亨格瑞管理会计英文第15版答案 11

亨格瑞管理会计英文第15版练习答案01CHAPTER 1COVERAGE OF LEARNING OBJECTIVESLEARNING OBJECTIVE LO1: Describe the major users and uses of accounting information. LO2: Describe the cost-benefit and behavioral issues involved in designing an accounting system. LO3: Explain the role of budgets and performance reports in planning and control. LO4: Discuss the role accountants play in the company’s value chain functions. LO5: Explain why accounting is important in a variety of career paths. LO6: Identify current trends in management accounting. LO7: Explain why ethics and standards of ethical conduct are important to accountants. FUNDA- CRITICAL CASES, MENTAL THINKING EXCEL, ASSIGN-EXERCISES COLLAB., & MENT AND INTERNET MATERIAL EXERCISES PROBLEMS EXERCISES A1, B1 28, 29, 33 39, 40, 42 55 41, 43 A2, B2 32 45 53A1, B1 30, 31, 34, 35, 39, 42, 44 36 30, 31 52, 55 A3, B3 37, 38 47, 48, 49 54 51, 52, 55 1 Copyright ?2021 Pearson Education, Inc., Publishing as Prentice Hall.CHAPTER 1Managerial Accounting, the Business Organization, and Professional Ethics1-A1 (10-15 min.)Information is often useful for more than one function, so the following classifications for each activity are not definitive but serve as a starting point for discussion: 1. Scorekeeping. A depreciation schedule is used in preparing financial statementsto report the results of activities. 2. Problem solving. Helps a manager assess the impact of a purchase decision. 3. Scorekeeping. Reports on the results of an operation. Could also be attentiondirecting if scrap is an area that might require management attention. 4. Attention directing. Focuses attention on areas that need attention. 5. Attention directing. Helps managers learn about the information contained in aperformance report. 6. Scorekeeping. The statement reports what has happened. Could also be attentiondirecting if the report highlights a problem or issue. 7. Problem solving. Assuming the cost comparison is to help the manager decidebetween two alternatives, this is problem solving. 8. Attention directing. Variances point out areas where results differ fromexpectations. Interpreting them directs attention to possible causes of the differences. 9. Problem solving. Aids a decision about where to make parts. 10. Attention directing and problem solving. Budgeting involves making decisionsabout planned activities -- hence, aiding problem solving. Budgets also direct attention to areas of opportunity or concern --hence, directing attention. Reporting against the budget also has a scorekeeping dimension.2 Copyright ?2021 Pearson Education, Inc., Publishing as Prentice Hall.1-A2 1. 2.(15-20 min.)Room rental FoodEntertainment Decorations TotalBudgeted Amounts $ 140 700 600 220 $1,660 Actual Amounts $ 140865 600 260 $1,865 Deviations or Variances $ 0 165U 0 40U $205U Because of the management by exception rule, room rental and entertainment require no explanation. The actual expenditure for food exceeded the budgetby $165. Of this $165, $150 is explained by attendance of 15 persons morethan budgeted (at a budget of $10 per person for food) and $15 is explained by expenditures above $10 per person.Actual expenditures for decorations were $40 more than the budget. The decorations committee should be asked for an explanation of the excess expenditures.1-A3 (10 min.)All of the situations raise possibilities for violation of the integrity standard. In addition, the manager in each situation must address an additional ethical standard: 1. The General Mills manager must respect the confidentiality standard. He or sheshould not disclose any information about the new cereal. 2. Felix must address his level of competence for the assignment. If his supervisorknows his level of expertise and wants an analysis from a “layperson” point of view, he should do it. However, if the supervisor expects an expert analysis, Felix must disclose his lack of competence. 3. The credibility standard should cause Mary Sue to decline to omit the informationfrom the budget. It is relevant information, and its omission may mislead readers of the budget.3 Copyright ?2021 Pearson Education, Inc., Publishing as Prentice Hall.1-B1 (15-20 min.)Information is often useful for more than one function, so the following classifications for each activity are not definitive but serve as a starting point for discussion: 1. Problem solving. Provides information for deciding between two alternativecourses of action. 2. Scorekeeping. Recording what has happened. If amounts are compared withexpectations, this could also serve an attention-directing function. 3. Problem solving. Helps a manager decide among alternatives. 4. Attention directing. Directs attention to the use of overtime labor. Alsoscorekeeping. 5. Problem solving. Provides information to managers for deciding whether to movecorporate headquarters. 6. Attention directing. Directs attention to why nursing costs increased. 7. Attention directing. Directs attention to areas where actual results differed fromthe budget. 8. Problem solving. Helps the vice-president decide which course of action is best. 9. Problem solving. Produces information to help the marketing department make adecision about a marketing campaign. 10. Scorekeeping. Records actual overtime costs. If results are compared withexpectations, also attention directing. 11. Attention directing. Directs attention to stores with either high or low ratios ofadvertising expenses to sales. 12. Attention directing. Directs attentionto causes of returns of the drug. 13. Attention directing or problem solving, depending on the use of the schedule. If itis to identify areas of high fuel usage it is attention directing. If itis to plan for purchases of fuel, it is problem solving. 14. Scorekeeping. Records items needed for financial statements.4 Copyright ?2021 Pearson Education, Inc., Publishing as Prentice Hall.1-B2 (10-15 min.)1 & 2. Budget Actual Variance Sales $75,000 $74,600 $ 400U Costs: Fireworks $36,000 $35,500 $500F Labor 15,000 18,000 3,000U Other 8,000 7,910 90F Total cost 59,000 61,410 2,410U Profit $16,000 $13,190 $2,810U 3. The cost of fireworks was $500 ÷ $36,000 = 1.4%under budget while sales wasjust 400 ÷ $75,000 = .5% under budget. Did fireworks suppliers lowertheir prices? Were selling prices set higher than expected? There should be some explanation for the lower cost of fireworks. The labor cost was $3,000÷ $15,000 =20% over budget. Sales and other costswere close to budget in percentage terms. Why was labor cost much higherthan expected?1-B3 (15 - 20 min.) 1. A code of conduct is a document specifying theethical standards of anorganization. 2. Different companies include different elements intheir codes of conduct. Some ofthe items included in companies’ codes of condu ct include maintaining adress code, avoiding illegal drugs, following instructions of superiors, being reliable and prompt, maintaining confidentiality, not accepting personal gifts fromstakeholders as a result of company role, avoiding racial or sexual discrimination, avoiding conflict of interest, complying with laws and regulations, not using organization’s property for personal use, andreporting illegal or questionable activity. Some companies have a simple code with little detail, and others have long lists of rules and regulations regarding appropriate conduct. The key is that the code of conduct must fit with the corporate culture. 3. Simply having a code of conduct does not guarantee ethical behavior byemployees. Most important is top management’s ethical example and its support of the code of conduct. A company’s performance evaluation and reward system must be consistent with its code of conduct. If unethical actions are rewarded, they will be encouraged even if they violate the code of conduct.5 Copyright ?2021 Pearson Education, Inc., Publishing as Prentice Hall.感谢您的阅读，祝您生活愉快。

管理会计第15版英文版答案021、He _______ getting up early. [单选题] *A. used toB. is used to(正确答案)C. is usedD. is used for2、85．You’d better? ? ? ? ? a taxi, or you’ll be late. [单选题] *A．take(正确答案)B．takingC．tookD．to take3、John is quite _______. He likes to attend activities in?his spare time. [单选题] *A. active(正确答案)B. quietC. lazyD. honest4、--Henry treats his secretary badly.--Yes. He seems to think that she is the _______ important person in the office. [单选题] *A. littleB. least(正确答案)C. lessD. most5、The flowers _______ sweet. [单选题] *A. tasteB. smell(正确答案)C. soundD. feel6、The market economy is quickly changing people’s idea on_____is accepted. [单选题] *A.what(正确答案)B.whichC.howD.that7、Jeanne's necklace was _____ 500 francs at most. [单选题] *A. worthyB. costC. worth(正确答案)D. valuable8、Just use this room for the time being ,and we’ll offer you a larger one _______it becomes available [单选题] *A. as soon as(正确答案)B unless .C as far asD until9、78．According to a report on Daily Mail, it’s on Wednesday（）people start feeling really unhappy. [单选题] *A. whenB. whichC. whatD. that(正确答案)10、I’d like to know the _______ of the club. [单选题] *A. schedule(正确答案)B. schoolC. menuD. subject11、( ) What _____ fine weather we have these days! [单选题] *A. aB. theC. /(正确答案)D. an12、The scenery is so beautiful. Let’s _______. [单选题] *A. take photos(正确答案)B. take mapsC. take busD. take exams13、He can’t meet his friends tonight because he _______ do homework. [单选题] *A. has to(正确答案)B. needC. have toD. don’t have to14、While my mother _______ the supper, my father came back. [单选题] *A. cooksB. is cookingC. was cooking(正确答案)D. has cooked15、46．The pants look cool.You can ________. [单选题] *A．try it onB．try on itC．try them on(正确答案)D．try on them16、Its’time to go to bed. _______ your computer, please. [单选题] *A. Turn onB. Turn inC. Turn off(正确答案)D. Turn down17、He prefers to use the word “strange”to describe the way（）she walks. [单选题] *A. in which(正确答案)B. by whichC. in thatD. by that18、He is a student of _______. [单选题] *A. Class SecondB. the Class TwoC. Class Two(正确答案)D. Second Two19、( ) It ___ the Chinese people 8 years to build the Dam. [单选题] *A. took(正确答案)B. costsC. paidD. spends20、My father and I often go ______ on weekends so I can ______ very well. （）[单选题] *A. swim; swimmingB. swims; swimC. swimming; swimmingD. swimming; swim(正确答案)21、75．As a student in Senior Three, I must work hard．（）, I should take exercise to strengthen my body．[单选题] *A.OtherwiseB.Meanwhile(正确答案)C.ThereforeD.Thus22、The huntsman caught only a（）of the deer before it ran into the woods. [单选题] *A. gazeB. glareC. glimpse(正确答案)D. stare23、--Don’t _______ too late, or you will feel tired in class.--I won’t, Mum. [单选题] *A. call upB. wake upC. stay up(正确答案)D. get up24、5 He wants to answer the ________ because it is an interesting one. [单选题] * A．problemB．question(正确答案)C．doorD．plan25、A brown bear escaped from the zoo, which was a（）to everyone in the town. [单选题] *A. HarmB. violenceC. hurtD. threat(正确答案)26、He went to America last Friday. Alice came to the airport to _______ him _______. [单选题] *A. take; offB. see; off(正确答案)C. send; upD. put; away27、This kind of work _______ skills and speed. [单选题] *A. looks forB. waits forC. calls for(正确答案)D. cares for28、A survey of the opinions of students（）that they admit several hours of sitting in front of the computer harmful to health. [单选题] *A. show；areB. shows ；is(正确答案)C.show；isD.shows ；are29、My English teacher has given us some _______ on how to study English well. [单选题] *A. storiesB. suggestions(正确答案)C. messagesD. practice30、I used to take ____ long way to take the bus that went by ____ tunnel under the water. [单选题] *A. a, aB. a. theC. a, /(正确答案)D. the, a。

Practice Eleven1．The managers of a firm are in the process of deciding whether to accept or reject a special offer for one of its products. A cost that is not relevant in their decision is the:A）common fixed overhead that will continue if the special offer is not accepted.B）direct materials.C）fixed overhead that will be avoided if the special offer is accepted.D）variable overhead.2．Costs that are always relevant in decision-making are:A）avoidable costs. B）fixed costs. C）sunk costs. D）variable costs.3．The Crete Corporation has 2,000 obsolete units of a product that are carried in inventory at a manufacturing cost of $40,000. If the units are remachined for $10,000, they could be sold for $18,000. Alternatively, the units could be sold for scrap for $2,000. Which alternative is more desirable and what are the total relevant costs for that alternative?A）Remachine; $10,000. B）Remachine; $50,000.C）Scrap; $40,000. D）Scrap; $18,0004．The Calculex Company has 800 obsolete calculators that are carried in inventory at a total cost of $53,400. If these calculators are upgraded at a total cost of $20,000, they can be sold for a total of $60,000. As an alternative, the calculators can be sold in their present condition for $22,400. The sunk cost in this situation is:A）$0 B）$20,000. C）$22,400. D）$53,400.5．A study has been conducted to determine if one of the departments of Marigold Company should be discontinued. The contribution margin in the department is $150,000 per year. Fixed expenses charged to the department are $195,000 per year. It is estimated that $120,000 of these fixed expenses could be eliminated if the department is discontinued. These data indicate that if the department is discontinued, Marigold's overall net operating income would:A）decrease by $30,000 per year. B）increase by $30,000 per year.C）decrease by $75,000 per year. D）increase by $75,000 per year.6．Bushen Company produces 3,000 parts per year, which are used in the assembly of oneThe part can be purchased from an outside supplier at $60 per unit. If the part is purchased from the outside supplier, two thirds of the fixed manufacturing costs can be eliminated. The annual impact on the company's net operating income as a result of buying the part from the outside supplier would be:A）$9,000 increase. B）$9,000 decrease. C）$18,000 decrease. D）$18,000 increase. 7．The following are the Wardley Company's unit costs of making and selling an item at a volume of 30,000 units per month (which represents the company's capacity):which will have to be sold at a reduced price as scrap. This would have no effect on the company's other sales. The variable selling and administrative costs would have to be incurred to sell the defective units. What cost is relevant as a guide for setting a minimum price on these defective units?A）$4.00 B）$12.00 C）$16.00 D）$21.008．Reddy Corporation manufactures coolers. The company can manufacture 600,000 coolers a year at a variable cost of $1,500,000 and a fixed cost of $900,000. Based on management's predictions for next year, 480,000 coolers will be sold at the regular price of $10.00 each. In addition, a special order was placed for 120,000 coolers to be sold at a 40% discount off the regular price. Total fixed costs would be unaffected by this order. By what amount would the company's net operating income be increased as a result of the special order?A）$240,000 B）$300,000 C）$420,000 D）$720,0009．Hopkins Company sells its product for $63 per unit. The company's unit product cost basedonly selling costs that would be incurred on this order would be $9 per unit for shipping. The company has sufficient idle capacity to manufacture the additional units. One-third of the manufacturing overhead is fixed and would not be affected by this order. Assume that direct labor is an avoidable cost in this decision. In negotiating a price for the special order, the minimum acceptable selling price per unit should be:A）$42. B）$45. C）$48. D）$54.10．Consider the following production and cost data for two products, A and B:labor and there is unlimited demand for each product. What is the largest possible total contribution margin that can be realized each period?A）$1,690,000. B）$1,950,000. C）$1,820,000. D）$3,640,000.11．A study has been conducted to determine if one of the departments of Lucy Company should be discontinued. The contribution margin in the department is $100,000 per year. Fixed expenses charged to the department are $130,000 per year. It is estimated that$80,000 of these fixed expenses could be eliminated if the department is discontinued. These data indicate that if the department is discontinued, Lucy's overall net operating income would:A）decrease by $20,000 per year. B）increase by $20,000 per year.C）decrease by $50,000 per year. D）increase by $50,000 per year.12．Brown Company produces 2,000 parts per year, which are used in the assembly of onefrom the outside supplier, two thirds of the fixed manufacturing costs can be eliminated. The annual impact on Brown's net operating income as a result of buying the part from the outside supplier would be:A）$4,000 increase. B）$4,000 decrease. C）$8,000 increase. D）$8,000 decrease. 13．The following are the Goodman Company's unit costs of making and selling an item at awhich will have to be sold at a reduced price as scrap. This would have no effect on the company's other sales. The variable selling and administrative costs would have to be incurred to sell the defective units. What cost is relevant as a guide for setting a minimum price on these defective units?A）$3.00 B）$7.00 C）$10.00 D）$13.0014．Chapman Company sells its product for $42 per unit. The company's unit product costonly selling costs that would be incurred on this order would be $6 per unit for shipping. The company has sufficient idle capacity to manufacture the additional units. Two-thirds of the manufacturing overhead is fixed and would not be affected by this order. Assume that direct labor is an avoidable cost in this decision. In negotiating a price for the special order, the minimum acceptable selling price per unit should be:A）$28. B）$30. C）$32. D）$36.PROBLEM 1 Dropping or Retaining a FlightProfits have been decreasing for several years at Pegasus Airlines. In an effort to improve thecom pany’s performance, consideration is being given to dropping several flights that appear to be unprofitable.The following additional information is available about flight 482:a. Members of the flight crew are paid fixed annual salaries, whereas the flight assistants are paid bythe flight.b. One-third of the liability insurance is a special charge assessed against flight 482 because in theopinion of the insurance company, the destination of the flight is in a “high-risk” area. Theremaining two-thirds would be unaffected by a decision to drop flight 482.c. The baggage loading and flight prep aration expense is an allocation of ground crews’ salaries anddepreciation of ground equipment. Dropping flight 482 would have no effect on the company’s total baggage loading and flight preparation expenses.d. If flight 482 is dropped, Pegasus Airlines has no authorization at present to replace it with anotherflight.e. Depreciation of aircraft is due entirely to obsolescence. Depreciation due to wear and tear isnegligible.f. Dropping flight 482 would not allow Pegasus Airlines to reduce the number of aircraft in its fleetor the number of flight crew on its payroll.Required:1. Prepare an analysis showing what impact dropping flight 482 would have on the airline’s profits.2. The airline’s scheduling officer has been criticized because only abou t 50% of the seats onPegasus Airlines flights are being filled compared to an average of 60% for the industry. The scheduling officer has explained that Pegasus Airlines average seat occupancy could be improved considerably by eliminating about 10% of the flights, but that doing so would reduce profits.Explain how this could happen.PROBLEM 2 Make or Buy a ComponentTroy Engines, Ltd., manufactures a variety of engines for use in heavy equipment. The company has always produced most of the parts for its engines, including all of the pistons. An outside supplier has offered to sell one type of piston to Troy Engines, Ltd., at a cost of $39.00 per unit. To evaluate this offer, Troy Engines has gathered the following information relating to its own cost of producing the piston internally:30,000 UnitsPer Unit per YearDirect materials ................................................... $21 $ 630,000Direct labor.......................................................... 