms Business process A series of steps that are followed in order to carry out some task in a business Constraint Anything that prevents you from getting more of what you want Controlling The process of gathering feedback to ensure that a plan is being properly executed or modified as circumstances change Corporate social responsibility A concept whereby organizations consider the needs of all stakeholders when making decisions Decision making Selecting a course of action from competing alternatives Enterprise risk management A process used by a company to identify its risks and develop responses to them that enable it to be reasonably assured of meeting its goals Financial accounting The phase of accounting that is concerned with reporting historical financial information to external parties, such as stockholders, creditors, and regulators Lean Production A management approach that organizes resources such as people and machines around the flow of business processes and that only produces units in response to customer orders Managerial accounting The phase of accounting that is concerned with providing information to managers for use within the organization Performance report A report that compares budgeted data to actual data to highlight instances of excellent and unsatisfactory performance Planning The process of establishing goals and specifying how to achieve them Segment A part or activity of an organization about which managers would like cost, revenue, or profit data Strategy A company’s ―game plan‖ for attracting customers by distinguishing itself from competitors Theory of Constraints A management approach that emphasizes the importance of managing constraints Value chain The major business functions that add value to a company’s products and services, such as research and development, product design, manufacturing, marketing, distribution, and customer service CHAPTER MANAGERIAL ACCOUNTING AND COST CONCEPTS Glossory Account analysis A method for analyzing cost behavior in which an account is classified as either variable or fixed based on the analyst’s prior knowledge of how the cost in the account behaves Phân tích tài khoản Một phương pháp cho việc phân tích hành vi chi phí mà tài khoản phân loại hai biến cố định dựa kiến thức trước nhà phân tích cách ứng xử chi phí tài khoản Activity base A measure of whatever causes the incurrence of a variable cost For example, the total cost of X-ray film in a hospital will increase as the number of X-rays taken increases.Therefore, the number of X-rays is the activity base that explains the total cost of X-ray film Hoạt động sở Một biện pháp điều gây incurrent chi phí biến Ví dụ, tổng chi phí phim x-quang bệnh viện tăng số chụp x-quang chụp tăng Vì vậy, số lượng tia x sở hoạt động giải thích tổng chi phí phim x-quang Administrative costs All executive, organizational, and clerical costs associated with the general management of an organization rather than with manufacturing or selling Chi phí hành Tất điều hành, tổ chức văn phịng chi phí liên quan với việc quản lý chung tổ chức với sản xuất bán Committed fixed costs Investments in facilities, equipment, and basic organizational structure that can’t be significantly reduced even for short periods of time without making fundamental changes Committed fixed costs Đầu tư Tiện nghi, trang thiết bị cấu tổ chức giảm bớt đáng kể thời gian ngắn mà không làm thay đổi Common cost A cost that is incurred to support a number of cost objects but that cannot be traced to them individually For example, the wage cost of the pilot of a 747 airliner is a common cost of all of the passengers on the aircraft Without the pilot, there would be no flight and no passengers But no part of the pilot’s wage is caused by any one passenger taking the flight Chi phí chung Chi phí phát sinh để hỗ trợ số chi phí cho đối tượng, mà truy nguồn từ chúng riêng rẽ Ví dụ, chi phí lương phi công máy bay chở khách 747 chi phí chung tất hành khách máy bay Khơng có phi cơng, có khơng có chuyến bay hành khách khơng có Nhưng khơng có phần mức lương phi cơng gây hành khách chuyến bay Contribution approach An income statement format that organizes costs by their behavior Costs are separated into variable and fixed categories rather than being separated into product and period costs for external reporting purposes Phương pháp tiếp cận đóng góp Một thu nhập tuyên bố định dạng mà chi phí tổ chức hành vi họ Chi phí tách thành biến thể loại cố định bị