BAI TAP KE TOAN QUAN TRI PHAN 1 (3)

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 1 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, andregulators

Lean Production A management approach that organizes resources such as people and

machines around the flow of business processes and that only produces units inresponse 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 2 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 theaccount behaves

Phân tích tài khoản Một phương pháp cho việc phân tích hành vi chi phí mà một tài

khoản được phân loại như là một trong hai biến hoặc cố định dựa trên kiến thức trước khi các nhà phân tích cách ứng xử của chi phí trong 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-raystaken increases.Therefore, the number of X-rays is the activity base that explains the totalcost of X-ray film

Hoạt động cơ sở Một biện pháp của bất cứ điều gì gây ra incurrent chi phí biến Ví dụ,

tổng chi phí của bộ phim x-quang tại bệnh viện sẽ tăng như số chụp x-quang chụp tăng Vì vậy, số lượng các tia x là cơ sở hoạt động giải thích tổng chi phí của bộ 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 chính Tất cả điều hành, tổ chức và văn phòng chi phí liên quan với việc

quản lý chung của một tổ chức chứ không phải với sản xuất hoặc 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 makingfundamental changes

Committed fixed costs Đầu tư Tiện nghi, trang thiết bị và cơ cấu tổ chức cơ bản không

thể được giảm bớt đáng kể ngay cả đối với thời gian ngắn mà không làm thay đổi cơ bản.

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 acommon cost of all of the passengers on the aircraft Without the pilot, there would be noflight and no passengers But no part of the pilot’s wage is caused by any one passengertaking the flight

Chi phí chung Chi phí phát sinh để hỗ trợ một số chi phí cho các đối tượng, nhưng mà

không thể được truy nguồn từ chúng riêng rẽ Ví dụ, chi phí lương phi công của một máy bay chở khách 747 là một chi phí chung của tất cả các hành khách trên máy bay Không có phi công, sẽ có không có chuyến bay và hành khách không có Nhưng không có một phần của mức lương của phi công được gây ra bởi bất kỳ một hành khách đi các 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 separatedinto 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 bởi hành vi của họ Chi phí được tách ra thành các biến và thể loại cố định chứ không phải bị tách ra thành sản phẩm và thời gian chi phí cho mục đích báo cáo bên ngoài

Contribution margin The amount remaining from sales revenues after all variable

expenses have been deducted

Đóng góp biên độ Số tiền còn lại từ doanh thu bán hàng sau khi đã trừ tất cả 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 trên không

Cost behavior The way in which a cost reacts to changes in the level of activity.

Hành vi chi phí Cách thức mà trong đó chi phí một phản ứng với những thay đổi trong 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 cứ điều gì mà dữ liệu chi phí được mong muốn Ví dụ về chi phí các đối tượng là sản phẩm, khách hàng, công việc, và các bộ phận của tổ chức như phòng ban hoặc 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 và pha trộn trong một 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 một số yếu tố quan hệ nhân quả; Tổng chi phí là biến phụ thuộc, như thể hiện bằng chữ Y

Differential cost A difference in cost between two alternatives Also see Incremental cost.

Vi phân chi phí Sự khác biệt trong chi phí giữa 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 trong doanh thu giữa 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 có thể được dễ dàng và thuận tiện truy tìm đối tượng xác định chiphí

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 có thể được dễ dàng truy tìm đến các đơn vị

cá nhân của sản phẩm Cũng gọi là 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 một phần không thể thiếu của một sản phẩm đãhoàn thành và chi phí mà có thể được thuận tiện truy nguồn từ nó

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 các quyết định hàng nămbằng cách quản lý chi tiêu vào các khoản mục chi phí cố định nhất định, chẳng hạn nhưquảng cáo và 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 ofthe prices of those inputs

Cách tiếp cận kỹ thuật Phân tích chi tiết về hành vi chi phí dựa trên mộtengineer'sevaluation công nghiệp của các đầu vào cần thiết để thực hiện một hoạt động cụthể và giá cả của các 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 variesinversely with the level of activity

Chi phí cố định Chi phí mà vẫn không đổi, tổng cộng, bất kể những thay đổi trong mức độhoạt động trong phạm vi có liên quan Nếu một chi phí cố định được thể hiện trên một cơ

sở cho mỗi đơn vị, nó 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 các yếu tố cố định vàbiến bằng cách phân tích những thay đổi trong chi phí giữa mức độ hoạt động cao và thấp

Incremental cost An increase in cost between two alternatives Also see Differential cost.