6 180,000Variable manufacturing overhead ....................... 4 120,000Fixed manufacturing overhead, traceable ............ 9* 270,000Fixed manufacturing overhead, allocated ............ 12 360,000Total cost ............................................................. $52 $1,560,000 *One-third supervisory salaries; two-thirds depreciation of special equipment (no resale value). Required:1. Assuming that the company has no alternative use for the facilities that are now being used toproduce the pistons, should the outside supplier’s offer be accepted? Show all computations.2. Suppose that if the pistons were purchased, Troy Engines, Ltd., could use the freed capacity tolaunch a new product. The segment margin of the new product would be $250,000 per year.Should Troy Engines, Ltd., accept the offer to buy the pistons for $39.00 per unit? Show allcomputations.PROBLEM 3 Accept or Reject a Special OrderPolaski Company manufactures and sells a single product called a Ret. Operating at capacity, the company can produce and sell 20,000 Rets per year. Costs associated with this level of production and sales are given below:Unit TotalDirect materials ..................................... $12.00 $240,000Direct labor ............................................ 6.00 120,000Variable manufacturing overhead.......... 4.00 80,000Fixed manufacturing overhead .............. 7.00 140,000Variable selling expense ........................ 3.00 60,000Fixed selling expense ............................ 4.00 80,000Total cost ............................................... $36.00 $720,000 The Rets normally sell for $42.00 each. Fixed manufacturing overhead is constant at $140,000 per year within the range of 15,000 through 20,000 Rets per year.Required:1. Assume that due to a recession, Polaski Company expects to sell only 15,000 Rets through regularchannels next year. A large retail chain has offered to purchase 5,000 Rets if Polaski Company is willing to accept a 15% discount off the regular price. There would be no sales commissions on this order; thus, variable selling expenses would be slashed by 80%. However, Polaski Companywould have to purchase a special machin e to engrave the retail chain’s name on the 5,000 units.This machine would cost $5,000. Polaski Company has no assurance that the retail chain will purchase additional units in the future. Determine the impact on profits next year if this special order is accepted.2. Refer to the original data. Assume again that Polaski Company expects to sell only 15,000 Retsthrough regular channels next year. The U.S. Army would like to make a one-time-only purchase of 5,000 Rets. The Army would pay a fixed fee of $7.00 per Ret, and it would reimburse Polaski Company for all costs of production (variable and fixed) associated with the units. Since the Army would pick up the Rets with its own trucks, there would be no variable selling expenses associated with this order. If Polaski Company accepts the order, by how much will profits increase ordecrease for the year?3. Assume the same situation as that described in (2) above, except that the company expects to sell20,000 Rets through regular channels next year. Thus, accepting the U.S. Army’s order would require giving up regular sales of 5,000 Rets. If the Army’s order is accepted, by how much will profits increase or decrease from what they would be if the 5,000 Rets were sold through regular channels?PROBLEM 4 Dropping or Retaining a SegmentAdams County Senior Services is a nonprofit organization devoted to providing essential services to seniors who live in their own homes within the Adams County area. Three services are provided for seniors—home nursing, meals on wheels, and housekeeping. In the home nursing program, nurses visit seniors on a regular basis to check on their general health and to perform tests ordered by their physicians. The meals on wheels program delivers a hot meal once a day to each senior enrolled in the program. The housekeeping service provides weekly housecleaning and maintenance services. Data on revenue and expenses for the past year follow:Home Nursing Meals onWheelsHouse-keeping TotalSales ..................................................................... $290,000 $440,000 $270,000 $1,000,00Variable expenses ................................................ 130,000 220,000 180,000 530,000 Contribution margin ............................................ 160,000 220,000 90,000 470,000 Fixed expenses:Depreciation ..................................................... 9,000 37,000 18,000 64,000 Liability insurance ............................................ 21,000 9,000 16,000 46,000 Program administrator s’ salaries...................... 42,000 39,000 38,000 119,000 General administrative overhead* .................... 66,700 101,200 62,100 230,000 Total fixed expenses ............................................ 138,700 186,200 134,100 459,000 Net operating income (loss) ................................. $ 21,300 $ 33,800 $(44,100) $ 11,000 *Allocated on the basis of program revenuesThe head administrator of Adams County Senior Services, Mariam Santoya, is concerned aboutthe organization’s finances and considers the net operating income of $11,000 last year to be razor-thin. (Last year’s results were very similar to the results for previous years and are representative of what would be expected in the future.) She feels that the organization should be building its financial reserves at a more rapid rate in order to prepare for the next inevitable recession. After seeing the abovereport, Ms. Santoya asked for more information about the financial advisability of perhaps discontinuing the housekeeping program.The depreciation in housekeeping is for a small van that is used to carry the housekeepers and their equipment from job to job. If the program were discontinued, the van would be donated to a charitable organization. None of the general administrative overhead would be avoided if the housekeeping program were dropped, but the liability insurance and the salary of the program administrator would be avoided.Required:1. Should the housekeeping program be discontinued? Explain. Show computations to support youranswer.2. Recast the above data in a format that would be more useful to management in assessing thelong-run financial viability of the various services.PROBLEM 5 Utilization of a Constrained ResourceThe Walton Toy Company manufactures a line of dolls and a doll dress sewing kit. Demand for the dolls is increasing, and management requests assistance from you in determining an economical sales and production mix for the coming year. The company has provided the following data:ProductDemandNext Year(units)SellingPrice perUnitDirectMaterialsDirectLaborDebbie ................ 80,000 $34.40 $4.80 $ 8.00Trish ................... 50,000 18.00 1.00 5.00Sarah ................... 40,000 39.80 6.20 12.00Mike ................... 45,000 28.00 1.80 8.00Sewing kit ........... 340,000 20.00 2.90 4.00The following additional information is available:a. The company’s plant has a capacity of 150,000 direct labor-hours per year on a single-shift basis.The company’s present employees and equipment can produce all five products.b. The direct labor rate of $20.00 per hour is expected to remain unchanged during the coming year.c. Fixed costs total $530,000 per year. Variable overhead costs are $6.00 per direct labor-hour.d. All of the company’s nonmanufacturing costs are fixed.e. The company’s finished goods inventory is negligible and can be ignored.Required:1. Determine the contribution margin per direct labor-hour expended on each product.2. Prepare a schedule showing the total direct labor-hours that will be required to produce the unitsestimated to be sold during the coming year.3. Examine the data you have computed in (1) and (2) above. How would you allocate the 150,000direct labor hours of capacity to Walton Toy Company’s various products?4. What is the highest price, in terms of a rate per hour, that Walton Toy Company would be willingto pay for additional capacity (that is, for added direct labor time)?5. Identify ways in which the company might be able to obtain additional output. Assume again thatthe company does not want to reduce sales of any product.PROBLEM 6 Relevant Cost Analysis in a Variety of SituationsAndretti Company has a single product called a Dak. The company normally produces and sells 72,000 Daks each year at a selling price of $28.00 per unit. The company’s unit costs at this level of activ ity are given below:Direct materials ...................................... $12.00Direct labor ............................................ 2.50Variable manufacturing overhead .......... 1.80Fixed manufacturing overhead .............. 3.20 ($230,400 total)Variable selling expense ........................ 1.20Fixed selling expense ............................. 3.00 ($216,000 total)Total cost per unit .................................. $23.70A number of questions relating to the production and sale of Daks follow. Each question is independent.Required:1. Assume that Andretti Company has sufficient capacity to produce 90,000 Daks each year withoutany increase in fixed manufacturing overhead costs. The company could increase its sales by 20% above the present 72,000 units each year if it were willing to increase the fixed selling expenses by $60,000. Would the increase fixed selling expenses be justified?2. Assume again that Andretti Company has sufficient capacity to produce 90,000 Daks each year. Acustomer in a foreign market wants to purchase 15,000 Daks. Import duties on the Daks would be $1.40 per unit, and costs for permits and licenses would be $15,000. The only selling costs that would be associated with the order would be $2.60 per unit shipping cost. Compute the per unit break-even price on this order.3. The company has 800 Daks on hand that have some irregularities and are therefore considered tobe “seconds.” Due to the irregularities, it will be impossible to sell these units at the normal price through regular distribution channels. What unit cost figure is relevant for setting a minimum selling price? Explain.4. Due to a strike in its supplier’s plan t, Andretti Company is unable to purchase more material forthe production of Daks. The strike is expected to last for two months. Andretti Company hasenough material on hand to operate at 40% of normal levels for the two-month period. As analternative, Andretti Company could close its plant down entirely for the two months. If the plant were closed, fixed overhead costs would continue at 50% of their normal level during thetwo-month period and the fixed selling costs would be reduced by 25%. What would be the impact on profits of closing the plant for the two-month period?5. An outside manufacturer has offered to produce Daks for Andretti Company and to ship themdirectly to Andretti’s customers. If Andretti Company accepts this offer, the facilities t hat it uses to produce Daks would be idle; however, fixed overhead costs would be reduced by 80%. Since the outside manufacturer would pay for all the shipping costs, the variable selling costs would be only two-thirds of their present amount. Compute the unit cost that is relevant for comparison to the price quoted by the outside manufacturer.。

第二章产品成本计算Exercises2–1（指教材上的第2章练习第1题，下同）1. Part #72A Part #172CSteel* $ 12.00 $ 18.00Setup cost** 6.00 6.00Total $ 18.00 $ 24.00*($1.00 ? 12; $1.00 ? 18)**($60,000/10,000)Steel cost is assigned by calculating a cost per ounce and then multiplying this by the ounces used by each part:Cost per ounce= $3,000,000/3,000,000 ounces= $1.00 per ounceSetup cost is assigned by calculating the cost per setup and then dividing this by the number of units in each batch (there are 20 setups per year):Cost per setup = $1,200,000/20= $60,0002. The cost of steel is assigned through the driver tracing using the number of ounces of steel, and the cost of the setups is assigned through driver tracing also using number of setups as the driver.3. The assumption underlying number of setups as the driver is that each part uses an equal amount of setup time. Since Part #72A uses double the setup time of Part #172C, it makes sense to assign setup costs based on setup time instead of number of setups. This illustrates the importance of identifying drivers that reflect the true underlying consumption pattern. Using setup hours [(40 ?10) + (20 ? 10)], we get the following rate per hour:Cost per setup hour = $1,200,000/600= $2,000 per hourThe cost per unit is obtained by dividing each part’s total setup costs by the number of units:Part #72A = ($2,000 ? 400)/100,000 = $8.00Part #172C = ($2,000 ? 200)/100,000 = $4.00Thus, Part #72A has its unit cost increased by $2.00, while Part #172C has its unit cost decreased by $2.00.problems2–51. Nursing hours required per year: 4 ? 24 hours ? 364 days* = 34,944*Note: 364 days = 7 days ? 52 weeksNumber of nurses = 34,944 hrs./2,000 hrs. per nurse = 17.472Annual nursing cost = (17 ? $45,000) + $22,500= $787,500Cost per patient day = $787,500/10,000 days= $78.75 per day (for either type of patient)2. Nursing hours act as the driver. If intensive care uses half of the hours and normal care the other half, then 50 percent of the cost is assigned to each patient category. Thus, the cost per patient day by patient category is as follows:Intensive care = $393,750*/2,000 days= $196.88 per dayNormal care = $393,750/8,000 days= $49.22 per day*$525,000/2 = $262,500The cost assignment reflects the actual usage of the nursing resource and, thus, should be more accurate. Patient days would be accurate only if intensive care patients used the same nursing hours per day as normal care patients.3. The salary of the nurse assigned only to intensive care is a directly traceable cost. To assign the other nursing costs, the hours of additional usage would need to be measured. Thus, both direct tracing and driver tracing would be used to assign nursing costs for this new setting.2–61. Bella Obra CompanyStatement of Cost of Services SoldFor the Year Ended June 30, 2006Direct materials:Beginning inventory $ 300,000Add: Purchases 600,000Materials available $ 900,000Less: Ending inventory 450,000*Direct materials used $ 450,000Direct labor 12,000,000Overhead 1,500,000Total service costs added $ 13,950,000Add: Beginning work in process 900,000Total production costs $ 14,850,000Less: Ending work in process 1,500,000Cost of services sold $ 13,350,000*Materials available less materials used2. The dominant cost is direct labor (presumably the salaries of the 100 professionals). Although labor is the major cost of providing many services, it is not always the case. For example, the dominant cost for some medical services may be overhead (e.g., CAT scans). In some services, the dominant cost may be materials (e.g., funeral services).3. Bella Obra CompanyIncome StatementFor the Year Ended June 30, 2006Sales $ 21,000,000Cost of services sold 13,350,000Gross margin $ 7,650,000Less operating expenses:Selling expenses $ 900,000Administrative expenses 750,000 1,650,000Income before income taxes $ 6,000,0004. Services have four attributes that are not possessed by tangible products: (1) intangibility, (2) perishability, (3) inseparability, and (4) heterogeneity. Intangibility means that the buyers of services cannot see, feel, hear, or taste a service before it is bought. Perishability means that services cannot be stored. This property affects the computation in Requirement 1. Inability to store services means that there will never be any finished goods inventories, thus making the cost of services produced equivalent to cost of services sold. Inseparability simply means that providers and buyers of services must be in direct contact for an exchange to take place. Heterogeneity refers to the greater chance for variation in the performance of services than in the production of tangible products.2–71. Direct materials:Magazine (5,000 ? $0.40) $ 2,000Brochure (10,000 ? $0.08) 800 $ 2,800Direct labor:Magazine [(5,000/20) ? $10] $ 2,500Brochure [(10,000/100) ? $10] 1,000 3,500Manufacturing overhead:Rent $ 1,400Depreciation [($40,000/20,000) ? 350*] 700Setups 600Insurance 140Power 350 3,190Cost of goods manufactured $ 9,490*Production is 20 units per printing hour for magazines and 100 units per printing hour for brochures, yielding monthly machine hours of 350 [(5,000/20) + (10,000/100)]. This is also monthly labor hours, as machine labor only operates the presses.2. Direct materials $ 2,800Direct labor 3,500Total prime costs $ 6,300Magazine:Direct materials $ 2,000Direct labor 2,500Total prime costs $ 4,500Brochure:Direct materials $ 800Direct labor 1,000Total prime costs $ 1,800Direct tracing was used to assign prime costs to the two products.3. Total monthly conversion cost:Direct labor $ 3,500Overhead 3,190Total $ 6,690Magazine:Direct labor $ 2,500Overhead:Power ($1 ? 250) $ 250Depreciation ($2 ? 250) 500Setups (2/3 ? $600) 400Rent and insurance ($4.40 ? 250 DLH)* 1,100 2,250Total $ 4,750Brochure:Direct labor $ 1,000Overhead:Power ($1 ? 100) $ 100Depreciation ($2 ? 100) 200Setups (1/3 ? $600) 200Rent and insurance ($4.40 ? 100 DLH)* 440 940Total $ 1,940*Rent and insurance cannot be traced to each product so the costs are assigned using direct labor hours: $1,540/350 DLH = $4.40 per direct labor hour. The other overhead costs are traced according to their usage. Depreciation and power are assigned by using machine hours (250 for magazines and 100 for brochures): $350/350 = $1.00 per machine hour for power and $40,000/20,000 = $2.00 per machine hour for depreciation. Setups are assigned according to the time required. Since magazines use twice as much time, they receive twice the cost: Letting X = the pro?portion of setup time used for brochures, 2X + X = 1 implies a cost assignment ratio of 2/3 for magazines and 1/3 for brochures.Exercises3–11. Resource Total Cost Unit CostPlastic1 $ 10,800 $0.027Direct labor andvariable overhead2 8,000 0.020Mold sets3 20,000 0.050Other facility costs4 10,000 0.025Total $ 48,800 $0.12210.90 ? $0.03 ? 400,000 = $10,800; $10,800/400,000 = $0.0272$0.02 ? 400,000 = $8,000; $8,000/400,000 = $0.023$5,000 ? 