tách thành sản phẩm thời gian chi phí cho mục đích báo cáo bên Contribution margin The amount remaining from sales revenues after all variable expenses have been deducted Đóng góp biên độ Số tiền lại từ doanh thu bán hàng sau trừ tất chi phí biến đổi Conversion cost Direct labor cost plus manufacturing overhead cost Chi phí chuyển đổi Chi phí trực tiếp lao động cộng sản xuất chi phí khơng Cost behavior The way in which a cost reacts to changes in the level of activity Hành vi chi phí Cách thức mà chi phí phản ứng với thay đổi mức độ hoạt động Cost object Anything for which cost data are desired Examples of cost objects are products, customers, jobs, and parts of the organization such as departments or divisions Chi phí đối tượng Bất điều mà liệu chi phí mong muốn Ví dụ chi phí đối tượng sản phẩm, khách hàng, công việc, phận tổ chức phòng ban đơn vị Cost structure The relative proportion of fixed, variable, and mixed costs in an organization Cơ cấu chi phí Tương đối tỷ lệ chi phí cố định, biến đổi pha trộn tổ chức Dependent variable A variable that responds to some causal factor; total cost is the dependent variable, as represented by the letter Y, in the equation Y = a + bX Phụ thuộc vào biến Một biến đáp ứng số yếu tố quan hệ nhân quả; Tổng chi phí biến phụ thuộc, thể chữ Y Differential cost A difference in cost between two alternatives Also see Incremental cost Vi phân chi phí Sự khác biệt chi phí hai lựa chọn Cũng thấy chi phí gia tăng Differential revenue The difference in revenue between two alternatives Doanh thu vi sai Sự khác biệt doanh thu hai lựa chọn Direct cost A cost that can be easily and conveniently traced to a specified cost object Chi phí trực tiếp Chi phí dễ dàng thuận tiện truy tìm đối tượng xác định chi phí Direct labor Factory labor costs that can be easily traced to individual units of product Also called touch labor Lao động trực tiếp chi phí lao động nhà máy dễ dàng truy tìm đến đơn vị cá nhân sản phẩm Cũng gọi lao động cảm ứng Direct materials Materials that become an integral part of a finished product and whose costs can be conveniently traced to it Vật liệu trực tiếp Vật liệu mà trở thành phần thiếu sản phẩm hoàn thành chi phí mà thuận tiện truy nguồn từ Discretionary fixed costs Those fixed costs that arise from annual decisions by management to spend on certain fixed cost items, such as advertising and research Tùy chi phí cố định Những người cố định chi phí phát sinh từ định hàng năm cách quản lý chi tiêu vào khoản mục chi phí cố định định, chẳng hạn quảng cáo nghiên cứu Engineering approach A detailed analysis of cost behavior based on an industrial engineer’sevaluation of the inputs that are required to carry out a particular activity and of the prices of those inputs Cách tiếp cận kỹ thuật Phân tích chi tiết hành vi chi phí dựa engineer'sevaluation công nghiệp đầu vào cần thiết để thực hoạt động cụ thể giá yếu tố đầu vào Fixed cost A cost that remains constant, in total, regardless of changes in the level of activity within the relevant range If a fixed cost is expressed on a per unit basis, it varies inversely with the level of activity Chi phí cố định Chi phí mà khơng đổi, tổng cộng, thay đổi mức độ hoạt động phạm vi có liên quan Nếu chi phí cố định thể sở cho đơn vị, thay đổi tỷ lệ nghịch với mức độ hoạt động High-low method A method of separating a mixed cost into its fixed and variable elements by analyzing the change in cost between the high and low activity levels Phương pháp cao thấp Một phương pháp tách chi phí hỗn hợp thành yếu tố cố định biến cách phân tích thay đổi chi phí mức độ hoạt động cao thấp Incremental cost An increase in cost between two alternatives Also see Differential cost Chi phí gia tăng Sự gia tăng chi phí hai lựa chọn Cũng thấy khác biệt chi phí Independent variable A variable that acts as a causal factor; activity is the independent variable, as represented by the letter X, in the equation Y = a + bX Biến độc lập A biến hoạt động yếu tố quan hệ nhân quả; hoạt động biến độc lập, thể chữ X Indirect cost A cost that cannot be easily and conveniently traced to a specified cost object Chi phí gián tiếp Chi phí mà khơng thể dễ dàng thuận tiện truy tìm đối tượng xác định chi phí Indirect labor The labor costs of janitors, supervisors, materials handlers, and other factory workers that cannot be conveniently traced to particular products Lao động gián tiếp Chi phí lao động janitors, giám sát, xử lý vật liệu công nhân nhà máy khác mà khơng thể