Chi phí gia tăng Sự gia tăng chi phí giữa hai lựa chọn Cũng thấy khác biệt giữa 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 như một yếu tố quan hệ nhân quả; hoạt động là biến độclập, như thể hiện bằng 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 không thể được dễ dàng và thuận tiện truy tìm đối tượng xácđịnh 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 của janitors, giám sát, xử lý vật liệu và công nhânnhà máy khác mà không thể được thuận tiện truy tìm đến các 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 như keo và móng tay mà có thể là một phần của mộtsản phẩm hoàn tất, nhưng chi phí mà không thể được dễ dàng hoặc thuận tiện truy tìm nó.

Inventoriable costs Synonym for product costs.

Chi phí inventoriable Từ đồng nghĩa cho chi phí của 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 các yếu tố

cố định và biến bằng cách trang bị một dòng hồi quy tổng hợp các 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 được gọi là tuyến tính bất cứ khi nào một đường thẳng là một xấp xỉ hợp lý cho mối quan hệ giữa chi phí và các hoạt động

Manufacturing overhead All manufacturing costs except direct materials and direct

labor Sản xuất trên cao Tất cả các 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 cả hai yếu tố chi phí biến đổi và cố định

Opportunity cost The potential benefit that is given up when one alternative is selected

over another

Chi phí cơ hội Những lợi ích tiềm năng mà được đưa ra khi một trong những lựa chọn khác hơn

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 manufacturingoverhead Also see Inventoriable costs

Chi phí sản phẩm Tất cả các chi phí có liên quan trong việc mua hoặc làm cho một sảnphẩm Trong trường hợp hàng hóa sản xuất, các chi phí này bao gồm các tài liệu trực tiếp,trực tiếp lao động và sản xuất trên cao Xem chi phí Inventoriable

Raw materials Any materials that go into the final product.

Nguyên liệu Bất kỳ tài liệu mà đi vào sản phẩm cuối cùng.

Relevant range The range of activity within which assumptions about variable and fixed

cost behavior are valid

Phạm vi có liên quan Phạm vi của các hoạt động trong đó các giả định về hành vi của biến và 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 cả các chi phí phát sinh để đảm bảo khách hàng đặt hàng và nhận được hoàn thành sản phẩm hoặc dịch vụ vào tay của 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 đã được phát sinh và đó không thể được thay đổi bởi bất kỳ quyết định được thực hiện ngay bây giờ hoặc trong 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, trong tổng số, các tỷ lệ trực tiếp tới những thay đổi trong mức độ hoạt động Chi phí biến là hằng số cho mỗi 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 variousmanufacturers The company is very small and its assembly shop and retail sales store arehoused in a Gig Harbor, Washington, boathouse Below are listed some of the costs that areincurred at the company

Thuyền, Inc, lắp ráp sailboats tuỳ chỉnh từ các thành phần được cung cấp bởi các nhà sảnxuất khác nhau Công ty là rất nhỏ và lắp ráp cửa hàng và cửa hàng bán lẻ bán hàng của nóđược đặt trong một boathouse Gig Harbor, Washington Dưới đây là liệt kê một số các chiphí phát sinh tại công ty

1 The wages of employees who build the sailboats

Tiền lương của nhân viên xây dựng các thuyền buồm

2 The cost of advertising in the local newspapers

Chi phí quảng cáo trong tờ báo địa phương

3 The cost of an aluminum mast installed in a sailboat

Chi phí của một cột bằng nhôm được cài đặt trong một thuyền buồm

4 The wages of the assembly shop’s supervisor

Lương giảng viên hướng dẫn các cửa hàng lắp ráp

5 Rent on the boathouse

6 The wages of the company’s bookkeeper

Tiền lương của nhân viên kế toán của công ty

7 Sales commissions paid to the company’s salespeople

Hoa hồng bán hàng trả cho nhân viên bán hàng của công ty

8 Depreciation on power tools

Chi phí khấu hao trên 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 thatmanufactures sophisticated radar sets for commercial aircraft The company, which isprivately 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 rằng bạn có được một công việc mùa hè tại hệ thống điện tử Fairwings, một công tysản xuất tinh vi tổ hợp radar máy bay thương mại Công ty tư nhân thuộc sở hữu, đã tiếpcận một ngân hàng cho vay tiền để giúp đỡ tài chính tăng trưởng to lớn của nó Ngân hàngyêu cầu báo cáo tài chính trước khi phê duyệt một 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

1 The cost of the memory chips used in a radar set

2 Factory heating costs

Phân loại mỗi chi phí được liệt kê dưới đây là chi phí sản phẩm hoặc chi phí thời gian chocác mục đích của việc chuẩn bị báo cáo tài chính cho ngân hàng