4 quarters = $20,000; $20,000/400,000 = $0.054$10,000; $10,000/400,000 = $0.0252. Plastic, direct labor, and variable overhead are flexible resources; molds and other facility costs are committed resources. The cost of plastic, direct labor, and variable overhead are strictly variable. The cost of the molds is fixed for the particular action figure being produced; it is a step cost for the production of action figures in general. Other facility costs are strictly fixed.3–3High (1,400, $7,950); Low (700, $5,150)V = ($7,950 – $5,150)/(1,400 – 700)= $2,800/700 = $4 per oil changeF = $5,150 – $4(700)= $5,150 – $2,800 = $2,350Cost = $2,350 + $4 (oil changes)Predicted cost for January = $2,350 + $4(1,000) = $6,350problems3–61. High (1,700, $21,000); Low (700, $15,000)V = (Y2 – Y1)/(X2 – X1)= ($21,000 – $15,000)/(1,700 – 700) = $6 per receiving orderF = Y2 – VX2= $21,000 – ($6)(1,700) = $10,800Y = $10,800 + $6X2. Output of spreadsheet regression routine with number of receiving orders as the independent variable:Constant 4512.98701298698Std. Err. of Y Est. 3456.24317476605R Squared 0.633710482694768No. of Observations 10Degrees of Freedom 8X Coefficient(s) 13.3766233766234Std. Err. of Coef. 3.59557461331427V = $13.38 per receiving order (rounded)F = $4,513 (rounded)Y = $4,513 + $13.38XR2 = 0.634, or 63.4%Receiving orders explain about 63.4 percent of the variability in receiving cost, providing evidence that Tracy’s choice o f a cost driver is reasonable. However, other drivers may need to be considered because 63.4 percent may not be strong enough to justify the use of only receiving orders.3. Regression with pounds of material as the independent variable:Constant 5632.28109733183Std. Err. of Y Est. 2390.10628259277R Squared 0.824833789433823No. of Observations 10Degrees of Freedom 8X Coefficient(s) 0.0449642991356633Std. Err. of Coef. 0.0073259640055344V = $0.045 per pound of material delivered (rounded)F = $5,632 (rounded)Y = $5,632 + $0.045XR2 = 0.825, or 82.5%Pounds of material delivered explains about 82.5 percent of the variability in receiving cost. This is a better result than that of the receiving orders and should convince Tracy to try multiple regression.4. Regression routine with pounds of material and number of receiving orders as the independent variables:Constant 752.104072925631Std. Err. of Y Est. 1350.46286973443R Squared 0.951068418023306No. of Observations 10Degrees of Freedom 7X Coefficient(s) 0.0333883151096915 7.14702865269395Std. Err. of Coef. 0.00495524841198368 1.68182916088492V1 = $0.033 per pound of material delivered (rounded)V2 = $7.147 per receiving order (rounded)F = $752 (rounded)Y = $752 + $0.033a + $7.147bR2 = 0.95, or 95%Multiple regression with both variables explains 95 percent of the variability in receiving cost. This is the best result.5–21. Job #57 Job #58 Job #59Balance, 7/1 $ 22,450 $ 0 $ 0Direct materials 12,900 9,900 35,350Direct labor 20,000 6,500 13,000Applied overhead:Power 750 600 3,600Material handling 1,500 300 6,000Purchasing 250 1,000 250Total cost $ 57,850 $ 18,300 $ 58,2002. Ending balance in Work in Process = Job #58 = $18,3003. Ending balance in Finished Goods = Job #59 = $58,2004. Cost of Goods Sold = Job #57 = $57,850problems5–31. Overhead rate = $180/$900 = 0.20 or 20% of direct labor dollars.(This rate was calculated using information from the Ladan job; however, the Myron and Coe jobs would give the same answer.)2. Ladan Myron Coe Walker WillisBeginning WIP $ 1,730 $1,180 $2,500 $ 0 $ 0Direct materials 400 150 260 800 760Direct labor 800 900 650 350 900Applied overhead 160 180 130 70 180Total $ 3,090 $2,410 $3,540 $ 1,220 $ 1,840Note: This is just one way of setting up the job-order cost sheets. You might prefer to keep the detail on the materials, labor, and overhead in beginning inventory costs.3. Since the Ladan and Myron jobs were completed, the others must still be in process. Therefore, the ending balance in Work in Process is the sum of the costs of the Coe, Walker, and Willis jobs.Coe $3,540Walker 1,220Willis 1,840Ending Work in Process $6,600Cost of Goods Sold = Ladan job + Myron job = $3,090 + $2,410 = $5,5004. Naman CompanyIncome StatementFor the Month Ended June 30, 20XXSales (1.5 ? $5,500) $8,250Cost of goods sold 5,500Gross margin $2,750Marketing and administrative expenses 1,200Operating income $1,5505–201. Overhead rate = $470,000/50,000 = $9.40 per MHr2. Department A: $250,000/40,000 = $6.25 per MHrDepartment B: $220,000/10,000 = $22.00 per MHr3. Job #73 Job #74Plantwide:70 ? $9.40 = $658 70 ? $9.40 = $658Departmental:20 ? $6.25 $ 125.00 50 ? $6.25 $ 312.5050 ? $22 1,100.00 20 ? $22 440.00$ 1,225.00 $ 752.50Department B appears to be more overhead intensive, so jobs spending more time in Department B ought to receive more overhead. Thus, departmental rates provide more accuracy.4. Plantwide rate: $250,000/40,000 = $6.25Department B: $62,500/10,000 = $6.25Job #73 Job #74Plantwide:70 ? $6.25 = $437.50 70 ? $6.25 = $437.50Departmental:20 ? $6.25 $ 125.00 50 ? $6.25 $ 312.5050 ? $6.25 312.50 20 ? $6.25 125.00$ 437.50 $ 437.50Assuming that machine hours is a good cost driver, the departmental rates reveal that overhead consumption is the same in each department. In this case, there is no need for departmental rates, and a plantwide rate is sufficient.5–41. Overhead rate = $470,000/50,000 = $9.40 per MHr2. Department A: $250,000/40,000 = $6.25 per MHrDepartment B: $220,000/10,000 = $22.00 per MHr3. Job #73 Job #74Plantwide:70 ? $9.40 = $658 70 ? $9.40 = $658Departmental:20 ? $6.25 $ 125.00 50 ? $6.25 $ 312.5050 ? $22 1,100.00 20 ? $22 440.00$ 1,225.00 $ 752.50Department B appears to be more overhead intensive, so jobs spending more time in Department B ought to receive more overhead. Thus, departmental rates provide more accuracy.4. Plantwide rate: $250,000/40,000 = $6.25Department B: $62,500/10,000 = $6.25Job #73 Job #74Plantwide:70 ? $6.25 = $437.50 70 ? $6.25 = $437.50Departmental:20 ? $6.25 $ 125.00 50 ? $6.25 $ 312.5050 ? $6.25 312.50 20 ? $6.25 125.00$ 437.50 $ 437.50Assuming that machine hours is a good cost driver, the departmental rates reveal that overhead consumption is the same in each department. In this case, there is no need for departmental rates, and a plantwide rate is sufficient.5–51. Last year’s unit-based overhead rate = $50,000/10,000 = $5This year’s unit-based overhead rate = $100,000/10,000 = $10Last Year This YearBike cost:2 ? $20 $ 40 $ 403 ? $12 36 36Overhead:5 ? $5 255 ? $10 50Total $101 $126Price last year = $101 ? 1.40 = $141.40/dayPrice this year = $126 ? 1.40 = $176.40/dayThis is a $35 increase over last year, nearly a 25 percent increase. No doubt the Carsons arenot pleased and would consider looking around for other recreational possibilities.2. Purchasing rate = $30,000/10,000 = $3 per purchase orderPower rate = $20,000/50,000 = $0.40 per kilowatt hourMaintenance rate = $6,000/600 = $10 per maintenance hourOther rate = $44,000/22,000 = $2 per DLHBike Rental Picnic CateringPurchasing$3 ? 7,000 $21,000$3 ? 3,000 $ 9,000Power$0.40 ? 5,000 2,000$0.40 ? 45,000 18,000Maintenance$10 ? 500 5,000$10 ? 100 1,000Other$2 ? 11,000 22,000 22,000Total overhead $50,000 $50,0003. This year’s bike rental overhead rate = $50,000/10,000 = $5Carson rental cost = (2 ? $20) + (3 ? $12) + (5 ? $5) = $101Price = 1.4 ? $101 = $141.40/day4. Catering rate = $50,000/11,000 = $4.55* per DLHCost of Estes job:Bike rental rate (2 ? $7.50) $15.00Bike conversion cost (2 ? $5.00) 10.00Catering materials 12.00Catering conversion (1 ? $4.55) 4.55Total cost $41.55*Rounded5. The use of ABC gives Mountain View Rentals a better idea of the types and costs of activities that are used in their business. Adding Level 4 bikes will increase the use of the most expensive activities, meaning that the rental rate will no longer be an average of $5 per rental day. Mountain View Rentals might need to set a Level 4 price based on the increased cost of both the bike and conversion cost.分步成本法6–11. Cutting Sewing PackagingDepartment Department DepartmentDirect materials $5,400 $ 900 $ 225Direct labor 150 1,800 900Applied overhead 750 3,600 900Transferred-in cost:From cutting 6,300From sewing 12,600Total manufacturing cost $6,300 $12,600 $14,6252. a. Work in Process—Sewing 6,300Work in Process—Cutting 6,300b. Work in Process—Packaging 12,600Work in Process—Sewing 12,600c. Finished Goods 14,625Work in Process—Packaging 14,625 3. Unit cost = $14,625/600 = $24.38* per pair6–21. Units transferred out: 27,000 + 33,000 – 16,200 = 43,8002. Units started and completed: 43,800 – 27,000 = 16,8003. Physical flow schedule:Units in beginning work in process 27,000Units started during the period 33,000Total units to account for 60,000Units started and completed 16,800Units completed from beginning work in process 27,000Units in ending work in process 16,200Total units accounted for 60,0004. Equivalent units of production:Materials ConversionUnits completed 43,800 43,800Add: Units in ending work in process:(16,200 ? 100%) 16,200(16,200 ? 25%) 4,050 Equivalent units of output 60,000 47,8506–31. Physical flow schedule:Units to account for:Units in beginning work in process 80,000Units started during the period 160,000Total units to account for 240,000Units accounted for:Units completed and transferred out:Started and completed 120,000From beginning work in process 80,000 200,000 Units in ending work in process 40,000Total units accounted for 240,0002. Units completed 200,000Add: Units in ending WIP ? Fraction complete(40,000 ? 20%) 8,000Equivalent units of output 208,0003. Unit cost = ($374,400 + $1,258,400)/208,000 = $7.854. Cost transferred out = 200,000 ? $7.85 = $1,570,000Cost of ending WIP = 8,000 ? $7.85 = $62,8005. Costs to account for:Beginning work in process $ 374,400Incurred during June 1,258,400Total costs to account for $ 1,632,800Costs accounted for:Goods transferred out $ 1,570,000Goods in ending work in process 62,800Total costs accounted for $ 1,632,8006–31、Units t0 account for:Units in beginning work in process(25% completed) 10000Units started during the period 70000 Total units to account for 80000 Units accounted forUnits completed and transferred outStarted and completed 50000From beginning work in process 10000 60000 Units in ending work in process(60% completed) 20000 Total units accounted for 80000 2、60000+20000×60%=72000（units）3、Unit cost for materials:（$/unit）Unit cost for convension:（$/unit）Total unit cost:5+1.13=6.13（$/unit）4、The cost of units of transferred out:60000×6.13=367800($)The cost of units of ending work in process:20000×5+20000×20%×1.13=113560($)作业成本法4–21. Predetermined rates:Drilling Department: Rate = $600,000/280,000 = $2.14* per MHrAssembly Department: Rate = $392,000/200,000= $1.96 per DLH*Rounded2. Applied overhead:Drilling Department: $2.14 ? 288,000 = $616,320Assembly Department: $1.96 ? 196,000 = $384,160Overhead variances:Drilling Assembly TotalActual overhead $602,000 $ 412,000 $ 1,014,000Applied overhead 616,320 384,160 1,000,480Overhead variance $ (14,320) over $ 27,840 under $ 13,5203. Unit overhead cost = [($2.14 ? 4,000) + ($1.96 ? 1,600)]/8,000= $11,696/8,000= $1.46**Rounded4–31. Yes. Since direct materials and direct labor are directly traceable to each product, their cost assignment should be accurate.2. Elegant: (1.75 ? $9,000)/3,000 = $5.25 per briefcaseFina: (1.75 ? $3,000)/3,000 = $1.75 per briefcaseNote: Overhead rate = $21,000/$12,000 = $1.75 per direct labor dollar (or 175 percent of direct labor cost).There are more machine and setup costs assigned to Elegant than Fina. This is clearly a distortion because the production of Fina is automated and uses the machine resources much more than the handcrafted Elegant. In fact, the consumption ratio for machining is 0.10 and 0.90 (using machine hours as the measure of usage). Thus, Fina uses nine times the machining resources as Elegant. Setup costs are similarly distorted. The products use an equal number of setups hours. Yet, if direct labor dollars are used, then the Elegant briefcase receives three times more machining costs than the Fina briefcase.3. Overhead rate = $21,000/5,000= $4.20 per MHrElegant: ($4.20 ? 500)/3,000 = $0.70 per briefcaseFina: ($4.20 ? 4,500)/3,000 = $6.30 per briefcaseThis cost assignment appears more reasonable given the relative demands each product places on machine resources. However, once a firm moves to a multiproduct setting, using only one activity driver to assign costs will likely produce product cost distortions. Products tend to make different demands on overhead activities, and this should be reflected in overhead cost assignments. Usually, this means the use of both unit- and nonunit-level activity drivers. In this example, there is a unit-level activity (machining) and a nonunit-level activity (setting up equipment). The consumption ratios for each (using machine hours and setup hours as the activity drivers) are as follows:Elegant FinaMachining 0.10 0.90 (500/5,000 and 4,500/5,000)Setups 0.50 0.50 (100/200 and 100/200)Setup costs are not assigned accurately. Two activity rates are needed—one based on machine hours and the other on setup hours:Machine rate: $18,000/5,000 = $3.60 per MHrSetup rate: $3,000/200 = $15 per setup hourCosts assigned to each product:Machining: Elegant Fina$3.60 ? 500 $ 1,800$3.60 ? 4,500 $ 16,200Setups:$15 ? 100 1,500 1,500Total $ 3,300 $ 17,700Units ÷3,000 ÷3,000Unit overhead cost $ 1.10 $ 5.904：Elegant Unit overhead cost：[9000+3000+18000*500/5000+3000/2]/3000=$5.1 Fina Unit overhead cost：[3000+3000+18000*4500/5000+3000/2]/3000=$7.94–51. Deluxe Percent Regular PercentPrice $900 100% $750 100%Cost 576 64 600 80Unit gross profit $324 36% $150 20%Total gross profit:($324 ? 100,000) $32,400,000($150 ? 800,000) $120,000,0002. Calculation of unit overhead costs:Deluxe gularUnit-level:Machining:$200 ? 100,000 $20,000,000$200 ? 300,000 $60,000,000Batch-level:Setups:$3,000 ? 300 900,000$3,000 ? 200 600,000Packing:$20 ? 100,000 2,000,000$20 ? 400,000 8,000,000Product-level:Engineering:$40 ? 50,000 2,000,000$40 ? 100,000 4,000,000Facility-level:Providing space:$1 ? 200,000 200,000$1 ? 800,000 800,000Total overhead $25,100,000 $73,400,000Units ÷100,000 ÷800,000Overhead per unit $251 $91.75Deluxe Percent Regular PercentPrice $900 100% $750.00 100%Cost 780* 87*** 574.50** 77***Unit gross profit $120 13%*** $175.50 23%***Total gross profit:($120 ? 100,000) $12,000,000($175.50 ? 800,000) $140,400,000*$529 + $251**$482.75 + $91.753. Using activity-based costing, a much different picture of the deluxe and regular products emerges. The regular model appears to be more profitable. Perhaps it should be emphasized.4–61. JIT Non-JITSalesa $12,500,000 $12,500,000Allocationb 750,000 750,000a$125 ? 100,000, where $125 = $100 + ($100 ? 0.25), and 100,000 is the average order size times the number of ordersb0.50 ? $1,500,0002. Activity rates:Ordering rate = $880,000/220 = $4,000 per sales orderSelling rate = $320,000/40 = $8,000 per sales callService rate = $300,000/150 = $2,000 per service callJIT Non-JITOrdering costs:$4,000 ? 200 $ 800,000$4,000 ? 20 $ 80,000Selling costs:$8,000 ? 20 160,000$8,000 ? 20 160,000Service costs:$2,000 ? 100 200,000$2,000 ? 50 100,000Total $1,160,000 $340,0 0For the non-JIT customers, the customer costs amount to $750,000/20 = $37,500 per order under the original allocation. Using activity assign?ments, this drops to $340,000/20 = $17,000 per order, a difference of $20,500 per order. For an order of 5,000 units, the order price can be decreased by $4.10 per unit without affecting customer profitability. Overall profitability will decrease, however, unless the price for orders is increased to JIT customers.3. It sounds like the JIT buyers are switching their inventory carrying costs to Emery without any significant benefit to Emery. Emery needs to increase prices to reflect the additional demands on customer-support activities. Furthermore, additional price increases may be needed to reflectthe increased number of setups, purchases, and so on, that are likely occurring inside the plant. Emery should also immediately initiate discussions with its JIT customers to begin negotiations for achieving some of the benefits that a JIT supplier should have, such as long-term contracts. The benefits of long-term contracting may offset most or all of the increased costs from the additional demands made on other activities.4–71. Supplier cost:First, calculate the activity rates for assigning costs to suppliers:Inspecting components: $240,000/2,000 = $120 per sampling hourReworking products: $760,500/1,500 = $507 per rework hourWarranty work: $4,800/8,000 = $600 per warranty hourNext, calculate the cost per component by supplier:Supplier cost:Vance FoyPurchase cost:$23.50 ? 400,000 $ 9,400,000$21.50 ? 1,600,000 $ 34,400,000Inspecting components:$120 ? 40 4,800$120 ? 1,960 235,200Reworking products:$507 ? 90 45,630$507 ? 1,410 714,870Warranty work:$600 ? 400 240,000$600 ? 7,600 4,560,000Total supplier cost $ 9,690,430 $ 39,910,070Units supplied ÷400,000 ÷1,600,000Unit cost $ 24.23* $ 24.94**RoundedThe difference is in favor of Vance; however, when the price concession is considered, the cost of Vance is $23.23, which is less than Foy’s component. Lumus should accept the contractual offer made by Vance.4–7 Concluded2. Warranty hours would act as the best driver of the three choices. Using this driver, the rate is $1,000,000/8,000 = $125 per warranty hour. The cost assigned to each component would be:Vance FoyLost sales:$125 ? 400 $ 50,000$125 ? 7,600 $ 950,000$ 50,000 $ 950,000Units supplied ÷400,000 ÷1,600,000Increase in unit cost $ 0.13* $ 0.59**Rounded$0.075 per unitCategory II: $45/1,000 = $0.045 per unitCategory III: $45/1,500 = $0.03 per unitCategory I, which has the smallest batches, is the most undercosted of the three categories. Furthermore, the unit ordering cost is quite high relative to Category I’s selling price (9 to 15 percent of the selling price). This suggests that something should be done to reduce the order-filling costs.3. With the pricing incentive feature, the average order size has been increased to 2,000 units for all three product families. The number of orders now processed can be calculated as follows:Orders = [(600 ? 50,000) + (1,000 ? 30,000) + (1,500 ? 20,000)]/2,000= 45,000Reduction in orders = 100,000 – 45,000 = 55,000Steps that can be reduced = 55,000/2,000 = 27 (rounding down to nearest whole number)There were initially 50 steps: 100,000/2,000Reduction in resource spending:Step-fixed costs: $50,000 ? 27 = $1,350,000Variable activity costs: $20 ? 55,000 = 1,100,000$2,450,000预算9-4Norton, Inc.Sales Budget For the Coming YearModel Units Price Total SalesLB-1 50,400 $29.00 $1,461,600LB-2 19,800 15.00 297,000WE-6 25,200 10.40 262,080 WE-7 17,820 10.00 178,200 WE-8 9,600 22.00 211,200 WE-9 4,000 26.00 104,000 Total $2,514,080二、1. Raylene’s Flowers and GiftsProduction Budget for Gift BasketsFor September, October, November, and DecemberSept. Oct. Nov. D ec.Sales 200 150 180 250Desired ending inventory 15 18 25 10Total needs 215 168 205 260Less: Beginning inventory 20 15 18 25 Units produced 195 153 187 2352. Raylene’s Flowers and GiftsDirect Materials Purchases BudgetFor September, October, and NovemberFruit: Sept. Oct. Nov.Production 195 153 187? Amount/basket (lbs.) ? 1 ? 1 ?1Needed for production 195 153 187Desired ending inventory 8 9 12Needed 203 162 200Less: Beginning inventory 10 8 9Purchases193 154 190Small gifts: Sept. Oct. Nov.Production 195 153 187 ? Amount/basket (items) ? 5 ? 5 ? 5Needed for production 975 765 935Desired ending inventory 383 468 588Needed 1,358 1,233 1,523Less: Beginning inventory 488 383 468Purchases 870 850 1,055Cellophane: Sept. Oct. Nov.Production 195 153 187。