thuận tiện truy tìm đến sản phẩm đặc biệt Indirect materials Small items of material such as glue and nails that may be an integral part of a finished product, but whose costs cannot be easily or conveniently traced to it Vật liệu gián tiếp Mục nhỏ vật liệu keo móng tay mà phần sản phẩm hồn tất, chi phí mà khơng thể dễ dàng thuận tiện truy tìm Inventoriable costs Synonym for product costs Chi phí inventoriable Từ đồng nghĩa cho chi phí sản phẩm Least-squares regression method A method of separating a mixed cost into its fixed and variable elements by fitting a regression line that minimizes the sum of the squared errors Tối thiểu hồi quy phương pháp Một phương pháp tách chi phí hỗn hợp thành yếu tố cố định biến cách trang bị dịng hồi quy tổng hợp lỗi bình phương tối thiểu Linear cost behavior Cost behavior is said to be linear whenever a straight line is a reasonable approximation for the relation between cost and activity Hành vi chi phí tuyến tính Hành vi chi phí gọi tuyến tính đường thẳng xấp xỉ hợp lý cho mối quan hệ chi phí hoạt động Manufacturing overhead All manufacturing costs except direct materials and direct labor Sản xuất cao Tất chi phí sản xuất trừ vật liệu trực tiếp, trực tiếp lao động Mixed cost A cost that contains both variable and fixed cost elements Chi phí hỗn hợp Chi phí bao gồm hai yếu tố chi phí biến đổi cố định Opportunity cost The potential benefit that is given up when one alternative is selected over another Chi phí hội Những lợi ích tiềm mà đưa lựa chọn khác Period costs Costs that are taken directly to the income statement as expenses in the period in which they are incurred or accrued Prime cost Direct materials cost plus direct labor cost Nguyên tố chi phí Vật liệu trực tiếp chi phí cộng với chi phí lao động trực tiếp Product costs All costs that are involved in acquiring or making a product In the case of manufactured goods, these costs consist of direct materials, direct labor, and manufacturing overhead Also see Inventoriable costs Chi phí sản phẩm Tất chi phí có liên quan việc mua làm cho sản phẩm Trong trường hợp hàng hóa sản xuất, chi phí bao gồm tài liệu trực tiếp, trực tiếp lao động sản xuất cao Xem chi phí Inventoriable Raw materials Any materials that go into the final product Nguyên liệu Bất kỳ tài liệu mà vào sản phẩm cuối Relevant range The range of activity within which assumptions about variable and fixed cost behavior are valid Phạm vi có liên quan Phạm vi hoạt động giả định hành vi biến cố định chi phí có hiệu lực Selling costs All costs that are incurred to secure customer orders and get the finished product or service into the hands of the customer Chi phí bán hàng Tất chi phí phát sinh để đảm bảo khách hàng đặt hàng nhận hoàn thành sản phẩm dịch vụ vào tay khách hàng Sunk cost A cost that has already been incurred and that cannot be changed by any decision made now or in the future Chi phí chìm Một chi phí mà phát sinh khơng thể thay đổi định thực tương lai Variable cost A cost that varies, in total, in direct proportion to changes in the level of activity A variable cost is constant per unit Chi phí biến Chi phí khác nhau, tổng số, tỷ lệ trực tiếp tới thay đổi mức độ hoạt động Chi phí biến số cho đơn vị All applicable exercises are available with McGraw-Hill’s Connect™ Accounting EXERCISE 2–1 Classifying Manufacturing Costs [LO1] Your Boat, Inc., assembles custom sailboats from components supplied by various manufacturers The company is very small and its assembly shop and retail sales store are housed in a Gig Harbor, Washington, boathouse Below are listed some of the costs that are incurred at the company Thuyền, Inc, lắp ráp sailboats tuỳ chỉnh từ thành phần cung cấp nhà sản xuất khác Công ty nhỏ lắp ráp cửa hàng cửa hàng bán lẻ bán hàng đặt boathouse Gig Harbor, Washington Dưới liệt kê số chi phí phát sinh cơng ty Required: For each cost, indicate whether it would most likely be classified as direct labor, direct materials, manufacturing overhead, selling, or an administrative cost Đối với chi phí, cho dù có nhiều khả phân loại trực tiếp lao động, vật liệu trực tiếp, chi phí sản xuất, bán, chi phí hành The wages of employees who build the sailboats Tiền lương nhân viên xây dựng thuyền buồm The cost of advertising in the local newspapers Chi phí quảng cáo tờ báo địa phương The cost of an aluminum mast installed in a sailboat Chi phí cột nhơm cài đặt thuyền buồm The wages of the assembly shop’s supervisor Lương giảng viên hướng dẫn cửa hàng lắp