1 chi phí của các chip nhớ được sử dụng trong một bộ radar

2 chi phí hệ thống sưởi nhà máy

3 nhà máy sản xuất thiết bị, chi phí bảo trì

4 đào tạo, chi phí cho nhân viên hành chính mới

5 chi phí của Hàn được sử dụng trong lắp ráp các bộ radar

6 các chi phí đi du lịch của công ty salespersons

7 tiền lương và tiền lương của nhân viên an ninh nhà máy

8 chi phí của máy lạnh văn phòng điều hành

9 tiền lương và tiền lương của tỉnh

3 Factory equipment maintenance costs.

4 Training costs for new administrative employees

5 The cost of the solder that is used in assembling the radar sets

6 The travel costs of the company’s salespersons

7 Wages and salaries of factory security personnel

8 The cost of air-conditioning executive offices

9 Wages and salaries in the department that handles billing customers

10 Depreciation on the equipment in the fitness room used by factory workers

11 Telephone expenses incurred by factory management

12 The costs of shipping completed radar sets to customers

13 The wages of the workers who assemble the radar sets

14 The president’s salary

15 Health insurance premiums for factory personnel

10 khấu hao vào các thiết bị trong phòng tập thể dục được sử dụng bởi các công nhânnhà máy

11 điện thoại chi phí phát sinh của quản lý nhà máy sản xuất

12 chi phí vận chuyển hoàn thành radar đặt cho khách hàng

13 lương công nhân lắp ráp các bộ radar

14 Tổng thống của tiền lương

15 bảo hiểm y tế bảo hiểm cho nhân viên nhà máy

EXERCISE 2–3 Fixed and Variable Cost Behavior [LO3] Hành vi chi phí cố định và biến

Koffee Express operates a number of espresso coffee stands in busy suburban malls Thefixed weekly expense of a coffee stand is $1,100 and the variable cost per cup of coffeeserved is $0.26

Koffee Express hoạt động một số pha cà phê espresso nằm trong Trung tâm mua sắmngoại ô bận rộn Các chi phí cố định lượt của cà phê đứng là $1.100 và chi phí biến chomỗi tách cà phê phục vụ là $0,26.

Required:

1 Fill in the following table with your estimates of total costs and average cost per cup ofcoffee at the indicated levels of activity for a coffee stand Round off the cost of a cup

of coffee to the nearest tenth of a cent

1 điền vào bảng sau đây với các bạn ước tính tổng chi phí và các chi phí trung bình cho mỗi tách cà phê ở các cấp được chỉ định của hoạt động cho một cà phê đứng Vòng tắt các chi phí của một tách cà phê đến mười một xu, gần nhất

2 liệu trung bình chi phí mỗi cốc cà phê phục vụ tăng, giảm, hay vẫn như cũ như số lượng ly

cà phê phục vụ trong một tuần tăng? Giải thích

Cups of Coffee Served in a Week

Fixed cost ? ? ?

Variable cost ? ? ?

Total cost ? ? ?

Average cost per cup of coffee served ? ? ?

2 Does the average cost per cup of coffee served increase, decrease, or remain the same

as the number of cups of coffee served in a week increases? Explain

EXERCISE 2–4 High-Low Method [LO4]

The Edelweiss Hotel in Vail, Colorado, has accumulated records of the total electricalcosts of the hotel and the number of occupancy-days over the last year An occupancy-dayrepresents a room rented out for one day The hotel’s business is highly seasonal, withpeaks occurring during the ski season and in the summer

Hotel Edelweiss tại Vail, Colorado, đã tích lũy được hồ sơ của tất cả chi phí điện kháchsạn và số suất phòng-ngày trong năm qua Một ngày người đại diện cho một phòng đượcthuê ra cho một ngày Kinh doanh của khách sạn là rất cao, theo mùa, với đỉnh núi xảy ratrong mùa trượt tuyết và vào mùa hè

2 What other factors other than occupancy-days are likely to affect the variation inelectrical costs from month to month?

1 sử dụng phương pháp cao thấp, ước tính chi phí cố định điện mỗi tháng và chi phí biến điện cho mỗi người ngày Vòng tắt các chi phí cố định cho đồng đô la toàn gần nhất và chi phí biến toàn bộ cent gần nhất

2 những gì các yếu tố khác ngoài cư ngày có khả năng ảnh hưởng đến sự thay đổi trong chi phí điện từ tháng này qua tháng

EXERCISE 2–5 Traditional and Contribution Format Income Statements [LO5] Redhawk, Inc., is a merchandiser that provided the following information:

Number of units sold 10,000

Selling price per unit $15

Variable selling expense per unit $2

Variable administrative expense per unit $1

Total fi xed selling expense $20,000

Total fi xed administrative expense $15,000

Merchandise inventory, beginning balance $12,000

Merchandise inventory, ending balance $22,000

Merchandise purchases $90,000

Required:

1 Prepare a traditional income statement.

2 Prepare a contribution format income statement

EXERCISE 2–6 Identifying Direct and Indirect Costs

[LO6]

The Empire Hotel is a four-star hotel located in downtown Seattle.