CHAPTER 3 COVERAGE OF LEARNING OBJECTIVESCHAPTER 3Measurement of Cost Behavior3-A1 (20-25 min.) Some of these answers are controversial, and reasonable cases can be built for alternative classifications. Class discussion of these answers should lead to worthwhile disagreements about anticipated cost behavior with regard to alternative cost drivers.1. (b) Discretionary fixed cost.2. (e) Step cost.3. (a) Purely variable cost with respect to revenue.4. (a) Purely variable cost with respect to miles flown.5. (d) Mixed cost with respect to miles driven.6. (c) Committed fixed cost.7. (b) Discretionary fixed cost.8. (c) Committed fixed cost.9. (a) Purely variable cost with respect to cases of 7-Up.10. (b) Discretionary fixed cost.11. (b) Discretionary fixed cost.3-A2 (25-30 min.)1. Support costs based on 60% of the cost of materials:Sign A SignBDirect materials cost $400 $200Support cost (60% of materials cost) $240 $120Support costs based on $50 per power tool operation:Sign A SignBPower tool operations 3 6Support cost $150 $3002. If the activity analysis is reliable, by using the current method,Evergreen Signs is predicting too much cost for signs that use fewpower tool operations and is predicting too little cost for signs thatuse many power tool operations. As a result the company could belosing jobs that require few power tool operations because its bids are too high -- it could afford to bid less on these jobs. Conversely, thecompany could be getting too many jobs that require many powertool operations, because its bids are too low -- given what the "true"costs will be, the company cannot afford these jobs at those prices.Either way, the sign business could be more profitable if the ownerbetter understood and used activity analysis. Evergreen Signs wouldbe advised to adopt the activity-analysis recommendation, but also toclosely monitor costs to see if the activity-analysis predictions ofsupport costs are accurate.3-A3 (25-30 min.)1. High-Low Method:Support Cost Machine HoursHigh month = September $13,500 1,750Low month = May 9,000 850Difference $ 4,500 900Variable cost per machine hour = Change in cost ÷ Change in costdriver= $4,500 ÷ 900 = $5.00Fixed support cost per month = Total support cost - Variable supportcostAt the high point: = $13,500 - $5.00 × 1,750= $13,500 - $8,750= $ 4,750or at the low point: = $ 9,000 - $5.00 × 850= $ 9,000 - $4,250= $ 4,7502. The high-low method uses the high and low activity levels todetermine the cost function. Since the new October data for machinehours does not change either the high or low level there would be no change in the analysis.3. The regression analysis results differ from the results of the high-lowmethod. As a result, estimates of total support cost may differconsiderably depending on the expected machine hour usage. Forexample, consider the following support cost estimates at three levelsof machine hour usage (all within the relevant range):Machine Hour Usage950 Hours 1,200 Hours 1,450 HoursHigh-Low:Fixed $4,750 $ 4,750 $ 4,750 Variable: $5.00 × 950 4,750$5.00 × 1,200 6,000$5.00 × 1,450 7,250 Total $9,500 $10,750 $12,000Regression:Fixed $3,355 $ 3,355 $ 3,355 Variable: $6.10 × 950 5,795$6.10 × 1,200 7,320$6.10 × 1,450 8,845 Total $9,150 $ 10,675 $12,200Because the high-low method has a lower variable cost estimate, theregression-based predictions exceed the high-low-based predictions at higher levels of machine usage, while the high-low estimates aregreater at lower levels of usage. The high-low method used only twodata points, so the results may not be reliable. Fernandez would beadvised to use the regression results, which are based on all relevantdata.3-B1 (20-25 min.)The following classifications are open to debate. With appropriate assumptions, other answers could be equally supportable. For example, in #2, the health insurance would be a committed fixed cost if the number of employees will not change. This problem provides an opportunity to discuss various aspects of cost behavior. Students should make an assumption regarding the time period involved. For example, if the time period is short, say one month, more costs tend to be fixed. Over longer periods, more costs are variable. They also must assume something about the nature of the cost. For example, consider #4. Repairs and maintenance are often thought of as a single cost. However, repairs are more likely to vary with the amount of usage, making them variable, while maintenance is often on a fixed schedule regardless of activity, making them fixed.Another important point to make is the cost/benefit criterion applied to determining “true” cost behavior. A manager may accept a cost driver that is plausible but may have less reliability than an alternative due to the cost associated with maintaining data for the more reliable cost driver.Cost Cost Behavior Likely Cost Driver(s)1. X-ray operating cost Mixed Number of x-rays2. Insurance Step (or variable) Number of employees3. Cancer research Discretionary fixed4. Repairs Variable Number of patients5. Training cost Discretionary fixed6. Depreciation Committed fixed7. Consulting Discretionary fixed8. Nursing supervisors Step Number of nurses,patient-days3-B2 (25-30 min.) Board Z15 Board Q52 Mark-up method:Material cost $40 $60Support costs (100%) $40 $60Activity analysis method:Manual operations 15 7Support costs (@$4) $60 $28The support costs are different because different cost behavior is assumed by the two methods. If the activity analyses are reliable, then boards with few manual operations are overcosted with the markup method, and boards with many manual operations are undercosted with the markup method.3-B3 (25-30 min.)Variable cost per machine hour = Change in Repair Cost ÷ Change in Machine Hours= (P260,000,000 –P200,000,000) ÷ (12,000 –8,000)= P15,000 per machine hourFixed cost per month = total cost - variable cost= P260,000,000 - P15,000 × 12,000= P260,000,000 - P180,000,000= P 80,000,000 per monthor = P200,000,000 - P15,000 × 8,000= P200,000,000 - P120,000,000= P 80,000,000 per month3-1 A cost driver is any output measure that is believed to cause costs to fluctuate in a predictable manner. For example, direct labor costs areprobably driven by direct labor hours; materials costs are probablydriven by levels of product output; and support costs may be driven bya variety of drivers, such as output levels, product complexity, numberof different products and/or parts, and so on.3-2 Linear cost behavior assumes that costs behave as a straight line. This line is anchored by an intercept, or fixed cost estimate, and total costs increase proportionately as cost driver activity increases. The slope ofthe line is the estimate of variable cost per unit of cost driver activity.3-3 Whether to categorize a step cost either as a fixed cost or as a variable cost depends on the "size" of the steps (height and width) and on thedesired accuracy of the description of step cost behavior. If the stepsare wide, covering a wide range of cost driver activity, then within each range the cost may be regarded as fixed. If the steps are narrow andnot too high, with small changes in cost, then the cost may beregarded as variable over a wide range of activity level, with little error.If the steps are narrow and high, covering big changes in cost, then the cost probably should not be regarded as variable, since small changesin activity level can result in large changes in cost.3-4 Mixed costs are costs that contain both fixed and variable elements. A mixed cost has a fixed portion that is usually a cost per time period.This is the minimum mixed cost per period. A mixed cost also has avariable portion that is a cost per unit of cost driver activity. Thevariable portion of a mixed cost increases proportionately withincreases in the cost driver.3-5 In order to achieve the goals set for the organization, management makes critical choices -- choices that guide the future activities of theorganization. These choices include decisions about locations, products, services, organization structure, and so on. Choices about product orservice attributes (mix, quality, features, performance, etc.), capacity(committed and discretionary fixed costs), technology (capital/laborconsiderations, alternative technologies), and incentives (standard-based performance evaluation) can greatly affect cost behavior.3-6 Some fixed costs are called capacity costs because the levels of these fixed costs are determined by management's strategic decisions aboutthe organization's expected levels of activities, or capacity.3-7 Committed fixed costs are costs that are often driven by the planned scale of operations. These costs typically cannot be changed easily orquickly without drastically changing the operations of the organization.Typical committed fixed costs include lease or mortgage payments,property taxes, and long-term management compensation.Discretionary fixed costs are costs that may be necessary to achievecertain operational goals, but there are no contractual obligations tocontinue these payments. Typical discretionary fixed costs includeadvertising, research and development, and employee trainingprograms. The distinction between committed and discretionary fixedcosts is that discretionary fixed costs are flexible and could beincreased, decreased, or eliminated entirely on short notice if necessary, but committed fixed costs usually must be incurred for some time --greater effort is needed to change or eliminate them.3-8 Committed fixed costs are the most difficult to change because long-term commitments generally have been made. These long-termcommitments may involve legal contracts that would be costly torenegotiate or dissolve. Committed fixed costs also are difficult tochange because doing so may mean greatly changing the way theorganization conducts its activities. Changing these committed fixedcosts may also mean changing organization structure, location,employment levels, and products or services.3-9 An organization’s capacity generally determines its committed fixed costs. Management’s choice is the main influence on discretionaryfixed costs. Both committed and discretionary fixed costs depend onthe organization's strategy relating to capacity, product attributes, andtechnology. These elements will determine long-term costcommitments (committed costs) and flexible spending responses tochanges in the environment (discretionary costs).3-10 Both planning for and controlling discretionary costs are important. It is hard to say that one is more important than the other, but certainlyeffective use of discretionary costs requires prior planning. One would not know, however, if these costs had been effective in meeting goalsunless the organization has a reliable and timely control system -- ameans of checking accomplishments against goals.3-11 High technology production systems often mean higher fixed costs and lower variable costs.3-12 Incentives to control costs are means of making cost control in the best interests of the people responsible for making cost expenditures. Asimple example will illustrate the use of incentives to control costs.Assume that you are an executive who travels for business, purchasesprofessional literature, and keeps current with personal computertechnology. Under one incentive system, you simply bill theorganization for all your travel and professional expenses. Underanother system, you are given an annual budget for travel andprofessional needs. Which system do you think would cause you to be more careful about how you spend money for travel and professionalneeds? Most likely, the latter system would be more effective incontrolling costs. Usually these incentives are economic, but other non-financial incentives may also be effective.3-13 Use of cost functions, or algebraic representations of cost behavior, allows cost analysts or management to build models of theorganization's cost behavior. These models can be used to aidplanning and control activities. One common use of cost functions isin financial planning models, which are algebraic models of the costand revenue behavior of the firm, essentially extended C-V-P modelssimilar to those discussed in Chapter 2. Understanding relationshipsbetween costs and cost drivers allows managers to make betterdecisions.3-14 A "plausible" cost function is one that is intuitively sound. A cost function is plausible if a knowledgeable analyst can make soundeconomic justifications why a particular cost driver could cause the cost in question. A "reliable" cost function is one that accurately andconsistently describes actual cost behavior, past and future. Bothplausibility and reliability are essential to useful cost functions. It isdifficult to say that one is more important than the other, but onewould not have much confidence in the future use of a cost functionthat is not plausible, even if past reliability (e.g., based on statisticalmeasures) has been high. Likewise, one would not be confident usinga cost function that is highly plausible, but that has not been shown tobe reliable. The cost analyst should strive for plausible and reliablecost functions.3-15 Activity analysis identifies underlying causes of cost behavior (appropriate cost drivers) and measures the relationships of costs totheir cost drivers. A variety of methods may be used to measure costfunctions, including engineering analysis and account analysis.3-16 Engineering analysis is a method of identifying and measuring cost and cost driver relationships that does not require the use of historical data.Engineering analysis proceeds by the use of interviews, experimentation, and observation of current cost generating activities. Engineeringanalysis will be more reliable if the organization has had pastexperience with the activities.Account analysis is a method of identifying and measuring costs andcost driver relationships that depend explicitly on historical cost data.An analyst selects a single cost driver and classifies each cost accountas fixed or variable with respect to that cost driver. Account analysiswill be reliable if the analyst is skilled and if the data are relevant tofuture uses of the derived cost function.3-17 There are four general methods covered in this text to measure mixed costs using historical data: (1) account analysis, (2) high-low, (3) visualfit, and (4) regression.• Account analysis looks to the organization's cost accounts andclassifies each cost as either fixed, variable, or mixed with regard to anappropriate cost driver.• High-low analysis algebraically measures mixed cost behavior by con-structing a straight line between the cost at the highest activity leveland that at the lowest activity level.• Visual-fit analysis seeks to place a straight line among data points on a plot of each cost and its appropriate cost driver.• Regression analysis fits a straight line to cost and activity data according to statistical criteria.3-18 Engineering analysis and account analysis often are combined. One of the problems of account analysis is that historical data may containpast inefficiencies. Therefore, account analysis measures what costswere, not necessarily what they should be. Differences in future costsmay be desired and/or anticipated, and account analysis alone usuallywill not account for these differences. Engineering analysis may becombined with account analysis to revise account-based measures fordesired improvements in efficiency and/or planned changes in inputs or processes.3-19 The strengths of the high-low method are also its weaknesses -- the method is simple to apply since it does not require extensive data orstatistical sophistication. This simplicity also means that the methodmay not be reliable because it may not use all the relevant data thatare available, and choice of the two points to measure the linear costrelationship is subjective. The method itself also does not give anymeasures of reliability.The visual-fit method is an improvement over the high-low methodbecause it uses all the available (relevant) data. However, this method, too, may not be reliable since it relies on the analyst's judgment onwhere to place the line.3-20 The cost-driver level should be used to determine the two data points to be used to determine the cost function. Why? Because thehigh- and low-cost points are more likely to have measurement errors, an unusually high cost at the high-cost point and an unusually low cost at the low-cost point.3-21 Regression analysis is usually preferred to the high-low method (and the visual-fit method) because regression analysis uses all the relevantdata and because easy-to-use computer software does the analysis and provides useful measures of cost function reliability. The majordisadvantage of regression analysis is that it requires statisticalsophistication to use properly. Because the software is easy to use,many users of regression analysis may not be able to critically evaluate the output and may be misled to believe that they have developed areliable cost function when they have not.3-22 This is a deceptive statement, because it is true on the face of it, but regression also has many pitfalls for the unwary. Yes, regressionsoftware provides useful output that can be used to evaluate thereliability of the measured cost function. If one understands theassumptions of least-squares regression, this output can be used tocritically evaluate the measured function. However, the regressionsoftware cannot evaluate the relevance or accuracy of the data that are used. Even though regression analysis is statistically objective,irrelevant or inaccurate data used as input will lead to unreliable costfunctions, regardless of the strength of the statistical indicators ofreliability.3-23 Plotting data helps to identify outliers, that is, observations that are unusual and may indicate a situation that is not representative of theenvironment for which cost predictions are being made. It can alsoshow nonlinear cost behavior that can lead to transformations of thedata before applying linear regression methods.3-24 R2 is a goodness-of-fit statistic that describes the percentage of variation in cost explained by changes in the cost driver.3-25 Control of costs does require measurement of cost behavior, either what costs have been or what costs should be. Problems of work rules and the like may make changing cost behavior difficult. There aretradeoffs, of course, and the instructor should expect that studentscould get into an impassioned debate over where the balance lies --union job protection versus improved efficiency. This debate gets toone of the major roles of accounting in organizations, and it isimportant that students realize that accounting does matter greatly toindividuals, and, ultimately, to society.3-26 The fixed salary portion of the compensation is a fixed cost. It is independent of how much is sold. In contrast, the 5% commission is a variable cost. It varies directly with the amount of sales. Because thecompensation is part fixed cost and part variable cost, it is considered a mixed cost.3-27 Both depreciation and research and development costs are fixed costs because they are independent of the volume of operations.Depreciation is generally a committed fixed cost. Managers have littlediscretion over the amount of the cost. In contrast, research anddevelopment costs are discretionary fixed costs because their size isoften the result of management’s judgment.3-28 Decision makers should know a product’s cost function if their decisions affect the amount of product produced. To know the costimpact of their decisions, decision makers apply the cost function toeach possible volume of production. This is important in manydecisions, such as pricing decisions, promotion and advertisingdecisions, sales staff deployment decisions, and many more decisionsthat affect the volume of product that the company produces.3-29 Regression analysis is a statistical method of fitting a cost-function line to observed costs. It is objective; that is, each cost analyst would come up with the same regression line, whereas different analysts might have different cost functions when using a visual fit method. In addition,regression analysis provides measures of how well the cost-functionline fits the data, so that managers know how much reliance they canput on cost predictions that use the cost function.3-30 (5 min.) Only (b) is a step cost.(a) This is a fixed cost. The same cost applies to all volumes in therelevant range.(b) This is a true step cost. Each time 15 students are added, the costincreases by the amount of one teacher’s salary.