ráp Rent on the boathouse The wages of the company’s bookkeeper Tiền lương nhân viên kế toán công ty Sales commissions paid to the company’s salespeople Hoa hồng bán hàng trả cho nhân viên bán hàng công ty Depreciation on power tools Chi phí khấu hao dụng cụ điện EXERCISE 2–2 Classification of Costs as Period or Product Costs [LO2] Suppose that you have been given a summer job at Fairwings Avionics, a company that manufactures sophisticated radar sets for commercial aircraft The company, which is privately owned, has approached a bank for a loan to help finance its tremendous growth The bank requires financial statements before approving such a loan Giả sử bạn có cơng việc mùa hè hệ thống điện tử Fairwings, công ty sản xuất tinh vi tổ hợp radar máy bay thương mại Công ty tư nhân thuộc sở hữu, tiếp cận ngân hàng cho vay tiền để giúp đỡ tài tăng trưởng to lớn Ngân hàng u cầu báo cáo tài trước phê duyệt khoản cho vay Required: Classify each cost listed below as either a product cost or a period cost for purposes of preparing the financial statements for the bank The cost of the memory chips used in a radar set Factory heating costs Phân loại chi phí liệt kê chi phí sản phẩm chi phí thời gian cho mục đích việc chuẩn bị báo cáo tài cho ngân hàng chi phí chip nhớ sử dụng radar chi phí hệ thống sưởi nhà máy nhà máy sản xuất thiết bị, chi phí bảo trì đào tạo, chi phí cho nhân viên hành chi phí Hàn sử dụng lắp ráp radar chi phí du lịch cơng ty salespersons tiền lương tiền lương nhân viên an ninh nhà máy chi phí máy lạnh văn phịng điều hành tiền lương tiền lương tỉnh Prepare a report summarizing the overhead costs assigned to the order for hard-rock drills What is the total overhead cost assigned to the order? EXERCISE 7–7 First-Stage Allocations [LO2] The operations vice president of First Bank of Eagle, Kristin Wu, has been interested in investigating the efficiency of the bank’s operations She has been particularly concerned about the costs of handling routine transactions at the bank and would like to compare these costs at the bank’s various branches If the branches with the most efficient operations can be identified, their methods can be studied and then replicated elsewhere While the bank maintains meticulous records of wages and other costs, there has been no attempt thus far to show how those costs are related to the various services provided by the bank Ms Wu has asked your help in conducting an activity-based costing study of bank operations In particular, she would like to know the cost of opening an account, the cost of processing deposits and withdrawals, and the cost of processing other customer transactions The Avon branch of First Bank of Eagle has submitted the following cost data for last year: Teller wages $150,000 Assistant branch manager salary 70,000 Branch manager salary 85,000 Total $305,000 Virtually all of the other costs of the branch—rent, depreciation, utilities, and so on—are organization-sustaining costs that cannot be meaningfully assigned to individual customer transactions such as depositing checks In addition to the cost data above, the employees of the Avon branch have been interviewed concerning how their time was distributed last year across the activities included in the activity-based costing study The results of those interviews appear below: Teller wages Assistant branch manager salary 0% 10% 75% 15% 15% 10% 100% 25% 50% 100% Branch manager salary Required: 0% 0% 20% 80% 100% Prepare the first-stage allocation for Ms Wu as illustrated in Exhibit 7-5 EXERCISE 7-8 Computing and Interpreting Activity Rates [LO3] (This exercise is a continuation of Exercise 7-7; it should be assigned only if Exercise 7-7 is also assigned.) The manager of the Avon branch of First Bank of Eagle has provided the following data concerning the transactions of the branch during the past year: Activity Total Activity at the Avo Opening accounts 200 accounts opened Processing deposits and withdrawals 50,000 deposits and withdrawals Processing other customer The lowest costs reported by other branches for these activities are displayed below: Activity Opening accounts Processing deposits and withdrawals Processing other customer transactions Lowest Cost among All First Bank of Eagle Branches $24.35 per account opened $2.72 per deposit or withdrawal $48.90 per other customer transaction Required: Using the first-stage allocation from Exercise 7-7 and the above data, compute the activity rates