Required:

For each of the following costs incurred at the Empire Hotel, indicate whether it would most likely be a direct cost or an indirect cost of the specified cost object by placing an X in the appropriate

Ex Cost of electricity to run the terminalsX

Cost of the new fl at-panel displays

Cost of the old computer terminals

Rent on the space occupied by the registration desk

Wages of registration desk personnel 5 Benefi ts from a new freezer

Costs of maintaining the old computer terminals

Cost of removing the old computer terminals

Cost of existing registration desk wiring .

EXERCISE 2–7 Differential, Opportunity, and Sunk Costs [LO7]

The Sorrento Hotel is a four-star hotel located in downtown Seattle The hotel’s operations vice president would like to replace the hotel’s antiquated computer terminals at the registration desk with attractive state-of-the-art flat-panel displays The new displays would take less space, would consume less power than the old computer terminals, and would provide additional security since they can only be viewed from a restrictive angle The new computer displays would not require any new wiring The hotel’s chef believes the funds would be better spent on a new bulk freezer for the kitchen

Required:

For each of the items below, indicate by placing an X in the appropriate column whether it should be considered a differential cost, an opportunity cost, or a sunk cost in the decision

to replace the old computer terminals with new flat-panel displays If none of the categories apply for a particular item, leave all columns blank

EXERCISE 2–8 Cost Behavior; Contribution Format Income Statement [LO3, LO5]

Parker Company manufactures and sells a single product A partially completed schedule

of the company’s total and per unit costs over a relevant range of 60,000 to 100,000 units produced and sold each year is given below:

1 Complete the schedule of the company’s total and unit costs.

2 Assume that the company produces and sells 90,000 units during the year at the sellingprice of $7.50 per unit Prepare a contribution format income statement for the year

EXERCISE 2–9 Cost Classification [LO1, LO2, LO3, LO7]

Several years ago Medex Company purchased a small building adjacent to itsmanufacturing plant in order to have room for expansion when needed Since the companyhad no immediate need for the extra space, the building was rented out to another companyfor rental revenue of $40,000 per year The renter’s lease will expire next month, and ratherthan renewing the lease, Medex Company has decided to use the building itself tomanufacture a new product Direct materials cost for the new product will total $40 perunit It will be necessary to hire a supervisor to oversee production Her salary will be

$2,500 per month Workers will be hired to manufacture the new product, with direct laborcost amounting to $18 per unit Manufacturing operations will occupy all of the buildingspace, so it will be necessary to rent space in a warehouse nearby in order to store finishedunits of product The rental cost will be $1,000 per month In addition, the company willneed to rent equipment for use in producing the new product; the rental cost will be $3,000per month The company will continue to depreciate the building on a straight-line basis, as

in past years Depreciation on the building is $10,000 per year

Advertising costs for the new product will total $50,000 per year Costs of shipping thenew product to customers will be $10 per unit Electrical costs of operating machines will

be $2 per unit To have funds to purchase materials, meet payrolls, and so forth, thecompany will have to liquidate some temporary investments These investments arepresently yielding a return of $6,000 per year

Required:

Prepare an answer sheet with the following column headings:

List the different costs associated with the new product decision down the extreme leftcolumn (under Name of the Cost) Then place an X under each heading that helps todescribe the type of cost involved There may be X’s under several column headings for asingle cost (For example, a cost may be a fixed cost, a period cost, and a sunk cost; youwould place an X under each of these column headings opposite the cost.)

EXERCISE 2–10 High-Low Method; Scattergraph Analysis [LO4]

Zerbel Company, a wholesaler of large, custom-built air conditioning units for commercialbuildings, has noticed considerable fluctuation in its shipping expense from month tomonth, as shown below:

Month Units Shipped Total Shipping Expense

January 4 $2,200

February 7 $3,100

March 5 $2,600

2 Using the high-low method, estimate the cost formula for shipping expense Draw astraight line through the high and low data points shown in the scattergraph that youprepared in requirement 1 Make sure your line intersects the Y axis.

3 Comment on the accuracy of your high-low estimates assuming a least-squaresregression analysis estimated the total fixed costs to be $1,010.71 per month and thevariable cost to be $317.86 per unit How would the straight line that you drew inrequirement 2 differ from a straight line that minimizes the sum of the squared errors?