(c) This is a variable cost that may be different per unit at differentlevels of volume. It is not a step cost. Why? Because each unit ofproduct requires a particular amount of steel, regardless of the form in which the steel is purchased.3-31 (5 min.) The $8,000 is a fixed cost and the $52 per unit is a variable cost. By definition, adding a fixed cost and a variable cost togetherproduces a mixed cost.3-32 (10-15 min.)1. Machining labor: G, number of units completed or labor hours2. Raw material: B, units produced; could also be D if the company’spurchases do not affect the price of the raw material.3. Annual wage: C or E (depending on work levels), labor hours4. Water bill: H, gallons used5. Quantity discounts: A, amount purchased6. Depreciation: E, capacity7. Sheet steel: D, number of implements of various types8. Salaries: F, number of solicitors9. Natural gas bill: C, energy usage3-33 (15 min.)The analysis is faulty because of the following errors.1. The scales used for both axes are incorrect. The space between equalintervals in number of orders and order-department costs should bethe same.2. The visual-fit line is too high, and the slope is too steep. It appears thatthe line has been purposely drawn to pass through the (100,450) datapoint and the $200 point on the y-axis to simplify the analysis. Avisual-fit line most often will not pass through any one data point.Choosing one point (any point) or a data point and the Y-interceptmakes this similar to the high-low method, ignoring much of theinformation contained in the rest of the data.3. The total cost for 90 orders is wrong. Either the fixed costs should beexpressed in thousands of dollars or the unit variable costs should be$2,000 per order. Even if the derived total cost function was accurate,the resulting cost prediction is incorrect. The formula should beexpressed as:Total cost (thousands of dollars) = $200 + $2.50 × Number of orders processed, orTotal cost = $200,000 + $2,500 × Number of orders processedThis would result in a predicted total cost for 90 orders of:Total cost (thousands of dollars) = $200 + $2.50 × 90 = $425, orTotal cost = $200,000 + $2,500 × 90 = $425,000.Correct AnalysisThe following graph has correctly constructed scales. The visual fit lineshown indicates that fixed costs are about $200,000 and variable cost isabout $2,250 per order – a lower slope than that shown in the text.The total cost function is:Total cost (thousands of dollars) = $200 + $2.25 × Number of orders, or Total cost = $200,000 + $2,250 × Number of ordersVariable cost (thousands of dollars) $180 ÷ 80 orders = $2.25The predicted total cost for 90 orders is:Total cost = $200,000 + $2,250 × 90 = $200,000 + $202,500 = $402,500.3-34 (15-20 min.) Amounts are in millions.1. 2001 2002Sales revenues $57 $116Less: Operating income (loss) (19) 18Operating expenses $76 $ 982. Change in operating expenses ÷ Change in revenues = Variable cost percentage($98 - $76) ÷ ($116 - $57) = $22 ÷ $59 = .37 or 37%Fixed cost = Total cost – Variable cost= $76 - .37 × $57= $55or= $98 - .37 × $116= $55Cost function = $55 + .37 × Sales revenue3. Because fixed costs to not change, the entire additional totalcontribution margin is added to operating income. The $57 salesrevenue in 2001 generated a total contribution margin of $57 × (1 - .37) = $36, which was $19 short of covering the $55 of fixed cost. But theadditional $59 of sales revenue in 2002 generated a total contributionmargin of $59 × (1 - .37) = $37 that could go directly to operatingincome because there was no increase in fixed costs. It wiped out the$19 operating loss and left $18 of operating income.3-35 (10-15 min.)1. Fuel costs: $.40 × 16,000 miles per month = $6,400 per month.2. Equipment rental: $5,000 × 7 × 3 = $105,000 for seven pieces ofequipment for three months3. Ambulance and EMT cost: $1,200 × (2,400/200) = $1,200 × 12 =$14,4004. Purchasing: $7,500 + $5 × 4,000 = $27,500 for the month.3-36 (10-15 min.) There may be some disagreement about these classifications, but reasons for alternative classifications should be explored.Cost Discretionary Committed Advertising $22,000Depreciation $ 47,000 Company health insurance 21,000 Management salaries 85,000 Payment of long-term debt 50,000 Property tax 32,000 Grounds maintenance 9,000Office remodeling 21,000Research and development 46,000Totals $98,000 $235,0003-37 (15-20 min.)This problem extends the chapter analysis to preview short-run decision making and capital budgeting. This problem ignores taxes, invest-ment cost, and the time value of money, which are covered in Chapter 11.Alternative 1 Alternative 2 Variable cost per order $8.00 $4.00 Expected number of orders 70,000 70,000 Annual variable costs $560,000 $280,000 Annual fixed cost 200,000 400,000 Annual total costs $760,000 $680,000Therefore, Alternative 2 is less costly than Alternative 1 by $80,000.Let X = the break-even number of orders, the level at which expected costs are equal.Costs for Alternative 1 = Costs for Alternative 2$200,000 + $8X = $400,000 + $4X$4X = $200,000X = 50,000 ordersAt 50,000 orders, the alternatives are equivalent. If order levels are expected to be below 50,000 orders, then Alternative 1 would have lower costs because fixed costs are lower. If orders are expected to be greater than 50,000, then Alternative 2 would have lower costs because variable costs are lower.3-38 (20-25 min.) A master of the scatter-diagrams with least-square regression lines and high-low lines appears in Exhibit 3-38 on the following page.This exercise enables a comparison of the high-low and visual-fit methods of decomposing mixed-costs into fixed and variable parts. Students find it interesting to compare their best guesses to the least-squares regression results. They find it interesting that a fairly complete and accurate analysis is possible based on a scatter-diagram and a little common sense. We normally have the class determine a “class best guess” before showing the transparency of the regression results.The exercise also introduces students to the concept of a hierarchy of activity levels, although this topic is not covered in the text. The literature contains discussions of four general levels of activities. Recognizing each of these levels can be an aid in choosing appropriate cost drivers. These levels and example cost drivers are:a. Unit-level activities -- performed each time a unit is produced (units ofproduct, machine hours, labor hours).b. Batch-level activities -- performed each time a batch of goods isprocessed or handled (number of orders processed, number of setups,number of material moves).c. Product-level activities -- performed as needed to support theproduction of each different type of product (number of tests, number of parts, number of engineering change notices, hours of design time,number of inspections).d. Facility-level activities -- sustain a facility’s general manufacturingprocess (square footage, number of employees, hours of training).In this exercise, a batch-level activity is involved -- setups.。

亨格瑞管理会计英⽂第15版答案11亨格瑞管理会计英⽂第15版答案11CHAPTER11CapitalBudgetin； 1.；Thepresentvalueis$480,00；(a)$480,000=annualpaymen；annualpayment=$480,000÷1；annualpayment=$480,000÷9；annualpayment=$480,000÷8；annualpayment=$480,000÷8；anCHAPTER 11 Capital Budgeting1.The present value is $480,000 and the annual payments are an annuity, requiring use of Table 2:(a)$480,000 = annual payment × 11.2578annual payment = $480,000 ÷ 11.2578 = $42,637 (b)$480,000 = annual payment × 9.4269annual payment = $480,000 ÷ 9.4269 = $50,918 (c)$480,000 = annual payment × 8.0552annual payment = $480,000 ÷ 8.0552 =$59,589 (a)$480,000 = annual payment × 8.5595annual payment = $480,000 ÷ 8.5595 = $56,078 (b)$480,000 = annual payment × 7.6061annual payment = $480,000 ÷ 7.6061 = $63,107 (c)$480,000 = annual payment × 6.8109annual payment = $480,000 ÷ 6.8109 =$70,475 (a) Total payments= 30 × $50,918 = $1,527,540Total interest paid= $1,527,540- $480,000 = $1,047,5402.3.(b) Total payments= 15 × $63,107= $946,605 Total interest paid = $946,605 - $480,000 = $466,605min.) Buy. The net present value is positive.Initial outlay *Present value of cash operating savings, from12-year, 12% column of Table 2, 6.1944 × $5,000 Net present value$(21,000) * The trade-in allowance really consists of a $5,000 adjustment of the selling price and a bona fide $10,000 cash allowance for the old equipment. The relevant amount is the incremental cash outlay, $21,000. The book value is irrelevant. min.)Copyright ?2011 Pearson Education11.NPV @ 10% = 10,000 × 3.7908 = $37,908 - $36,048 = $1,860 NPV @ 12% = 10,000 × 3.6048 = $36,048 - $36,048 = $0 NPV @ 14% = 10,000 × 3.4331 = $34,331 - $36,048 = $(1,717)The IRR is the interest rate at which NPV = $0; therefore, from requirement 1 we know that IRR = 12%.The NPV at the company’s cost of capital, 10%, is positive, so the project should be accepted.The IRR (12%) is greater than the company’s cost of capital (10%), so the project should be accepted. Note that the IRR and NPV models give the same decision.2.3.4.min.)1.Annual addition to profit = 40% × $25,000 = $10,000.Payback period is $36,000 ÷ $10,000 = 3.6 years. It is not a good measure of profitability because it ignores returns beyond the payback period and it does not account for the time value of money.NPV = $5,114. Accept the proposal because NPV is positive. Computation: NPV = ($10,000 × 4.1114) - $36,000= $41,114 - $36,000 = $ 5,1142.3. ARR = (Increase in average cash flow – Increase in depreciation) ÷ Initialinvestment= ($10,000 - $6,000) ÷ $36,000 = 11.1%min.)Salaries $49,920(a) $41,600(b) $ 8,320 Overtime 1,728(c) -- 1,728 Repairs and maintenance 1,800 1,050 750Toner, supplies, etc. Total annual cash outflows(a) ($ 8 × 40 hrs.) × 52 weeks × 3 employees = $320 × 52 × 3 = $49,920 (b) ($10 × 40 hrs.) × 52 weeks × 2 employees = $400× 52 × 2 = $41,600 (c) ($12 × 4 hrs.) × 12 months × 3 machines = $ 48 × 12 × 3 = $ 1,728Purchase of Cannon machines $ -- $50,000 $50,000Copyright ?2011 Pearson Education21.Sale of Xerox machines Training and remodeling Total -- -3,000 -3,000 Copyright ?2011 Pearson Education 3All numbers are expressed in Mexican pesos. 2. 18% Total Sketch of Relevant Cash Flows (in thousands) Cash operating savings:* .847583,902 99,000 108,900 119,790 131,769 .4371 144,946 Income tax savings from depreciation not changed by inflation, see 1 3.1272 33,600 33,600 33,600 33,600 33,600 Required outlay at time zero 1.0000 Net present value*Amounts are computed by multiplying (150,000 × .6) = 90,000 by 1.10, 1.10 2, 1.10 3, etc.Copyright ?2011 Pearson Education 461PV Present of $1.00 Value ofTOTAL PROJECT APPROACH: Cannon:Init. cash outflow 1.0000 $ (51,000) Oper. cash flows (45,950) (45,950) (45,950) (45,950) (45,950) Total $(216,641)Xerox:Oper. cash flows 3.6048 (57,048) (57,048) (57,048) (57,048) (57,048) Difference in favor of retaining XeroxINCREMENTAL APPROACH: Initial investment 1.0000 $(51,000) Annual operating cash savings 3.6048 11,098 11,098 11,098 11,098 11,098 Net present value of purchase 2. The Xerox machines should not be replaced by the Cannon equipment. Net savings = (Present value of expenditures to retain Xerox machines) less (Present value of expenditures toconvert to Cannon machines)= $205,647 - $216,641 = $(10,994) 3. a. How flexible is the new machinery? Will it be useful only for the presently intended functions, or can it be easilyadapted for other tasks that may arise over the next 5 years?b. What psychological effects will it have on various interested parties?Copyright ?2011 Pearson Education462。

11 Evaluating Performance andEmerging Management and AccountingTechniquesSOLUTIONS TO APPLY WHAT YOU HAVE LEARNED11-14.a.Allocation of Common Fixed CostEastern Division $300,000/$500,000 = 60% x $25,000 = $15,000Western Division $200,000/$500,000 = 40% x $25,000 = $10,000Almer Sales CompanySegment Income StatementFor the Year Ended December 31, 2008WesternEasternCompany Division Division$300,000 $200,000Sales $500,000Variable Cost 420,000 250,000 170,000Contribution Margin 80,000 50,000 30,000Direct Fixed Cost 35,000 20,000 15,000Segment Margin 45,000 30,000 15,000Common Fixed Cost 25,000 15,000 10,000Net Income $ 20,000 $15,000 $ 5,000b. Student answers will vary but they should include the fact thatsegment managers have little or no control over common fixedcosts. Including common costs in segment reports might leadmanagers to make counterproductive decisions. However, itshould also be mentioned that divisions should be aware that theseare costs of the company that each division must help absorb.c. Almer Sales CompanySegment Income StatementFor the Year Ended December 31, 2008WesternEasternCompany Division Division$300,000 $200,000Sales $500,000Variable Cost 420,000 250,000 170,000Contribution Margin 80,000 50,000 30,000Direct Fixed Cost 35,000 20,000 15,000Segment Margin 45,000 $ 30,000 $15,000Common Fixed Cost 25,000Net Income $ 20,00011-15.a.Allocation of Common Fixed CostNorthern Division $30,000/$120,000 = 25% x $10,000 = $2,500Southern Division $90,000/$120,000 = 75% x $10,000 = $7,500Ted Green Sales CompanySegment Income StatementFor the Year Ended December 31, 2008NorthernSouthernCompany Division Division$90,000$30,000Sales $120,000Variable Cost 72,000 18,000 54,000Contribution Margin 48,000 12,000 36,000Direct Fixed Cost 20,000 5,000 15,000Segment Margin 28,000 7,000 21,000Common Fixed Cost 10,000 2,500 7,500Net Income $ 18,000 $4,500 $13,500b. Student answers will vary but they should include the fact thatsegment managers have little or no control over common fixedcosts. Including common costs in segment reports might leadmanagers to make counterproductive decisions. However, itshould also be mentioned that divisions should be aware that theseare costs of the company that each division must help absorb.c. Ted Green Sales CompanySegment Income StatementFor the Year Ended December 31, 2008SouthernNorthernCompany Division Division$90,000 Sales $120,000$30,000Variable Cost 72,000 18,000 54,000Contribution Margin 48,000 12,000 36,000Direct Fixed Cost 20,000 5,000 15,000Segment Margin 28,000 $ 7,000 $21,000Common Fixed Cost 10,000Net Income $ 18,000The memo should include the fact that the Industrial Division is generating a positive contribution margin of $46,875. The net loss is due to the allocation of $18,900 in common fixed costs over which the division has little or no control. If the company disposes of the division, the company will be worse off because the $18,900 incommon costs allocated to that division will be absorbed by theremaining divisions. The total company profit would be reduced by the $46,875 segment margin of the closed division.The proposed solution might be to evaluate performance based on segment margin. As an alternative, common fixed costs might be allocated based on relative segment margin rather than on relative sales.11-17.Segment Classification:Revenue Center RCost Center CProfit Center R CInvestment Center R C ISegmentIncome-------------------------------- = Return on Investment Investment in the Segment18%$ 220,680 =$1,226,00011-19.SegmentIncome-------------------------------- = Return on Investment Investment in the Segment$ 1,916,800 =16%$11,980,00011-20.IncomeSegment-------------------------------- = Return on Investment Investment in the Segment$ 558,620 =17%$3,286,000a. Segment Income=Return on Investment--------------------------------Investment in the Segment$ 553,350 = 17% for Division A$3,255,000$ 407,550 = 19% for Division B$2,145,000$ 573,920 = 16% for Division C$3,587,000b. Rank Division Profit1 DivisionC $573,920A $553,3502 DivisionB $407,9203 Divisionc. Rank Division ROIB 19%1 DivisionA 17%2 DivisionC 16%3 Divisiond. Rankings in b are based on segment income alone. The rankingsin c are based on segment income as a percentage of investment in the segment, and therefore, they report income relative to theamount invested.Actual income $1,836,800 Required income (14% x $12,780,000) 1,789,200Residual income $ 47,60011-23.Actual income $522,567Required income (18% x $2,778,450)500,121Residual income $ 22,44611-24a. Segment Income-------------------------------- = Return on Investment Investment in the Segment$1,133,250 = 15.0% for Division D $7,555,000$ 911,240 = 15.2% for Division E $5,995,000$ 493,120 = 16.0% for Division F $3,082,00011-24 (Continued)b. Required Income CalculationsDivision D 14% x $7,555,000 = $1,057,700Division E 14% x $5,995,000 = $839,300Division F 14% x $3,082,000 = $431,480Division D Division E Division F Actual income $1,133,250 $911,240 $493,120 Required Income 1,057,700 839,300 431,48061,640 Residual income $ 75,550 $71,940 $c. Rank Division Profit$1,133,250D1 Division2 Division E $ 911,2403 Division F $ 493,120d. Rank Division ROIF 16.0%1 DivisionE 15.2%2 DivisionD 15.0%3 Divisione. Rank Division Residual IncomeD $75,5501 DivisionE $71,9402 DivisionF $61,6403 Divisionf. The rankings in c are based on segment income alone, whereas thed rankings are based on segment income relative to the amountinvested. The rankings in c and e will be the same because theyare based on the same two variables — actual income and amountinvested.11-25Incomea. Segment=Return on Investment--------------------------------Investment in the Segment$ 202,540 = 16.4% for Automotive Division $1,235,000$ 332,830 = 16.6% for Industrial Division$2,005,000$ 963,520 = 16.0% for Consumer Division$6,022,000b. The expected return on investment of the new equipment is 16.2%($36,450/$225,000). Since this exceeds the required return, itwould be in the best interest of the company.c. The Automotive and Industrial Division managers are reluctantbecause their divisions are producing returns higher (16.4% and16.6%, respectively) than the 16.2% expected for the newequipment. The new equipment would result in a reduction in the overall return on investment of these two divisions.d. The Consumer Division manager would volunteer to accept theacquisition because the 16.2% expected return on investmentexceeds the current return on investment of the division of 16.0%.The acquisition would, therefore, result in an increase in theoverall return on investment of the division.11-26.Expected actual income $36,450Required Income (14% x $225,000) 31,500Residual income $ 4,950If residual income was used to evaluate segment performance, each manager would want to acquire the equipment. This is because the equipment would increase the residual income of any of the three divisions by the same $4,950.11-27.A.balanced scorecardB.balanced scorecard measuresC.balanced scorecard targetsD.balanced scorecard initiativesE.balanced scorecard objectivesF.e-commerceG.value chainH.process management I.enterprise information systemJ.databaseK.Six SigmaL.constraintM.theory of constraints (TOC)N.Lean manufacturingO.just-in-time (JIT)P.zero defectsQ.setup timeR.throughput timeS.lead timeT.unscheduled downtimeU.supply chain managementJ 1. An electronic filing system that contains various facts and figures.F 2. Buying and selling of products or services and other business activities conducted over the internet.G 3. A stream of connected activities that begins with research and development, through product design,then to manufacturing, then marketing and distribution, all with the focus on customer satisfaction.A 4. An integrated set of performance measures organized around distinct perspectives.K 5. A business management strategy that seeks to identify and remove the causes of defects and errors (anything that could lead to customer dissatisfaction) in manufacturing and other business processes.M 6. An overall management philosophy introduced by Dr. Eliyahu M. Goldratt in his 1984 book titled The Goal which is based on the premise that the ability to achieve a goal is limited by at least oneconstraining process.N 7. A production practice that focuses on reducing waste and inefficiencies in the production of product.This philosophy considers the expenditure of resources for any goal other than creating value for theend customer to be wasteful, and thus a target for elimination.T 8. The amount of time production equipment is out of service due to unscheduled repairs and maintenance.E 9. Concise statements for each balanced scorecard perspective that articulate what the organization hopesto accomplish.U 10. A term commonly used to describe the coordination of business activities between companies as products move from the manufacturer to the ultimate end consumer.B 11. Descriptions of how success in achieving scorecard objectives will be measured.I 12. An integrated computer system capable of supporting an entire organization with quality service whileprocessing large volumes of data.L 13. Anything does not allow you to do something you want or need to do.H 14. Managing the various interconnected business activities in an enterprise.O 15. A method of eliminating or greatly reducing inventory by delaying the purchase of material until it is actually needed for immediate use.P 16. Describes the concept of products that are completely free of imperfections.C 17. The level of performance or rate of improvement desired for each measure.Q 18. The time it takes to prepare manufacturing equipment for the production of particular products.R 19. The time that passes from the time a unit of product enters the production process until it emerges as a finished product.S 20. The time that passes from the time an order is received until the product is complete and ready for shipment.D 21. Short-term programs and actions that will help achieve the established balanced scorecard objectivesand performance targets.Chapter 11 – Evaluating Performance 388。