for the activity-based costing system (Use Exhibit 7-6 as a guide.) Round all computations to the nearest whole cent What these results suggest to you concerning operations at the Avon branch? EXERCISE 7-9 Customer Profitability Analysis [LO3, LO4, LO5] Med Max buys surgical supplies from a variety of manufacturers and then resells and delivers these supplies to hundreds of hospitals Med Max sets its prices for all hospitals by marking up its cost of goods sold to those hospitals by 5% For example, if a hospital buys supplies from Med Max that had cost Med Max $100 to buy from manufacturers, Med Max would charge the hospital $105 to purchase these supplies For years, Med Max believed that the 5% markup covered its selling and administrative expenses and provided a reasonable profit However, in the face of declining profits Med Max decided to implement an activity-based costing system to help improve its understanding of customer profitability The company broke its selling and administrative expenses into five activities as shown below: Activity Cost Pool Activity Activity Measure Total Cost Customer deliveries deliveries Number of deliveries $ 400,000 5,000 Manual order processing orders Number of manual orders 300,000 4,000 Electronic order processing orders Number of electronic orders 200,000 12,500 Line item picking line items Number of line items picked 500,000 400,000 Other organization-sustaining costs NA 600,000 Total selling and administrative expenses Total $2,000,000 Med Max gathered the data below for two of the many hospitals that it serves—City General and County General (both hospitals purchased a total quantity of medical supplies that had cost Med Max $30,000 to buy from its manufacturers): Activity Activity Measure City General County General Number of deliveries 10 20 Number of manual orders 40 Number of electronic orders 10 Number of line items picked 100 260 Required: Compute the total revenue that Med Max would receive from City General and County General Compute the activity rate for each activity cost pool Compute the total activity costs that would be assigned to City General and County General Compute Med Max’s customer margin for City General and County General (Hint: Do not overlook the $30,000 cost of goods sold that Med Max incurred serving each hospital.) Describe the purchasing behaviors that are likely to characterize Med Max’s least profitable customers EXERCISE 7-10 Activity Measures [LO1] Various activities at Morales Corporation, a manufacturing company, are listed below Each activity has been classified as unit-level, batch-level, product-level, customer-level, or organization-sustaining Activity Activity Classification Examples of Activity Measures a Materials are moved from the receiving dock to the assembly area by a material- handling crew Batch-level Direct labor workers assemble various b Unit-level products c Diversity training is provided to all Organization-sustaining employees in the company d A product is designed by a crossProduct-level functional team e Equipment is set up to process a batch Batch-level f A customer is billed for all products Customer-level delivered during the month Required: Complete the table by providing an example of an activity measure for each activity EXERCISE 7–11 Comprehensive Activity-Based Costing Exercise [LO2, LO3, LO4, LO5] Silicon Optics has supplied the following data for use in its activity-based costing system: Overhead Costs Wages and salaries $350,000 Other overhead costs 200,000 Total overhead costs $550,000 Activity Cost Pool Activity Measure Activity Total Direct labor support .Number of direct labor-hours DLHs 10,000 Order processing Number of orders orders 500 Customer support Number of customers customers 100 Other This is an organization-sustaining activity applicable Not Distribution of Resource Consumption Across Activities Direct Labor Order Support Processing Support Wages and salaries 30% Other overhead costs 25% Customer Other Total 35% 25% 10% 100% 15% 20% 40% 100% During the year, Silicon Optics completed an order for a special optical switch for a new customer, Indus Telecom This customer did not order any other products during the year Data concerning that order follow: Data Concerning the Indus Telecom Order Selling price .