4 What factors, other than the number of units shipped, are likely to affect the company’sshipping expense? Explain

EXERCISE 2–11 Traditional and Contribution Format Income Statements [LO5]

Haaki Shop, Inc., is a large retailer of surfboards The company assembled the informationshown below for the quarter ended May 31:

Amount Total sales revenue $800,000

Selling price per surfboard $400

Variable selling expense per surfboard $50

Variable administrative expense per surfboard $20

Total fi xed selling expense $150,000

Total fi xed administrative expense $120,000

Merchandise inventory, beginning balance $80,000

Merchandise inventory, ending balance $100,000

Merchandise purchases $320,000

Required:

1 Prepare a traditional income statement for the quarter ended May 31.

2 Prepare a contribution format income statement for the quarter ended May 31

3 What was the contribution toward fixed expenses and profits for each surfboard soldduring the quarter? (State this figure in a single dollar amount per surfboard.)

EXERCISE 2–12 Cost Behavior; High-Low Method [LO3, LO4]

Speedy Parcel Service operates a fleet of delivery trucks in a large metropolitan area Acareful study by the company’s cost analyst has determined that if a truck is driven 120,000miles during a year, the average operating cost is 11.6 cents per mile If a truck is drivenonly 80,000 miles during a year, the average operating cost increases to 13.6 cents permile

Required:

1 Using the high-low method, estimate the variable and fixed cost elements of the annualcost of truck operation

2 Express the variable and fixed costs in the form Y = a + bX

3 If a truck were driven 100,000 miles during a year, what total cost would you expect to

be incurred?

EXERCISE 2–13 High-Low Method; Predicting Cost [LO3, LO4]

The number of X-rays taken and X-ray costs over the last nine months in Beverly Hospitalare given below:

Month X-Rays Taken X-Ray Costs

1 Using the high-low method, estimate the cost formula for X-ray costs

2 Using the cost formula you derived above, what X-ray costs would you expect to beincurred during a month in which 4,600 X-rays are taken?

3 Prepare a scattergraph using the data given above Plot X-ray costs on the vertical axisand the number of X-rays taken on the horizontal axis Draw a straight line through the twodata points that correspond to the high and low levels of activity Make sure your lineintersects the Y -axis

4 Comment on the accuracy of your high-low estimates assuming a least-squaresregression analysis estimated the total fixed costs to be $6,529.41 per month and thevariable cost to be $3.29 per X-ray taken How would the straight line that you drew inrequirement 3 differ from a straight line that minimizes the sum of the squared errors?

5 Using the least-squares regression estimates given in requirement 4, what X-ray costswould you expect to be incurred during a month in which 4,600 X-rays are taken?

Costs Cost Formula

Selling:

Advertising $950 per month

Delivery of organs $60 per organ sold

Sales salaries and commissions $4,800 per month, plus 4% of salesUtilities $650 per month

Depreciation of sales facilities $5,000 per month

Administrative:

Executive salaries $13,500 per month

Depreciation of office equipment $900 per month

House of Organs, Inc., purchases organs from a well-known manufacturer and sells them

at the retail level The organs sell, on the average, for $2,500 each The average cost of anorgan from the manufacturer is $1,500 The costs that the company incurs in a typicalmonth are presented below:

During November, the company sold and delivered 60 organs

Required:

1 Prepare a traditional income statement for November

2 Prepare a contribution format income statement for November Show costs andrevenues on both a total and a per unit basis down through contribution margin

First 1,000,000 gallons or less $1,000 fl at fee

Next 10,000 gallons $0.003 per gallon used

Next 10,000 gallons $0.006 per gallon used

Next 10,000 gallons $0.009 per gallon used

Etc Etc

3 Refer to the income statement you prepared in (2) above Why might it be misleading toshow the fixed costs on a per unit basis?

PROBLEM 2–15 Identifying Cost Behavior Patterns [LO3]

A number of graphs displaying cost behavior patterns are shown on the next page Thevertical axis on each graph represents total cost and the horizontal axis represents the level

b City water bill, which is computed as follows:

c Depreciation of equipment, where the amount is computed by the straight-line method When the depreciation rate was established, it was anticipated that the obsolescence factorwould be greater than the wear and tear factor

d Rent on a factory building donated by the city, where the agreement calls for a fixed feepayment unless 200,000 labor-hours or more are worked, in which case no rent need be paid

e Cost of raw materials, where the cost starts at $7.50 per unit and then decreases by

5 cents per unit for each of the first 100 units purchased, after which it remains constant

at $2.50 per unit

f Salaries of maintenance workers, where one maintenance worker is needed for every1,000 hours of machine-hours or less (that is, 0 to 1,000 hours requires one maintenanceworker, 1,001 to 2,000 hours requires two maintenance workers, etc.)

g Cost of raw material used

h Rent on a factory building donated by the county, where the agreement calls for rent of

$100,000 less $1 for each direct labor-hour worked in excess of 200,000 hours, but a

minimum rental payment of $20,000 must be paid

i Use of a machine under a lease, where a minimum charge of $1,000 is paid for up to 400hours of machine time After 400 hours of machine time, an additional charge of $2 per hour is paid up to a maximum charge of $2,000 per period

2 How would a knowledge of cost behavior patterns such as those above be of help to a manager in analyzing the cost structure of his or her company?