CHAPTER 4 COVERAGE OF LEARNING OBJECTIVESCHAPTER 4Cost Management Systems and Activity-Based Costing4-A1 (20-30 min.)See Table 4-A1 on the following page.4-A2 (25-30 min.)1. Merchandise Inventories, 1,000 devices @ $97 $97,0002. Direct materials inventory $ 40,000Work-in-process inventory 0 Finished goods inventory 97,000 Total inventories $137,000 3.NILE ELECTRONICS PRODUCTSStatement of Operating IncomeFor the Year Ended December 31, 20X9Sales (9,000 units at $170) $1,530,000 Cost of goods sold:Beginning inventory $ 0Purchases 970,000Cost of goods available for sale $ 970,000Less ending inventory 97,000Cost of goods sold (an expense) 873,000 Gross margin or gross profit $ 657,000 Less other expenses: selling & administrative costs 185,000 Operating income (also income before taxesin this example) $ 472,000TABLE 4-A1STATEMENT OF OPERATING INCOME OPERATING INCOME BY PRODUCT LINEEXTERNAL REPORTING PURPOSE INTERNAL STRATEGIC DECISION MAKING PURPOSECustom Large SmallDetailed Std. Std. Cost Type, Assignment Method Sales $155,000 $30,000 $45,000 $80,000Cost of goods sold:Direct material 40,000 5,000 15,000 20,000 Direct, Direct TraceIndirect manufacturing 41,000 28,0001 5,000 8,000 Indirect, Alloc. – Mach. Hours81,000 33,000 20,000 28,000Gross profit 74,000 (3,000) 25,000 52,000Selling and administrative expenses:Commissions 15,000 1,500 3,500 10,000 Direct, Direct Trace Distribution to warehouses 10,400 1,0002 3,000 6,400 Indirect, Allocation - Weight Total selling and admin. expenses 25,400 2,500 6,500 16,400Contribution to corporate expensesand profit 48,600 $(5,500) $18,500 $35,600Unallocated expenses:Administrative salaries 8,000Other administrative expenses 4,000Total unallocated expenses 12,000Operating income before tax $ 36,6001 Total machine hours is 1,400 + 250 + 400 = 2,050. Indirect manufacturing cost per machine hour is then $41,000 ÷ 2,050 = $20. The al location to custom detailed is $20 × 1,400 machine hours = $28,000.2 Total weight shipped is 25,000 kg + 75,000 kg + 160,000 kg = 260,000 kg. Indirect distribution costs per kilogram is then $10,400 ÷ 260,000 kg = $0.04. The allocation to custom detailed is $0.04 × 25,000 kg = $1,000.技术资料专业整理4. ORINOCO, INC.Statement of Operating IncomeFor the Year Ended December 31, 20X9Sales (9,000 units at $170)$1,530,000Cost of goods manufactured and sold:Beginning finished goods inventory $ 0Cost of goods manufactured:Beginning WIP inventory $ 0Direct materials used 530,000Direct labor 290,000Indirect manufacturing 150,000Total mfg. costs to account for $970,000Less ending work-in-process inventory 0 970,000Cost of goods available for sale $970,000Less ending finished goods inventory 97,000Cost of goods sold (an expense) 873,000Gross margin or gross profit $ 657,000 Less other expenses: selling and administrative costs 185,000Operating income (also income before taxesin this example) $ 472,0005. The balance sheet for the merchandiser (Nile) has just one line forinventories, the ending inventory of the items purchased for resale.The balance sheet for the manufacturer (Orinoco) has three items:direct materials inventory, work-in-process inventory, and finishedgoods inventory.The income statements are similar except for the computation of cost of goods available for sale. The merchandiser (Nile) simply showspurchases for the year plus beginning inventory. In contrast, themanufacturer (Orinoco) shows beginning work-in-process inventory plusthe three categories of cost that comprise manufacturing cost (directmaterials used, direct labor, and factory (or manufacturing) overhead)and then deducts the ending work-in-process inventory. The manufacturer then adds the beginning finished goods inventory to this cost of goodsmanufactured to get the cost of goods available for sale.6. The purpose is providing aggregate measures of inventory value and costof goods manufactured for external reporting to investors, creditors,and other external stakeholders.4-A3 (10-15 min.)There can be many justifiable answers for each item other than thelisted cost driver and behavior. The purpose of this exercise is togenerate an active discussion regarding those chosen by First Bank’smanagers. One point that should be emphasized is that many timesmanagers choose cost drivers that are not the most plausible or reliable because of lack of data availability. Cost drivers are also used as abasis to allocate activity and resource costs and so the availability of data is often an important consideration.ActivityOr CostResource Cost Driver Behaviora.* R Number of square feet Fb.** R Number of person hours Fc. R Number of computer transactions Vd. A Number of schedulese. R Number of person hours Ff. R Number of loan inquiries Vg.*** A Number of investmentsh. A Number of applicationsi. R Number of person hours Vj. R Number of minutes Vk. R Number of person hours Fl. A Number of loans* An argument can be made that maintenance of the building is an activity.If this was the case, resources such as supplies and labor would be resources consumed, and several resource cost drivers would be needed. In addition, a separate resource and associated cost driver would be needed for insurance costs. However, the company had a contract for maintenance (fixed price), so this was a fixed-cost resource that was added to other occupancy costs such as insurance. The cost driver chosen for all these occupancy costs was square feet occupied by the various departments.** Normally, the cost driver used for any labor resource is person hours.It is assumed that the staff person hours used are regular hours rather than overtime or temporary labor hours. Thus, the cost is fixed with respect to changes in hours used. As the hours used increases (decreases) theutilization of the resources increases (decreases) and eventually, management will need to make a decision whether to expand capacity (or whether to cutback on labor). This is an example of a step cost that is fixed over wideranges of cost-driver level.*** Students may try to determine the cost behavior of activities even thoughthe problem requirements do not ask for it. Point out that activities almostalways have mixed cost behavior because they consume various resources. Someof these are fixed-cost and others variable-cost resources. For example, theactivity “research to evaluate a loan application” consumes such fixed-costresources as manager labor time and computers (assumed owned by the bank).This activity also consumes variable-cost resources such as telecommunicationstime and external computing services.4-A4 (20-30 min.)1. The first step is to determine the cost per cost-driver unit for eachactivity:Monthly Cost- Cost perManufacturing Driver DriverActivity [Cost driver] Overhead Activity UnitMaterial Handling [Direct materials cost] $12,000 $200,000$ 0.06Engineering [Engineering change notices] 20,000 20 1,000.00Power [Kilowatt hours] 16,000 400,000 0.04Total Manufacturing Overhead $48,000Next, the costs of each activity can be allocated to each of the threeproducts:PHYSICAL FLOW / ALLOCATED COSTCost Senior Basic DeluxeMaterial Handling$.06 × 25,000 = $1,500$.06 × 50,000 = $ 3,000$.06 × 125,000 = $ 7,5 Engineering $1,000 × 13 = 13,000$1,000 × 5 = 5,000$1,000 × 2 = 2,000Power $.04 × 50,000 = 2,000$.04 × 200,000 = 8,000$.04 × 150,000 = 6,000 Total $16,500 $16,000 $15,5002. Overhead rate based on direct labor costs:Rate = Total manufacturing overhead ÷ Total direct labor cost= $48,000 ÷ $8,000 = $6.00/DL$Overhead allocated to each product is:Senior: $6.00 × 4,000 = $24,000Basic: $6.00 × 1,000 = 6,000Deluxe: $6.00 × 3,000 = 18,000Total $48,000Notice that much less manufacturing overhead cost is allocated to Basic using direct labor as a cost driver. Why? Because Basic uses only asmall amount of labor but large amounts of other resources, especially power.3. The product costs in requirement 1 are more accurate if the costdrivers are good indicators of the causes of the costs -- they are both plausible and reliable. For example, kilowatt hours is certainly abetter measure of the cost of power costs than is direct labor hours.Therefore, the allocation of power costs in requirement 1 is certainly better than in requirement 2. Materials handling and engineering arelikewise more plausible. A manager would be much more confident in the manufacturing overhead allocated to products in requirement 1.Remember, however, that there are incremental costs of data collection associated with the more accurate ABC system. The benefit/costcriteria must be applied in deciding which costing system is “best.”4-B1 (20-30 min.)See Table 4-B1 on the following page.4-B2 (25-30 min.)1. $1,080,000 ÷ 45,000 hours = $24 per direct-labor hour2. (a) $585,000 ÷ 15,000 hours = $39 per direct-labor hour(b) $495,000 ÷ 30,000 hours = $16.50 per direct-labor hour3. (a) $585,000 ÷ 97,500 hours = $6 per machine hour(b) $495,000 ÷ 30,000 hours = $16.50 per direct-labor hour4. (a) $24 × (1.0 + 14.0) = $360.00$24 × (1.5 + 3.0) = $108.00$24 × (1.3 + 8.0) = $223.20(b) ($39 × 1.0) + ($16.50 × 14.0) = $39.00 + $231.00 = $270.00($39 × 1.5) + ($16.50 × 3.0) = $58.50 + $ 49.50 = $108.00($39 × 1.3) + ($16.50 × 8.0) = $50.70 + $132.00 = $182.70(c) ($6 × 12.0) + ($16.50 × 14.0) = $ 72.00 + $231.00 = $303.00($6 × 17.0) + ($16.50 × 3.0) = $102.00 + $ 49.50 = $151.50($6 × 14.0) + ($16.50 × 8.0) = $ 84.00 + $132.00 = $216.00(d) First consider using departmental instead of firm-wide rates (partb vs. part a). Departmental rates that use direct-labor hours asthe base decrease the cost applied to units of A and C and leave B unaffected. Other products that use relatively less assembly time will increase in cost. Now examine changing to a base of machine hours in machining (part c vs. part a). Product B is the only one with an increase in cost in (c) compared to (a). Why? Because B's uses only 16% of the direct labor hours used for A, B, and C, so it is is allocated only 16% of the costs allocated on the basis ofdirect labor hours. But it uses 40% of the machine hours, andthere is allocated 40% of costs that are allocated on the basis on machine hours. Therefore, it receives relatively more costs with a base of machine hours than with a base of direct-labor hours.TABLE 4-B1STATEMENT OF OPERATING INCOME OPERATING INCOME BY PRODUCT LINEThousands of Dollars Lawn HandScooter Mower Tool Cost Type,Parts Parts Parts Assignment Method Sales $990 $350 $380 $260Cost of goods sold:Direct material 400 175 125 100 Direct, Direct Trace Indirect manufacturing 94 68 1 14 12 Indirect – Mach.Hrs494 243 139 112Gross profit 496 107 241 148Selling and administrative expenses:Commissions 55 25 20 10 Direct, Direct Trace Distribution to warehouses 150 20 2 80 50 Indirect - Weight Total selling and administrative expenses 205 45 100 60Contribution to corporate expenses and profit 291 $ 62 $141 $ 88Unallocated expenses:Corporate salaries 11Other general expenses 17Total unallocated expenses 28Operating income before tax $2631 Total machine hours is 8,500 + 1,750 + 1,500 = 11,750. Indirect manufacturing cost per machine hour isthen $94,000 ÷ 11,750 = $8. The allocation to scooter parts is $8 × 8,500 machine hours = $68,000.2 Total weight shipped is 100,000 kg + 400,000 kg + 250,000 kg = 750,000 kg. Indirect distribution costs perkilogram is then $150,000 ÷ 750,000 kg = $0.20. The allocation to scooter parts is $0.20 × 100,000 kg = $20,000.技术资料专业整理4-B3 (30-35 min.)1.The existing system allocates all costs based on direct labor cost. The rate for allocating indirect production costs is:Estimated indirect production cost ÷ Estimated direct labor cost= ¥24,500,000 ÷ ¥35,000,000 = 70%That is, each time ¥1 is spent on direct labor, Watanabe adds ¥0.7 of indirect production cost to the cost of the product.2. Under an ABC system, Watanabe would allocate indirect production costs separately for each activity. This would result in the following four allocation rates:Receiving: Receiving co sts ÷ Direct material cost=¥4,800,000 ÷ 60,000,000 = ¥0.08 per ¥1of dir. mat. Assembly: Assembly costs ÷ Number of control units=¥13,800,000 ÷ 92,000 = ¥150 per control unitQual. Control: Quality control cost ÷ QC hours=¥1,800,000 ÷ 600 = ¥3,000 per QC hourShipping: Shipping cost ÷ # of boxes shipped=¥4,100,000 ÷ 8,200 = ¥500 per box shipped3. (a) The cost will contain 3 components (in thousands of yen):Direct material ¥ 8,000Direct labor 2,000Indirect production cost (¥2,000 × .7 = 1,400) 1,400Total cost ¥11,400Price (¥11,400 × 1.3)¥14,820(b) The cost will have 7 components, 4 of them allocating indirect production costs (totals in thousands of yen):Direct materials ¥ 8,000Direct labor 2,000Receiving (¥0.08 × 8,000)¥640Assembly (¥150 × 5,000)750Quality control (¥3,000 × 50)150Shipping (¥500 × 600) 300Total indirect production cost 1,840Total cost ¥11,840 Price (11 ,840 × 1.3)¥15,3924. The order from Nissan requires a relatively large amount of receiving, quality control, and shipping resources compared to the relative amount of labor required. This makes its indirect production costs are relatively expensive relative to the labor required. The following illustrates why an allocation on the basis of labor cost results in less costs than allocations based on the four activities:Budgeted Cost- Nissan Cost- NissanActivity Allocation Base Allocation Base Percentage Direct materials 60,000,000 8,000,000 13.3%Direct labor 35,000,000 2,000,000 5.7 Receiving 60,000,000 8,000,000 13.3 Assembly 92,000 5,000 5.4 Quality control 600 50 8.3 Shipping 8,200 600 7.3Using the single direct-labor cost-allocation base, this order would receive 5.7% of all indirect production costs. The main reason that indirect production costs for this order under the ABC system are relatively high is the large relative cost of materials that drives a large allocation (13.3%) of receiving costs to this order. The allocations of both quality control and shipping costs are slightly larger that they would be using a direct-labor cost-allocation base, while the allocation of assembly costs is slightly smaller.4-B4 (50-60 min.)1. A summary of the analyses follows.Pen Cell-PhoneCasings Casings CompanyBase Gross Profit Percentage* 1.25% 38.75% 8.07% Plan Gross Profit Percentage** 10.80% 37.20% 17.40% Support of Product Manager? Strong NoneSupport of President? Moderate* See Exhibit 4-6 on p. 136 of the text.** See Panel B of Exhibit 4-B4 that follows.Exhibit 4-B4, Panels A and B on the following pages can be used to explain the impact of the controller’s idea using the process map of the traditional costing system and the related financial reports. Notice that the $80,000 annual decrease in the cost of engineers needs to be converted to a $20,000 quarterly savings. The controller’s idea will result in an increase of 9.55%in the gross profit of the pen-casings line but a decrease of 1.55% in thecell-phone line. The product manager of pen casings would probably give strong support to the idea but the cell-phone casings manager would most likely not support the idea.Although the company-level gross profit margin improves, the president’s support may not be strong. Why? There is not a strong consensus among product-line managers. Top management is normally hesitant to support actions that do not have the unanimous support among product-line managers unless there is solid evidence of material improvement in profitability. While the current loss would be reversed, the return on sales is still nominal at 3,500 ÷ $480,000 = .73%.Exhibit 4-B4: Panel AProcess Map of Traditional Cost System[Direct Labor Hours = 4,500 +Exhibit 4-B4: Panel BPRO-FORMA FINANCIAL REPORTS:TRADITIONAL COST ALLOCATION SYSTEMSTATEMENT OF OPERTING INCOME CONTRIBUTION TO CORPORATE COSTSAND PROFIT [EXTERNAL REPORTING PURPOSE] [INTERNAL STRATEGIC DECISION MAKINGAND OPERATIONAL-CONTROL PURPOSE]Pen Casings Cell Phone CasingsSales $480,000 $360,000 $120,000 1 Cost of goods sold:Direct material 46,500 22,500 24,000 2 Direct labor 150,000 135,000 15,000Indirect manufacturing 200,000 163,636 3 36,364 4 Cost of goods sold 396,500 321,136 75,364 Gross profit 83,500 $ 38,864 $ 44,636 Corporate expenses (unallocated) 80,000Operating income $ 3,500Gross profit margin 17.40% 10.80% 37.20%1. $80,000 × .75 × 22. $12,000 × 23. $200,000 × [4,500/(4,500 + 1,000)]4. $200,000 × [1,000/(4,500 + 1,000)]5. $83,500/$480,000技术资料专业整理Perhaps the most important factor bearing on the president’s support is lack of confidence in the accuracy of the cost and hence gross margin figures. She probably will inquire whether the shift in the consumption percentages by the two activities is captured by the traditional costing system. Does the change in allocation rates from 90:10 to 82:18 based on direct labor hour changes accurately capture the impact of the operational changes? An informal analysis of the controller’s idea might look like the following table.Based on the informal analysis, the President probably would expect the profitability of cell-phone casings to improve and the profitability of pen casings to be unaffected. This disagrees with the numerical analysis. Given the propensity of managers to embrace numerical results, less weight will likely be given this analysis compared to the “objective” numbers. As a result, she may question the validity of the numerical analysis as well as the value of the traditional costing system!Finally, the focus of improvement efforts should be directly on the pen-casing product line. This initiative deals mostly with the cell-phone line. What can be done to improve profitability of the pen casings? Can prices be raised without losing too much volume? Can operational improvements be made to lower the indirect manufacturing costs? The controller’s idea is worthy of some support but it does not address the profitability issue head on.2. Exhibit 4-B4, Panel C on the following page is a process map that can be used to explain the impact of the controller’s idea. Panel D at the end of the solution provides a detailed evaluation of the controller’s idea.Pen Cell-PhoneCasings Casings Company Base Gross Profit Percentage* 16.22% (28.63%) 8.07% Plan Gross Profit Percentage** 17.26% 17.81% 17.40% Support of Product Manager? Neutral StrongSupport of President? Strong* See the table on p. 139 of the text.