$295 per unit Units ordered .100 units Direct materials $264 per unit Direct labor-hours 0.5 DLH per unit Direct labor rate $25 per DLH Required: Using Exhibit 7–5 as a guide, prepare a report showing the first-stage allocations of overhead costs to the activity cost pools Using Exhibit 7–6 as a guide, compute the activity rates for the activity cost pools Prepare a report showing the overhead costs for the order from Indus Telecom, including customer support costs Using Exhibit 7–11 as a guide, prepare a report showing the customer margin for Indus Telecom EXERCISE 7–12 Computing ABC Product Costs [LO3, LO4] Performance Products Corporation makes two products, titanium Rims and Posts Data regarding the two products follow: Direct Labor-Hours per Unit Annual Production Rims .0.40 20,000 units Posts 0.20 80,000 units Additional information about the company follows: a Rims require $17 in direct materials per unit, and Posts require $10 b The direct labor wage rate is $16 per hour c Rims are more complex to manufacture than Posts, and they require special equipment d The ABC system has the following activity cost pools: Required: Compute the activity rate for each activity cost pool 2.Determine the unit cost of each product according to the ABC system, including direct materials and direct labor EXERCISE 7-13 Second-Stage Allocation and Margin Calculations [LO4, LO5] Theatre Seating, Inc., makes high-quality adjustable seats for theaters The company’s activity- based costing system has four activity cost pools, which are listed below along with their activity measures and activity rates: Activity Cost Pool Activity Measure Activity Rate Supporting direct labor Number of direct labor-hours hour $12 per direct labor- Batch processing Number of batches $96 per batch Order processing Number of orders $284 per order Customer service Number of customers $2,620 per customer The company just completed a single order from CineMax Entertainment Corporation for 2,400 custom seats The order was produced in four batches Each seat required 0.8 direct labor-hours The selling price was $137.95 per seat, the direct materials cost was $112.00 per seat, and the direct labor cost was $14.40 per seat This was the only order from CineMax Entertainment for the year Required: Using Exhibit 7–11 as a guide, prepare a report showing the customer margin on sales to CineMax Entertainment for the year EXERCISE 7–14 Cost Hierarchy [LO1] Green Glider Corporation makes golf carts that it sells directly to golf courses throughout the world Several basic models are available, which are modified to suit the needs of each particular golf course A golf course located in the Pacific Northwest, for example, would typically specify that its golf carts come equipped with retractable rain-proof covers In addition, each customer (i.e., golf course) customizes its golf carts with its own color scheme and logo The company typically makes all of the golf carts for a customer before starting work on the next customer’s golf carts A number of activities carried out at Green Glider Corporation are listed below: a The purchasing department orders the specific color of paint specified by the customer from the company’s supplier b A steering wheel is installed in a golf cart c An outside attorney draws up a new generic sales contract for the company limiting Gree Glider’s liability in case of accidents that involve its golf carts d The company’s paint shop makes a stencil for a customer’s logo e A sales representative visits an old customer to check on how the company’s golf carts are working out and to try to make a new sale f The accounts receivable department prepares the bill for a completed order g Electricity is used to heat and light the factory and the administrative offices h A golf cart is painted i The company’s engineer modifies the design of a model to eliminate a potential safety problem j The marketing department has a catalogue printed and then mails copies to golf course managers k Completed golf carts are individually tested on the company’s test track l A new model golf cart is shipped to the leading golfing trade magazine to be evaluated for the magazine’s annual rating of golf carts Required: Classify each of the costs or activities above as unit-level, batch-level, product-level, customer- level, or organization-sustaining In this case, customers are golf courses, products are models of the golf cart, a batch is a specific order from a customer, and units are individual golf carts EXERCISE 7–15 Calculating and Interpreting Activity-Based Costing Data [LO3, LO4] Sven’s Cookhouse is a popular restaurant