Example: The cost of polio immunization tablets

a The salary of the head nurse in the Immunization Center

b Costs of incidental supplies consumed in the Immunization Center, such as papertowels

c The cost of lighting and heating the Immunization Center

d The cost of disposable syringes used in the Immunization Center

e The salary of the Central Area Well-Baby Clinic’s information systems manager

f The costs of mailing letters soliciting donations to the Central Area Well-Baby Clinic

g The wages of nurses who work in the Immunization Center

h The cost of medical malpractice insurance for the Central Area Well-Baby Clinic

i Depreciation on the fixtures and equipment in the Immunization Center

Required:

For each cost listed above, indicate whether it is a direct or indirect cost of theImmunization Center, whether it is a direct or indirect cost of immunizing particularpatients, and whether it is variable or fixed with respect to the number of immunizationsadministered Use the form shown below for your answer

Level of Activity

Machine-hours 60,000 80,000

Total factory overhead costs 274,000 pesos312,000 pesos

Indirect materials (variable) 90,000 pesos

Rent (fi xed) 130,000

Maintenance (mixed) 54,000

Total factory overhead costs 274,000 pesos

PROBLEM 2–17 High-Low Method; Predicting Cost [LO3, LO4]

Echeverria SA is an Argentinian manufacturing company whose total factory overheadcosts fluctuate somewhat from year to year according to the number of machine-hoursworked in its production facility These costs (in Argentinian pesos) at high and low levels

of activity over recent years are given below:

The factory overhead costs above consist of indirect materials, rent, and maintenance Thecompany has analyzed these costs at the 60,000 machine-hours level of activity as follows:

2 Using the high-low method, estimate a cost formula for maintenance.

3 What total overhead costs would you expect the company to incur at an operating level

of 65,000 machine-hours?

PROBLEM 2–18 Cost Behavior; High-Low Method; Contribution Format IncomeStatement

[LO3, LO4, LO5]

Frankel Ltd , a British merchandising company, is the exclusive distributor of a productthat is gaining rapid market acceptance The company’s revenues and expenses (in Britishpounds) for the last three months are given below:

Frankel Ltd.

Comparative Income Statements For the Three Months Ended June 30

Frankel Ltd.’s income statement has been recast in the functional format common in theUnited States The British currency is the pound, denoted by £.)

AprilSales in units 3,000

May3,750

June4,500Sales revenue £420,000 £525,000 £630,000

Cost of goods sold 168,000 210,000 252,000

Total selling and administrative expenses 272,000 296,000 320,000

Net operating income (loss) £ (20,000) £ 19,000 £ 58,000 (Note:

Sebolt Wire Company heats copper ingots to very high temperatures by placing the ingots

in a large heat coil The heated ingots are then run through a shaping machine that shapesthe soft ingot into wire Due to the long heat-up time, the coil is never turned off When aningot is placed in the coil, the temperature is raised to an even higher level, and then thecoil is allowed to drop to the ―waiting‖ temperature between ingots Management needs toknow the variable cost of power involved in heating an ingot and the fixed cost of powerduring ―waiting‖ periods The following data on ingots processed and power costs areavailable:

3 Comment on the accuracy of your high-low estimates assuming a least-squaresregression analysis estimated the total fixed costs to be $1,185.45 per month and thevariable cost to be $37.82 per ingot How would the straight line that you drew inrequirement 2 differ from a straight line that minimizes the sum of the squared errors?