** See panel D of Exhibit 4-B4 that follows.The controller’s idea will result in a slight increase in the gross profit of the pen-casings line but a dramatic turnaround in the profitability of thecell-phone line. The product manager of pen casings would probably be neutral or slightly positive about the idea because the idea does not focus on operational improvements that directly affect the pen-casings line. The cell-phone casings manager would give strong support to the idea – this may save his/her job! The president would strongly support this idea while encouraging all managers involved to keep up the good work. Also, note that the numbers agree with the informal analysis – generating confidence in the integrity of the cost accounting system.Exhibit 4-B4, Panel CProcess Map for ABC SystemExhibit 4-B4: Panel DPRO-FORMA FINANCIAL REPORTS FOR LOPEZ PLASTICS COMPANY:ACTIVITY-BASED COST ALLOCATION SYSTEMSTATEMENT OF OPERTING INCOME CONTRIBUTION TO CORPORATE COSTSAND PROFIT [EXTERNAL REPORTING PURPOSE] [INTERNAL STRATEGIC DECISION MAKINGAND OPERATIONAL-CONTROL PURPOSE]Pen Casings Cell Phone Casings Sales $480,000 $360,000 $120,000 Cost of goods sold:Direct material 46,500 22,500 24,000 Direct labor 150,000 135,000 15,000Processing activity 154,000 126,000 128,000 2Production support activity 46,000 14,375 3 31,625 4 Cost of goods sold 396,500 297,875 98,625 Gross profit 83,500 $ 62,125 $ 21,375 Corporate expenses (unallocated) 80,000Operating loss $ 3,500Gross profit margin 17.26% 17.81%1. $154,000 × [4,500 labor hours/(4,500 labor hours + 1,000 labor hours)]2. $154,000 × [1,000 labor hours/(4,500 labor hours + 1,000 labor hours)]3. $46,000 × [5 distinct parts/(5 distinct parts + 11 distinct parts)]4. $46,000 × [11 distinct parts/(5 distinct parts + 11 distinct parts)]技术资料专业整理3. As vice president, you probably are pleased with the new ABC system. The cost drivers that are used to allocate activity costs appear to be plausible and reliable and thus probably represent a sound cause-effect model of operations. This will improve both the accuracy of product costing and operating managers’ control over costs. Operating managers will be pleased with the ABC system because it helps them understand how their day-to-day work impacts costs and profits. From a behavioral perspective, this should behighly motivational.This problem emphasizes the importance of the cost-accounting system to managers. Different systems can result in significantly different management decisions. In this case, the product-line managers’ support for the controller’s idea changes when an ABC system is used to evaluate the idea. Although the company-level gross margins do not change, it is possible thatthe president would strongly support the idea based on ABC data. Why? Neither of the product-line managers is against the idea, and one strongly supports it. In addition, the president may have more confidence in the accuracy of the ABC analysis. The substantial losses of the current quarter have been completely eliminated and the serious profitability problem of the cell-phone casing product line has been reversed.4-1 A cost management system is a collection of tools and techniques that identifies how management’s decisions affect costs. The three purposesof a CMS are to provide1.cost information for operational control,2.cost information for strategic decisions, and3.measures of inventory value and cost of goods manufactured (orpurchased) for external reporting to investors, creditors, and otherexternal stakeholders.4-2 a. The production manager needs operational control information.b. Setting the product mix is a strategic decision.c. The cost of inventory that appears on the balance sheet is information that is used by external investors, creditors, and other stakeholders.4-3 Cost objects are any items for which decision makers desire a separate measurement of costs. They include departments, products, services, territories, and customers.4-4 No. Products are one of the main cost objects for most companies, but departments are also important cost objects because they represent a logical grouping of activities for which managers desire a separate determination of costs.4-5 The major purpose of a detailed cost-accounting system is to measure costs for decision making and financial reporting. Cost accounting systems become more detailed as management seeks more accurate data for decision making.4-6 The two major processes performed by a cost accounting system are cost accumulation and cost assignment. Cost accumulation is collecting costs by some “natural” classification, such as materials or labor, or by activities performed such as order processing or machine processing. Cost assignment is attaching costs to one or more cost objects, such as activities, processes, departments, customers, or products.4-7 Managers make important decisions on a daily basis. They base these decisions in large part on financial data provided by the cost accounting system. So it is critically important that the cost accounting system provide accurate and reliable financial information.4-8 Managers can specifically and exclusively identify direct costs with a given cost object (that is, directly trace them) in an economically feasible way. Indirect costs cannot be so identified. However, managers can usually identify a plausible and reliable cost driver to use to allocate resourcecosts to cost objects that consume the resources. When direct tracing is not economically feasible and a plausible and reliable cost driver cannot be found, costs should remain unallocated.4-9 Yes, the same cost (for example, the department supervisor's salary)can be direct with respect to a department but indirect with respect to the variety of products flowing through a department (e.g., tables, chairs, and cabinets).4-10 Some costs can be physically linked with a department (or a product), but not in an economically feasible way. An example is the use of departmental meters for measuring power usage. Such devices could measure power costs as direct costs of a department. The alternative is to regard factory power costs as indirect costs of individual departments. Managers often decide whether the resulting increased accuracy provided by individual power meters is worth their additional cost; thus, the test of economic feasibility will decide whether a particular cost is regarded as direct or indirect.4-11 The four purposes of cost allocation are (1) to predict the economic effects of strategic and operational control decisions, (2) to obtain desired motivation, (3) to compute income and asset valuations, and (4) to justify costs or obtain reimbursement.4-12 Generally Accepted Accounting Principles (GAAP) require publically-held companies to allocate all production-related costs and only production-related costs to its products for financial reporting to the public.4-13 No. The costs in a cost pool are not physically traced to cost objects. Only direct costs are traced to cost objects. A cost pool contains indirect costs that are allocated to cost objects using a single cost-allocation base.4-14 Some possible terms are reallocate, assign, distribute, redistribute, load, apportion, reapportion, and burden.4-15 For financial statement purposes, the typical accounting system does not allocate costs associated with value-chain functions other than production to the physical units produced. However, for guiding decisions regarding product-pricing and product-mix decisions, many companies allocate all costs, including R&D, design, marketing, distribution, and customer service costs. However, the allocations of these costs may not be embedded in the system that generates financial statements.4-16 Yes. The two criteria that should be met before using any measure as a cost-allocation base are economic plausibility and reliability. A measure should be plausible – make common sense. If managers cannot easily understand the logical relationship between a cost allocation-base and the costs of an activity or resource, managers will perceive the resulting allocations as arbitrary.4-17 Production maintenance costs are normally indirect. Sales commissions normally can be directly traced to specific products. The costs associated with process design are normally unallocated because it is too difficult to identify plausible and reliable cost-allocation bases, although some companies elect to allocate them.4-18 Generally not. They are direct as far as the physical product is concerned, but in accounting for their cost it would usually be impractical (too costly) to keep records of the amount of glue or tacks used in each unit of product. A more feasible method would be to consider these as supplies (indirect materials).4-19 Depreciation related to production activities is a product cost, not a period cost. Hence, it will become an expense as a part of manufacturing cost of goods sold. Thus, depreciation is not always an immediate expense.。

CHAPTER 11DECISION MAKING AND RELEVANT INFORMATION11-1The five steps in the decision process outlined in Exhibit 11-1 of the text are1. Identify the problem and uncertainties2. Obtain information3. Make predictions about the future4. Make decisions by choosing among alternatives5. Implement the decision, evaluate performance, and learn11-2Relevant costs are expected future costs that differ among the alternative courses of action being considered. Historical costs are irrelevant because they are past costs and, therefore, cannot differ among alternative future courses of action.11-3No. Relevant costs are defined as those expected future costs that differ among alternative courses of action being considered. Thus, future costs that do not differ among the alternatives are irrelevant to deciding which alternative to choose.11-4Quantitative factors are outcomes that are measured in numerical terms. Some quantitative factors are financial––that is, they can be easily expressed in monetary terms. Direct materials is an example of a quantitative financial factor. Qualitative factors are outcomes that are difficult to measure accurately in numerical terms. An example is employee morale.11-5Two potential problems that should be avoided in relevant cost analysis are(i) Do not assume all variable costs are relevant and all fixed costs are irrelevant.(ii) Do not use unit-cost data directly. It can mislead decision makers becausea. it may include irrelevant costs, andb. comparisons of unit costs computed at different output levels lead to erroneousconclusions11-6No. Some variable costs may not differ among the alternatives under consideration and, hence, will be irrelevant. Some fixed costs may differ among the alternatives and, hence, will be relevant.11-7No. Some of the total unit costs to manufacture a product may be fixed costs, and, hence, will not differ between the make and buy alternatives. These fixed costs are irrelevant to the make-or-buy decision. The key comparison is between purchase costs and the costs that will be saved if the company purchases the component parts from outside plus the additional benefits of using the resources freed up in the next best alternative use (opportunity cost). Furthermore, managers should consider nonfinancial factors such as quality and timely delivery when making outsourcing decisions.11-8Opportunity cost is the contribution to income that is forgone (rejected) by not using a limited resource in its next-best alternative use.11-9No. When deciding on the quantity of inventory to buy, managers must consider both the purchase cost per unit and the opportunity cost of funds invested in the inventory. For example, the purchase cost per unit may be low when the quantity of inventory purchased is large, but the benefit of the lower cost may be more than offset by the high opportunity cost of the funds invested in acquiring and holding inventory.11-10No. Managers should aim to get the highest contribution margin per unit of the constraining (that is, scarce, limiting, or critical) factor. The constraining factor is what restricts or limits the production or sale of a given product (for example, availability of machine-hours).11-11No. Allocated costs are always irrelevant to the shut-down decision.11-12Cost written off as depreciation is irrelevant when it pertains to a past cost such as equipment already purchased. But the purchase cost of new equipment to be acquired in the future that will then be written off as depreciation is often relevant.11-13No. Managers tend to favor the alternative that makes their performance look best so they focus on the measures used in the performance-evaluation model. If the performance-evaluation model does not emphasize maximizing operating income or minimizing costs, managers will most likely not choose the alternative that maximizes operating income or minimizes costs.11-14The three steps in solving a linear programming problem are(i) Determine the objective function.(ii) Specify the constraints.(iii) Compute the optimal solution.11-15The text outlines two methods of determining the optimal solution to an LP problem:(i) Trial-and-error solution approach(ii) Graphical solution approachMost LP applications in practice use standard software packages that rely on the simplex method to compute the optimal solution.11-16 (20 min.) Disposal of assets.1.This is an unfortunate situation, yet the $75,000 costs are irrelevant regarding thedecision to remachine or scrap. The only relevant factors are the future revenues and future costs. By ignoring the accumulated costs and deciding on the basis of expected future costs, operating income will be maximized (or losses minimized). The difference in favor of remachining is $2,000:(a) (b)Remachine Scrap Future revenues $30,000 $3,000Deduct future costs 25,000 –Operating income $ 5,000 $3,000Difference in favor of remachining2.This, too, is an unfortunate situation. But the $100,000 original cost is irrelevant to thisdecision. The difference in relevant costs in favor of rebuilding is $5,000 as follows:(a) (b)Replace Rebuild New truck $105,000 –Deduct current disposalprice of existing truck 15,000 –Rebuild existing truck –$85,000$ 90,000 $85,000Difference in favor of rebuildingNote, here, that the current disposal price of $15,000 is relevant, but the original cost (or book value, if the truck were not brand new) is irrelevant.11-17(20 min.) Relevant and irrelevant costs.Brodeur Computers should reject Plum’s offer. The $15 of fixed costs are irrelevant because they will be incurred regardless of this decision. When comparing relevant costs between the choices, Plum’s offer price is higher than the cost to continue to produce.2.Keep Replace DifferenceCash operating costs (2 years) $40,000 $24,000 $16,000Current disposal value of old machine (1,250) 1,250Cost of new machine ______ 4,000 (4,000)Total relevant costs $40,000 $26,750 $13,250JR Manufacturing should replace the old machine. The cost savings are far greater than the cost to purchase the new machine.11-18(15 min.) Multiple choice.1. (b) Special order price per unit $6.00Variable manufacturing cost per unit 4.50Contribution margin per unit $1.50Effect on operating income = $1.50 ⨯ 20,000 units= $30,000 increase2. (b) Costs of purchases, 20,000 units ⨯ $60 $1,200,000Total relevant costs of making:Variable manufacturing costs, $64 – $16 $48Fixed costs eliminated 9Costs saved by not making $57Multiply by 20,000 units, so totalcosts saved are $57 ⨯ 20,000 1,140,000Extra costs of purchasing outside 60,000Minimum overall savings for Reno 25,000Necessary relevant costs that would haveto be saved in manufacturing Part No. 575 $ 85,00011-19(30 min.) Special order, activity-based costing.1. Award Plus’operating income under the alternatives of accepting/rejecting the specialorder are:Without One-Time Only Special Order 8,000 UnitsWith One-Time OnlySpecial Order11,000 UnitsDifference3,000UnitsRevenues $1,600,000 $2,050,000 $450,000 Variable costs:Direct materials 364,500 500,5001136,500 Direct manufacturing labor 400,000 550,0002150,000 Batch manufacturing costs 96,000 114,000318,000 Fixed costs:Fixed manufacturing costs 375,000 375,000 ––Fixed marketing costs 275,000 275,000 ––Total costsOperating income1$364,0008,000⨯ 11,0002$400,0008,000⨯ 11,000 3$96,000 + (30 ⨯ $600)Alternatively, we could calculate the incremental revenue and the incremental costs of the additional 3,000 units as follows:Incremental revenue $150 ⨯ 3,000 $450,000 Incremental direct material costs $364,0008,000⨯ 3,000 136,500Incremental direct labor costs $400,0008,000⨯ 3,000 150,000Incremental batch manufacturing costs $600 ⨯ 30 18,000Total incremental costs 304,500Total incremental operating income fromaccepting the special order $ 145,500 Award Plus should accept the one-time-only special order if it has no long-term implications because accepting the order increases Award Plu s’ operating income by $145,500.If, however, accepting the special order would cause the regular customers to be dissatisfied or to demand lower prices, then Award Plus will have to trade off the $145,500 gain from accepting the special order against the operating income it might lose from regular customers.2. Award Plus has a capacity of 10,000 medals. Therefore, if it accepts the special one-timeorder of 3,000 medals, it can sell only 7,000 medals instead of the 8,000 medals that it currently sells to existing customers. That is, by accepting the special order, Award Plus must forgo sales of 1,000 medals to its regular customers. Alternatively, Award Plus can reject the special order and continue to sell 8,000 medals to its regular customers.Award Plus’operating income from selling 7,000 medals to regular customers and 3,000 medals under one-time special order follow:Revenues (7,000 ⨯ $200) + (3,000 ⨯ $150) $1,850,000Direct materials (7,000 ⨯ $45.51) + (3,000 ⨯ $45.51) 455,000Direct manufacturing labor (7,000 ⨯ $502) +(3,000 ⨯ $502) 500,000Batch manufacturing costs (1403⨯ $600) + (30 ⨯ $600) 102,000Fixed manufacturing costs 375,000Fixed marketing costs 275,000Total costs 1,707,000Operating income $ 143,0001$45.50 = $364,0008,0002$50 =$400,0008,0003Award Plus makes regular medals in batch sizes of 50. To produce 7,000 medals requires 140 (7,000 ÷ 50) batches. Accepting the special order will result in an increase in operating income of $53,000 ($143,000 –$90,000). The special order should, therefore, be accepted.A more direct approach would be to focus on the incremental effects––the benefits of accepting the special order of 3,000 units versus the costs of selling 1,000 fewer units to regular customers. Increase in operating income from the 3,000-unit special order equals $145,500 (requirement 1). The loss in operating income from selling 1,000 fewer units to regular customers equals:Lost revenue, $200 ⨯ 1,000 $(200,000)Savings in direct materials costs, $45.5 ⨯ 1,000 45,500Savings in direct manufacturing labor costs, $50 ⨯ 1,000 50,000Savings in batch manufacturing costs, $600 ⨯ 20 12,000Operating income lost $ (92,500) Accepting the special order will result in an increase in operating income of $53,000 ($145,500 –$92,500). The special order should, therefore, be