located on Lake Union in Seattle The owner of the res- taurant has been trying to better understand costs at the restaurant and has hired a student intern to conduct an activity-based costing study The intern, in consultation with the owner, identified three major activities She then completed the first-stage allocations of costs to the activity cost pools, using data from last month’s operations The results appear below: Activity Cost Pool Activity Activity Measure Total Cost Total Serving a party of diners Number of parties served parties $12,000 5,000 Serving a diner Number of diners served diners $90,000 12,000 Serving a drink Number of drinks ordered drinks $26,000 10,000 The above costs include all of the costs of the restaurant except for organization-sustaining costs such as rent, property taxes, and top-management salaries A group of diners who ask to sit at the same table are counted as a party Some costs, such as the costs of cleaning linen, are the same whether one person is at a table or the table is full Other costs, such as washing dishes, depend on the number of diners served Prior to the activity-based costing study, the owner knew very little about the costs of the restaurant He knew that the total cost for the month (including organization-sustaining costs) was $180,000 and that 12,000 diners had been served Therefore, the average cost per diner was $15 Required: According to the activity-based costing system, what is the total cost of serving each of the following parties of diners? a A party of four diners who order three drinks in total b A party of two diners who not order any drinks c A lone diner who orders two drinks Convert the total costs you computed in (1) above to costs per diner In other words, what is the average cost per diner for serving each of the following parties? a A party of four diners who order three drinks in total b A party of two diners who not order any drinks c A lone diner who orders two drinks Why the costs per diner for the three different parties differ from each other and from the overall average cost of $15.00 per diner? All applicable problems are available with McGraw-Hill’s Connect™ Accounting PROBLEM 7–16 Second-Stage Allocations and Product Margins [LO4, LO5] AnimPix, Inc., is a small company that creates computer-generated animations for fi lms and television Much of the company’s work consists of short commercials for television, but the company also does realistic computer animations for special effects in movies The young founders of the company have become increasingly concerned with the economics of the business—particularly because many competitors have sprung up recently in the local area To help understand the company’s cost structure, an activitybased costing system has been designed Three major activities are carried out in the company: animation concept, animation production, and contract administration The animation concept activity is carried out at the contract proposal stage when the company bids on projects This is an intensive activity that involves individuals from all parts of the company in creating storyboards and prototype stills to be shown to the prospective client After the client has accepted a project, the animation goes into production and contract administration begins Technical staff almost all of the work involved in animation production, whereas the administrative staff is largely responsible for contract administration The activity cost pools and their activity measures and rates are listed below: Activity Cost Pool Activity Measure Activity Rate Animation concept Number of proposals$6,000 per proposal Animation production Minutes of animation$7,700 per minute of animation Contract administration Num These activity rates include all of the costs of the company, except for the costs of idle capacity and organization-sustaining costs There are no direct labor or direct materials costs Preliminary analysis using these activity rates has indicated that the local commercials segment of the market may be unprofi table This segment is highly competitive Producers of local commercials may ask several companies like AnimPix to bid, which results in an unusually low ratio of accepted contracts to bids Furthermore, the animation sequences tend to be much shorter for local commercials than for other work Because animation work is billed at standard rates according to the running time of the completed animation, the revenues