PROBLEM 2–20 Ethics and the Manager [LO2]

The top management of General Electronics, Inc., is well known for ―managing bythe numbers.‖ With an eye on the company’s desired growth in overall net profit, thecompany’s CEO (chief executive officer) sets target profits at the beginning of the year foreach of the company’s divisions The CEO has stated her policy as follows: ―I won’t

Month Machine-Hours Total Overhead Cost

be delayed until the beginning of the new year On December 30, he was angered todiscover that a warehouse clerk had ordered $350,000 of cellular telephone parts earlier inDecember even though the parts weren’t really needed by the assembly department untilJanuary or February Contrary to common accounting practice, the General Electronics,Inc., Accounting Policy Manual states that such parts are to be recorded as an expensewhen delivered To avoid recording the expense, Mr Richart asked that the order becanceled, but the purchasing department reported that the parts had already been deliveredand the supplier would not accept returns Because the bill had not yet been paid, Mr.Richart asked the accounting department to correct the clerk’s mistake by delayingrecognition of the delivery until the bill is paid in January

Required:

1 Are Mr Richart’s actions ethical? Explain why they are or are not ethical

2 Do the general management philosophy and accounting policies at General Electronicsencourage or discourage ethical behavior? Explain

PROBLEM 2–21 High-Low Method; Predicting Cost [LO3, LO4]

Golden Company’s total overhead cost at various levels of activity are presented below:

Assume that the overhead cost above consists of utilities, supervisory salaries, andmaintenance The breakdown of these costs at the 40,000 machine-hour level of activity is

as follows:

Utilities (variable) $ 52,000

Supervisory salaries (fixed) 60,000

Maintenance (mixed) 58,200

Total overhead cost $170,200

The company wants to break down the maintenance cost into its variable and fixed costelements

2 Using the high-low method, estimate a cost formula for maintenance

3 Express the company’s total overhead cost in the form Y = a + bX

4 What total overhead cost would you expect to be incurred at an activity level of 45,000machine-hours?

PROBLEM 2–22 Cost Classification [LO2, LO3, LO6]

Listed below are costs found in various organizations

1 Depreciation, executive jet

2 Costs of shipping finished goods to customers

3 Wood used in manufacturing furniture

4 Sales manager’s salary

5 Electricity used in manufacturing furniture

6 Secretary to the company president

7 Aerosol attachment placed on a spray can produced by the company

8 Billing costs

9 Packing supplies for shipping products 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 taxes on finished goods warehouses

17 Lubricants for production

equipment Required:

Prepare an answer sheet with column headings as shown below For each cost item,indicate whether it would be variable or fixed with respect to the number of units producedand sold; and then whether it would be a selling cost, an administrative cost, or amanufacturing cost If it is a manufacturing cost, indicate whether it would typically betreated as a direct or indirect cost with respect to units of product Three sample answersare provided for illustration

Cost Cost FormulaCost of goods sold $20 per unit sold

Advertising expense $170,000 per quarter

Sales commissions 5% of sales Administrative salaries $80,000 per quarter Shipping expense ?Depreciation expense $50,000 per quarter

Management has concluded that shipping expense is a mixed cost, containing both

variable and fixed cost elements Units sold and the related shipping expense over the last

eight quarters are given below:

Management would like a cost formula derived for shipping expense so that a budgeted

contribution format income statement can be prepared for the next quarter

Required:

1 Using the high-low method, estimate a cost formula for shipping expense.

2 In the first quarter of Year 3, the company plans to sell 21,000 units at a selling price of

$50 per unit Prepare a contribution format income statement for the quarter

PROBLEM 2–24 Cost Classification and Cost Behavior [LO2, LO3, LO6]

Heritage Company manufactures a beautiful bookcase that enjoys widespread popularity.The company has a backlog of orders that is large enough to keep production goingindefinitely at the plant’s full capacity of 4,000 bookcases per year Annual cost data at fullcapacity follow:

Direct materials used (wood and glass) $430,000

Administrative office salaries $110,000

Factory supervision $70,000

Sales commissions $60,000

Depreciation, factory building $105,000

Depreciation, administrative office equipment $2,000

Indirect materials, factory $18,000

Factory labor (cutting and assembly) $90,000

Advertising $100,000

Insurance, factory $6,000

Administrative office supplies (billing) $4,000

Property taxes, factory $20,000

Utilities, factory $45,000

1 Prepare an answer sheet with the column headings shown below Enter each cost item

on your answer sheet, placing the dollar amount under the appropriate headings Asexamples, this has been done already for the first two items in the list above Note thateach cost item is classified in two ways: first, as either variable or fixed with respect tothe number of units produced and sold; and second, as either a selling andadministrative cost or a product cost (If the item is a product cost, it should also beclassified as either direct or indirect as shown.)

