Dropping a customer, activity-based costing, ethics.
1. CRS would not benefit from dropping Martha Leones because it would lose $21,840 in
revenues and save $21,672 in costs resulting in a $168 decrease in operating income.
Problem 18-21: Weighted-average method, spoilage.
Solution Exhibit 18-21, Panel A calculates equivalent units of work done to date for direct
materials and conversion costs.
Solution Exhibit 18-21, Panel B summarizes total costs to account for, calc
ACTIVITY-BASED COSTING AND ACTIVITY-BASED MANAGEMENT
Broad averaging (or peanut-butter costing) describes a costing approach that uses broad
averages for assigning (or spreading, as in spreading peanut butter) the cost of resources
Problem - 6-32:
Revenue and production budgets
This is a routine budgeting problem. The key to its solution is to compute the correct quantities of
finished goods and direct materials. Use the following general formula:
Budgeted production = Target endin
17-1 Industries using process costing in their manufacturing areas include chemical
processing, oil refining, pharmaceuticals, plastics, brick and tile manufacturing, semiconductor
chips, beverages, and breakfast cereals.
Problem 11-19: Special order, activity-based costing.
Direct materials cost per unit ($350,000 10,000 units) = $35 per unit
Direct manufacturing labor cost per unit ($375,000 10,000 units) = $37.50 per unit
Variable cost per batch = $500 per batch
Budgeted income statement.
Smart Video Company
Budgeted Income Statement for 2014
Equipment ($8,000 1.06 1.10)
Maintenance contracts ($1,900 1.06)
Cost of goods sold ($4,000 1.06 1.05)
ALLOCATION OF SUPPORT-DEPARTMENT COSTS,
COMMON COSTS, AND REVENUES
15-1 The single-rate (cost-allocation) method makes no distinction between fixed costs and
variable costs in the cost pool. It allocates costs in each cost pool to cost objects
Problem 6-24: Budgets for production and direct manufacturing labor.
Budget for Production and Direct Manufacturing Labor
for the Quarter Ended March 31, 2015
Budgeted sales (units)
Add target ending finished goods
NOTATION USED IN CHAPTER 3 SOLUTIONS
Variable cost per unit
Contribution margin per unit
Target operating income
Cost-volume-profit (CVP) analysis examines the behavi
Cost poola grouping of individual indirect cost items.
Cost tracingthe assigning of direct costs to the chosen cost object.
Cost allocationthe assigning of indirect costs to the chosen cost object.
Cost-allocation basea factor th
15-17 Single-rate method, budgeted versus actual costs and quantities.
1. a. Budgeted rate =
Budgeted indirect costs
= $115,000/50 trips = $2,300 per round-trip
Indirect costs allocated to Dark C. Division
= $2,300 per round-trip 30 budgete
Problem 7-18: Flexible-budget preparation and analysis.
Variance Analysis for Bank Management Printers for September 2014
Level 1 Analysis
THE MANAGER AND MANAGEMENT ACCOUNTING
See the front matter of this Solutions Manual for suggestions regarding your choices of
assignment material for each chapter.
Management accounting measures, analyzes, and reports financial and nonfinanc
Variance analysis, nonmanufacturing setting.
1. This is a problem of two equations and two unknowns. The two equations relate to the
number of cars detailed and the labor costs (the wages paid to the employees).
X = number of cars detailed by the exp
Special order price per unit
Variable manufacturing cost per unit
Contribution margin per unit
Effect on operating income
= $1.25 5,000 units
= $6,250 increase
2. (b) Costs of purchases, 30,000 units $47
AN INTRODUCTION TO COST TERMS AND PURPOSES
A cost object is anything for which a separate measurement of costs is desired. Examples
include a product, a service, a project, a customer, a brand category, an activity, and a
Sky Corporation produces and sells three products; X, Y, and Z in a local market and in a regional
market. At the end of the first quarter of the current year, the following income statement (in
thousands of dollars) has been reported.
Problem 5-21: ABC process costing.
Rates per unit cost driver.
$375,000 (25,000 + 50,000)
= $5 per machine hour
$120,000 (50 + 50)
= $1,200 per production run
Problem 18-24: Recognition of loss from spoilage.
1. The unit cost of making the 10,000 power adapters is:
$400,000 10,000 units = $40 per unit
2. The total cost of the 375 spoiled units is:
$40 375 units = $15,000
3. The increase in the per-unit cost of
Spoilage, journal entries.
Spoilage represents the amount of resources that go into the process but do not result in finished
product. A simple way to account for spoilage in process costing is to calculate the amount of
direct material that
Problem: 18-19 FIFO method, spoilage, equivalent units.
Summarize the Flow of Physical Units and Compute Output in Equivalent Units;
First-in, First-out (FIFO) Method of Process Costing with Spoilage,
Gray Manufacturing Company for November 2014.
Job costing with single direct-cost category, single indirect-cost pool, law firm.
Pricing decisions at Bradley Associates are heavily influenced by reported cost numbers.
Suppose Bradley is bidding against another firm for a client with a job sim
Midterm Study Guide
ACC 331 Cost Accounting
Review and study from class notes, chapter homeworks and text book
Chapter One- The Manager and Management Accounting
The difference between financial accounting from management accounting
How management account