from these short projects tend to be below average Data concerning activity in the local commercials market appear below: Activity Measure Local Commercials Number of proposals20 Minutes of animation12 Number of contracts8 The total sales for local commercials amounted to $240,000 Required: Determine the cost of serving the local commercials market Prepare a report showing the margin earned serving the local commercials market (Remember, this company has no direct materials or direct labor costs.) What would you recommend to management concerning the local commercials market? PROBLEM 7–17 Comparing Traditional and Activity-Based Product Margins [LO1, LO3, LO4, LO5] Precision Manufacturing Inc (PMI) makes two types of industrial component parts—the EX300 and the TX500 An absorption costing income statement for the most recent period is shown below: Precision Manufacturing Inc Income Statement Sales $1,700,000 Cost of goods sold 1,200,000 Gross margin 500,000 Selling and administrative expenses 550,000 Net operating loss $ (50,000) PMI produced and sold 60,000 units of EX300 at a price of $20 per unit and 12,500 units of TX500 at a price of $40 per unit The company’s traditional cost system allocates manufacturing overhead to products using a plantwide overhead rate and direct labor dollars as the allocation base Additional information relating to the company’s two product lines is shown below: EX300 TX500 Total Direct materials $366,325 $162,550 $ 528,875 Direct labor $120,000 $42,500 162,500 Manufacturing overhead 508,625 Cost of goods sold $1,200,000 The company has created an activity-based costing system to evaluate the profi tability of its products PMI’s ABC implementation team concluded that $50,000 and $100,000 of the company’s advertising expenses could be directly traced to EX300 and TX500, respectively The remainder of the selling and administrative expenses was organization- sustaining in nature The ABC team also distributed the company’s manufacturing overhead to four activities as shown below: Machining (machine-hours) $198,250 90,000 62,500 152,500 150,000 75 300 375 Product-sustaining (number of products) 100,000 1 Other (organization-sustaining costs) 60,375 Total manufacturing overhead cost $508,625 NA NA NA Setups (setup hours) Required: Using Exhibit 7–12 as a guide, compute the product margins for the EX300 and TX500 under the company’s traditional costing system Using Exhibit 7–10 as a guide, compute the product margins for EX300 and TX500 under the activity-based costing system Using Exhibit 7–13 as a guide, prepare a quantitative comparison of the traditional and activity-based cost assignments Explain why the traditional and activity-based cost assignments differ, PROBLEM 7–18 Comparing Traditional and Activity-Based Product Margins [LO1, LO3, LO4, LO5] Rocky Mountain Corporation makes two types of hiking boots—Xactive and the Pathbreaker Data concerning these two product lines appear below: Xactive Pathbreaker Selling price per unit $127.00 $89.00 Direct materials per unit $64.80 $51.00 Direct labor per unit .$18.20 $13.00 Direct labor-hours per unit 1.4 DLHs 1.0 DLHs Estimated annual production and sales 25,000 units75,000 units The company has a traditional costing system in which manufacturing overhead is applied to units based on direct labor-hours Data concerning manufacturing overhead and direct labor-hours for the upcoming year appear below: Estimated total manufacturing overhead $2,200,000 Estimated total direct labor-hours 110,000 DLHs Required: Using Exhibit 7–12 as a guide, compute the product margins for the Xactive and the Pathbreaker products under the company’s traditional costing system The company is considering replacing its traditional costing system with an activity- based costing system that would assign its manufacturing overhead to the following four activity cost pools (the Other cost pool includes organization-sustaining costs and idle capacity costs): ... 1, 116 $3,5 91 July 3 ,16 2 $7,264 August 3,608 $8 ,11 1 September 1, 260 $3,707 October 18 6 $1, 712 November 1, 080 $3,3 21 2,046 $5 ,19 6 December Required:... Year 1: First 16 ,000 $16 0,000 Second 18 ,000 $17 5,000 Third 23,000 $ 217 ,000 Fourth 19 ,000 $18 0,000 First 17 ,000 $17 0,000... overseas 10 Sand used in manufacturing concrete 11 Supervisor’s salary, factory 12 Executive life insurance 13 Sales commissions 14 Fringe benefits, assembly-line workers 15 Advertising costs 16 Property