Cost Behavior Selling or Administrative Product Cost

Materials used $430,000

Administrative office

$430,000

salaries $110,000 $110,000

*To units of product

2 Total the dollar amounts in each of the columns in (1) above Compute the averageproduct cost per bookcase

3 Due to a recession, assume that production drops to only 2,000 bookcases per year.Would you expect the average product cost per bookcase to increase, decrease, or remainunchanged? Explain No computations are necessary

4 Refer to the original data The president’s next-door neighbor has considered makinghimself a bookcase and has priced the necessary materials at a building supply store Hehas asked the president whether he could purchase a bookcase from the Heritage Company

―at cost,‖ and the president has agreed to let him do so

a Would you expect any disagreement between the two men over the price theneighbor should pay? Explain What price does the president probably have inmind? The neighbor?

b Because the company is operating at full capacity, what cost term used in thechapter might be justification for the president to charge the full, regular price to theneighbor and still be selling ―at cost‖? Explain

Glossary

Chapter 3 JOB-ORDER COSTING

Absorption costing A costing method that includes all

manufacturing costs—direct materials, direct labor, andboth variable and fixed manufacturing overhead—in thecost of a product

Allocation base A measure of activity such as direct hours or machine-hours that is used to assign costs to costobjects

labor-Bill of materials A document that shows the quantity ofeach type of direct material required to make a product.Cost driver A factor, such as machine-hours, bedsoccupied, computer time, or flight-hours, that causesoverhead costs

Cost of goods manufactured The manufacturing costsassociated with the goods that were finished during theperiod

Finished goods Units of product that have been completedbut not yet sold to customers

Job cost sheet A form that records the materials, labor, andmanufacturing overhead costs charged to a job (p 86)Job-order costing A costing system used in situationswhere many different products, jobs, or services areproduced each period

Materials requisition form A document that specifies thetype and quantity of materials to be drawn from thestoreroom and that identifies the job that will be charged forthe cost of those materials

Multiple predetermined overhead rates A costing systemwith multiple overhead cost pools and a differentpredetermined overhead rate for each cost pool, rather than

Overapplied overhead A credit balance in the Manufacturing Overhead accountthat occurs when the amount of overhead cost applied to Work in Process exceedsthe amount of overhead cost actually incurred during a period (p 103)

Overhead application The process of charging manufacturing overhead cost to jobcost sheets and to the Work in Process account

Plantwide overhead rate A single predetermined overhead rate that is usedthroughout a plant

Predetermined overhead rate A rate used to charge manufacturing overhead cost tojobs that is established in advance for each period It is computed by dividing theestimated total manufacturing overhead cost for the period by the estimated totalamount of the allocation base for the period

Raw materials Any materials that go into the final product

Schedule of cost of goods manufactured A schedule that contains three elements ofproduct costs—direct materials, direct labor, and manufacturing overhead—and thatsummarizes the portions of those costs that remain in ending Work in Processinventory and that are transferred out of Work in Process into Finished Goods.Schedule of cost of goods sold A schedule that contains three elements of productcosts—direct materials, direct labor, and manufacturing overhead—and thatsummarizes the portions of those costs that remain in ending Finished Goodsinventory and that are transferred out of

Finished Goods into Cost of Goods Sold

Time ticket A document that is used to record the amount of time an employeespends on various activities

Underapplied overhead A debit balance in the Manufacturing Overhead accountthat occurs when the amount of overhead cost actually incurred exceeds the amount

of overhead cost applied to Work in Process during a period

Work in process Units of product that are only partially complete and will requirefurther work before they are ready for sale to the customer

All applicable exercises are available with McGraw-Hill’s Connect™ Accounting

EXERCISE 3–1 Compute the Predetermined Overhead Rate [LO1]

Logan Products computes its predetermined overhead rate annually on the basis ofdirect laborhours At the beginning of the year, it estimated that 40,000 direct labor-hours would be required for the period’s estimated level of production Thecompany also estimated $466,000 of fixed manufacturing overhead expenses for thecoming period and variable manufacturing overhead of $3.00 per direct labor-hour.Logan’s actual manufacturing overhead for the year was $713,400 and its actualtotal direct labor was 41,000 hours.

Required:

Compute the company’s predetermined overhead rate for the year

EXERCISE 3–2 Apply Overhead [LO2]

Westan Corporation uses a predetermined overhead rate of $23.10 per direct hour This predetermined rate was based on a cost formula that estimated $277,200

labor-of total manufacturing overhead for an estimated activity level labor-of 12,000 directlabor-hours The company incurred actual total manufacturing overhead costs of

$266,000 and 12,600 total direct labor-hours during the period

Required:

Determine the amount of manufacturing overhead that would have been applied toall jobs during the period

EXERCISE 3–3 Computing Job Costs [LO3]

Weaver Company ’s predetermined overhead rate is $18.00 per direct labor-hourand its direct labor wage rate is $12.00 per hour The following information pertains

to Job A-200:

Direct materials $200

Direct labor $120

Required:

1 What is the total manufacturing cost assigned to Job A-200?

2 If Job A-200 consists of 50 units, what is the average cost assigned to each unitincluded in the job?

EXERCISE 3–4 Prepare Journal Entries [LO4]