accepted.3. Award Plus should accept the special order.Increase in operating income by selling 3,000 unitsunder the special order (requirement 1) $145,000Operating income lost from existing customers ($10 ⨯ 8,000)Net effect on operating income of accepting special orderThe special order should, therefore, be accepted.11-20(30 min.) Make versus buy, activity-based costing.1. The expected manufacturing cost per unit of CMCBs in 2009 is as follows:TotalManufacturing Costs of CMCB(1)Manufacturing Cost per Unit (2) = (1) ÷ 10,000Direct materials, $170 ⨯ 10,000Direct manufacturing labor, $45 ⨯ 10,000 Variable batch manufacturing costs, $1,500 ⨯ 80 Fixed manufacturing costsAvoidable fixed manufacturing costsUnavoidable fixed manufacturing costs Total manufacturing costs $1,700,000450,000120,000320,000800,000$3,390,000$1704512322. The following table identifies the incremental costs in 2009 if Svenson (a) made CMCBsand (b) purchased CMCBs from Minton.Total Incremental CostsPer-Unit Incremental CostsIncremental Items Make Buy Make Buy Cost of purchasing CMCBs from MintonDirect materialsDirect manufacturing labor Variable batch manufacturing costs Avoidable fixed manufacturing costs Total incremental costs $1,700,000450,000120,000$ 3,000,000$170451232$259$300$300Difference in favor of makingNote that the opportunity cost of using capacity to make CMCBs is zero since Svenson would keep this capacity idle if it purchases CMCBs from Minton.Svenson should continue to manufacture the CMCBs internally since the incremental costs to manufacture are $259 per unit compared to the $300 per unit that Minton has quoted. Note that the unavoidable fixed manufacturing costs of $800,000 ($80 per unit) will continue to be incurred whether Svenson makes or buys CMCBs. These are not incremental costs under either the make or the buy alternative and hence, are irrelevant.3. Svenson should continue to make CMCBs. The simplest way to analyze this problem isto recognize that Svenson would prefer to keep any excess capacity idle rather than use it to make CB3s. Why? Because expected incremental future revenues from CB3s, $2,000,000, are less than expected incremental future costs, $2,150,000. If Svenson keeps its capacity idle, we know from requirement 2 that it should make CMCBs rather than buy them.An important point to note is that, because Svenson forgoes no contribution by not being able to make and sell CB3s, the opportunity cost of using its facilities to make CMCBs is zero. It is, therefore, not forgoing any profits by using the capacity to manufacture CMCBs. If it does not manufacture CMCBs, rather than lose money on CB3s, Svenson will keep capacity idle.A longer and more detailed approach is to use the total alternatives or opportunitycost analyses shown in Exhibit 11-7 of the chapter.Choices for SvensonRelevant Items Make CMCBsand Do NotMake CB3sBuy CMCBsand Do NotMake CB3sBuy CMCBsand MakeCB3sTOTAL-ALTERNATIVES APPROACH TO MAKE-OR-BUY DECISIONS Total incremental costs ofmaking/buying CMCBs (fromrequirement 2)Excess of future costs over future revenues from CB3sTotal relevant costs $2,590,000$3,000,000$3,000,000150,000Svenson will minimize manufacturing costs by making CMCBs.OPPORTUNITY-COST APPROACH TO MAKE-OR-BUY DECISIONSTotal incremental costs ofmaking/buying CMCBs (fromrequirement 2) $2,590,000 $3,000,000 $3,000,000 Opportunity cost: profit contributionforgone because capacity will notbe used to make CB3s 0* 0* 0 Total relevant costs $2,590,000 $3,000,000 $3,000,000*Opportunity cost is 0 because Svenson does not give up anything by not making CB3s. Svenson is best off leaving the capacity idle (rather than manufacturing and selling CB3s).11-21(10 min.) Inventory decision, opportunity costs.1. Unit cost, orders of 25,000 $10.00Unit cost, order of 300,000 (0.94 ⨯ $10.00) $ 9.40Alternatives under consideration:(a) Buy 300,000 units at start of year.(b) B uy 25,000 units at start of each month.Average investment in inventory:(a) (300,000 ⨯ $9.40) ÷ 2 $1,410,000(b) ( 25,000 ⨯ $10.00) ÷ 2 125,000Difference in average investment $1,285,800Opportunity cost of interest forgone from 300,000-unit purchase at start of year= $1,285,000 ⨯ 0.10 = $128,5002. No. The $128,500 is an opportunity cost rather than an incremental or outlay cost. Noactual transaction records the $128,500 as an entry in the accounting system.3. The following table presents the two alternatives:Alternative A: Purchase300,000 spark plugs at beginning ofyear(1) Alternative B:Purchase25,000spark plugsat beginningof each month(2)Difference(3) = (1) – (2)Annual purchase-order costs(1 ⨯ $250; 12 ⨯ $250)Annual purchase (incremental) costs(300,000 ⨯ $9.40; 300,000 ⨯ $10) Annual interest income that could be earned if investment in inventory were invested (opportunity cost)(10% ⨯ $1,410,000; 10% ⨯ $150,000) Relevant costs$ 2502,820,0001,410,000$2,961,250$ 3,0003,000,00012,500$3,018,000$ (2,750)(180,000)128,500$ 54,250)Column (3) indicates that purchasing 25,000 spark plugs at the beginning of each month is not preferred relative to purchasing 300,000 spark plugs at the beginning of the year because the opportunity cost of holding larger inventory exceeds the lower purchasing and ordering costs. If other incremental benefits of holding lower inventory such as lower insurance, materials handling, storage, obsolescence, and breakage costs were considered, the costs under Alternative A would have been higher, and Alternative B would be preferred.11-22 (20–25 min.) Relevant costs, contribution margin, product emphasis.1.Cola Lemonade Punch Natural Orange JuiceSelling price $18.80 $20.00 $27.10 $39.20 Deduct variable cost per case 14.20 16.10 20.70 30.20 Contribution margin per case $ 4.60 $ 3.90 $ 6.40 $ 9.00 2. The argument fails to recognize that shelf space is the constraining factor. There are only12 feet of front shelf space to be devoted to drinks. Sexton should aim to get the highestdaily contribution margin per foot of front shelf space:Cola Lemonade Punch Natural Orange JuiceContribution margin per case $ 4.60 $ 3.90 $ 6.40 $ 9.00 Sales (number of cases) per footof shelf space per day ⨯ 25 ⨯ 24 ⨯ 4 ⨯ 5 Daily contribution per footof front shelf space $115.00 $93.60 $25.60 $45.00 3. The allocation that maximizes the daily contribution from soft drink sales is:Daily ContributionFeet of per Foot of Total ContributionShelf Space Front Shelf Space Margin per Day Cola 6 $115.00 $ 690.00 Lemonade 4 93.60 374.40 Natural Orange Juice 1 45.00 45.00 Punch 1 25.60 25.60$1,135.00The maximum of six feet of front shelf space will be devoted to Cola because it has the highest contribution margin per unit of the constraining factor. Four feet of front shelf space will be devoted to Lemonade, which has the second highest contribution margin per unit of the constraining factor. No more shelf space can be devoted to Lemonade since each of the remaining two products, Natural Orange Juice and Punch (that have the second lowest and lowest contribution margins per unit of the constraining factor) must each be given at least one foot of front shelf space.11-23(10 min.) Selection of most profitable product.Only Model 18 should be produced. The key to this problem is the relationship of manufacturing overhead to each product. Note that it takes twice as long to produce Model 3; machine-hours for Model 3 are twice that for Model 18. Management should choose the product mix that maximizes operating income for a given production capacity (the scarce resource in this situation). In this case, Model 18 will yield a $13.50 contribution to fixed costs per machine hour, and Model 3 will yield $11.50:Model 3 Model 18Selling priceVariable costs per unit (total cost – FMOH) Contribution margin per unitRelative use of machine-hours per unit of product Contribution margin per machine hour $115.0092.00$ 23.00$82.0068.50$13.5011-24 (20 min.)Which base to close, relevant-cost analysis, opportunity costs.The future outlay operating costs will be $400 million regardless of which base is closed, given the additional $100 million in costs at Everett if Alameda is closed. Further, one of the bases will permanently remain open while the other will be shut down. The only relevant revenue and cost comparisons area. $500 million from sale of the Alameda base. Note that the historical cost of buildingthe Alameda base ($100 million) is irrelevant. Note also that future increases in thevalue of the land at the Alameda base is also irrelevant.One of the bases must be keptopen, so if it is decided to keep the Alameda base open, the Defense Department willnot be able to sell this land at a future date.b. $60 million in savings in fixed income note if the Everett base is closed. Again, thehistorical cost of building the Everett base ($150 million) is irrelevant.The relevant costs and benefits analysis favors closing the Alameda base despite the objections raised by the California delegation in Congress. The net benefit equals $440 ($500 –$60) million.11-25(25 30 min.) Closing and opening stores.Note: This solution is based off of the problem update listed on the errata sheet in the front matter of this solution manual.1. Solution Exhibit 11-25, Column 1, presents the relevant loss in revenues and the relevantsavings in costs from closing the Utah store. Sanchez is correct that Gamanche Corporation’s operating income would increase by $3,000 if it closes down the Utah store. Closing down the Utah store results in a loss of revenues of $980,000 but cost savings of $983,000 (from cost of goods sold, rent, labor, utilities, and corporate costs). Note that by closing down the Utah store, Gamanche Corporation will save none of the equipment-related costs because this is a past cost. Also note that the relevant corporate overhead costs are the actual corporate overhead costs $80,000 that Gamanche expects to save by closing the Utah store. The corporate overhead of $60,000 allocated to the Utah store is irrelevant to the analysis.2. Solution Exhibit 11-25, Column 2, presents the relevant revenues and relevant costs ofopening another store like the Utah store. Sanchez is correct that opening such a store would increase Gamanche Corporation’s operating income by $27,000. Incremental revenues of $980,000 exceed the incremental costs of $953,000 (from higher cost of goods sold, rent, labor, utilities, and some additional corporate costs). Note that the cost of equipment written off as depreciation is relevant because it is an expected future cost that Sanchez will incur only if it opens the new store. Also note that the relevant corporate overhead costs are the $8,000 of actual corporate overhead costs that Gamanche expects to incur as a result of opening the new store. Gamanche may, in fact, allocate more than $8,000 of corporate overhead to the new store but this allocation is irrelevant to the analysis.The key reason that Gamanche Corporation’s operating income increases either if it closes down the Utah store or if it opens another store like it is the behavior of corporate overhead costs. By closing down the Utah store, Gamanche can significantly reduce corporate overhead costs presumably by reducing the corporate staff that oversees the Utah operation. On the other hand, adding another store like Utah does not increase actual corporate costs by much, presumably because the existing corporate staff will be able to oversee the new store as well.SOLUTION EXHIBIT 11-25Relevant-Revenue and Relevant-Cost Analysis of Closing Utah Store and Opening Another Store Like It.(Loss in Revenues) and Savings in Costs from Closing Utah Store(1)Incremental Revenues and (Incremental Costs) of Opening New Store Like Utah Store(2)Revenues $(980,000) $980,000 Cost of goods sold680,000(680,000) Lease rent95,000 (95,000) Labor costs62,000(62,000) Depreciation of equipment0(42,000) Utilities (electricity, heating)66,000(66,000) Corporate overhead costs 80,000 (8,000) Total costs 983,000(953,000) Effect on operating income (loss)$ 3,000$ 27,00011-26 (20 min.)Choosing customers.If Broadway accepts the additional business from Kelly, it would take an additional 500 machine-hours. If Broadway accepts all of Kelly’s and Taylor’s business for February, it would require 2,500 machine-hours (1,500 hours for Taylor and 1,000 hours for Kelly). Broadway has only 2,000 hours of machine capacity. It must, therefore, choose how much of the Taylor or Kelly business to accept.To maximize operating income, Broadway should maximize contribution margin per unit of the constrained resource. (Fixed costs will remain unchanged at $100,000 regardless of the business Broadway chooses to accept in February, and is, therefore, irrelevant.) The contribution margin per unit of the constrained resource for each customer in January is:Taylor KellySince the $80,000 of additional Kelly business in February is identical to jobs done in January, it will also have a contribution margin of $64 per machine-hour, which is greater than the contribution margin of $52 per machine-hour from Taylor. To maximize operating income, Broadway should first allocate all the capacity needed to take the Kelly Corporation business (1,000 machine-hours) and then allocate the remaining 1,000 (2,000 – 1,000) machine-hours to Taylor.Taylor KellyCorporation Corporation Total Contribution margin per machine-hour $52 $64Machine-hours to be worked ⨯ 1,000 ⨯ 1,000Contribution margin $52,000 $64,000 $116,000Fixed costsOperating income11-27(30–40 min.) Relevance of equipment costs.1a. Statements of Cash Receipts and DisbursementsKeep Buy New MachineYear 1 EachYear2, 3, 4FourYearsTogether Year 1EachYear2, 3, 4FourYearsTogetherReceipts from operations:RevenuesDeduct disbursements:Other operating costsOperation of machinePurchase of “old” machinePurchase of “new” equipment Cash inflow from sale of old equipmentNet cash inflow $170,000(115,000)(20,000)(25,000)*$ 10,000$170,000(115,000)(20,000)$ 35,000$680,000(460,000)(80,000)(25,000)$ 115,000$170,000(115,000)(14,000)(25,000)(29,000)8,000$ (5,000)$170,000(115,000)(14,000)$ 41,000$680,000(460,000)(56,000)(25,000)(29,000)8,000$ 118,000*Some students ignore this item because it is the same for each alternative. However, note that a statement for the entire year has been requested. Obviously, the $25,000 would affect Year 1 only under both the “keep” and “buy”alternatives.The difference is $8,000 for four years taken together. In particular, note that the $25,000 book value can be omitted from the comparison. Merely cross out the entire line; although the column totals are affected, the net difference is still $8,000.1b. Again, the difference is $8,000:Income StatementsKeep Buy New MachineEach Year 1, 2, 3, 4FourYearsTogether Year 1EachYear2, 3, 4Four YearsTogetherRevenuesCosts (excluding disposal):Other operating costsDepreciationOperating costs of machineTotal costs (excluding disposal) Loss on disposal:Book value (“cost”)Proceeds (“revenue”)Loss on disposalTotal costsOperating income $170,000115,0006,25020,000141,250141,250$ 28,750$680,000460,00025,00080,000565,000565,000$115,000$170,000115,0007,25014,000136,25025,000(8,000)17,000153,250$ 16,750$170,000115,0007,25014,000136,250136,250$ 33,750$680,000460,00029,00056,000545,00025,000*(8,000)17,000562,000$ 118,000*As in part (1), the $25,000 book value may be omitted from the comparison without changing the $8,000 difference. This adjustment would mean excluding the depreciation item of $6,250 per year (a cumulative effect of $25,000) under the “keep” alternative and excluding the book value item of $25,000 in the loss on disposal computation under the “buy” alternative.1c.The $25,000 purchase cost of the old equipment, the revenues, and the other operating costs are irrelevant because their amounts are common to both alternatives.2.The net difference would be unaffected. Any number may be substituted for the original$25,000 figure without changing the final answer. Of course, the net cash outflows under both alternatives would be high. The Clean Car manager really blundered. However, keeping the old equipment will increase the cost of the blunder to the cumulative tune of $8,000 over the next four years.3. Book value is irrelevant in decisions about the replacement of equipment, because it is apast (historical) cost. All past costs are down the drain. Nothing can change what has already been spent or what has already happened. The $25,000 has been spent. How it is subsequently accounted for is irrelevant. The analysis in requirement (1) clearly shows that we may completely ignore the $25,000 and still have a correct analysis. The only relevant items are those expected future items that will differ among alternatives.Despite the economic analysis shown here, many managers would keep the old machine rather than replace it. Why? Because, in many organizations, the income statements of part (2) would be a principal means of evaluating performance. Note that the first-year operating in come would be higher under the “keep”alternative. The conventional accrual accounting model might motivate managers toward maximizing their first-year reported operating income at the expense of long-run cumulative betterment for the organization as a whole. This criticism is often made of the accrual accounting model. That is, the action favored by the “correct” or “best”economic decision model may not be taken because the performance-evaluation model is either inconsistent with the decision model or because the focus is on only the short-run part of the performance-evaluation model.There is yet another potential conflict between the decision model and the performance evaluation model. Replacing the machine so soon after it is purchased may reflect badly on the manager’s capabilities and performance. Why didn’t the manager search and find the new machine before buying the old machine? Replacing the old machine one day later at a loss may make the manager appear incompetent to his or her superiors. If the manager’s bosses have no knowledge of the better machine, the manager may prefer to keep the existing machine rather than alert his or her bosses about the better machine.。

管理会计英文版课后习题答案第二章产品成本计算Exercises2–1（指教材上的第2章练习第1题，下同）1. Part #72A Part #172CSteel* $ 12.00 $ 18.00Setup cost** 6.00 6.00Total $ 18.00 $ 24.00*($1.00 ? 12; $1.00 ? 18)**($60,000/10,000)Steel cost is assigned by calculating a cost per ounce and then multiplying this by the ounces used by each part: Cost per ounce = $3,000,000/3,000,000 ounces= $1.00 per ounceSetup cost is assigned by calculating the cost per setup and then dividing this by the number of units in each batch (there are 20 setups per year):Cost per setup = $1,200,000/20= $60,0002. The cost of steel is assigned through the driver tracing using thenumber of ounces of steel, and the cost of the setups is assigned through driver tracing also using number of setups as the driver.3. The assumption underlying number of setups as the driver is thateach part uses an equal amount of setup time. Since Part #72A uses double the setup time of Part #172C, it makes sense to assign setup costs based on setup time instead of number ofsetups. This illustrates the importance of identifying drivers that reflect the true underlying consumption pattern. Using setup hours [(40 ? 10) + (20 ?10)], we get the following rate per hour:Cost per setup hour = $1,200,000/600= $2,000 per hourThe cost per unit is obtained by dividing each part’s total setup costs by the number of units:Part #72A = ($2,000 ? 400)/100,000 = $8.00Part #172C = ($2,000 ? 200)/100,000 = $4.00Thus, Part #72A has its unit cost increased by $2.00, while Part #172C has its unit cost decreased by $2.00.problems2–51. Nursing hours required per year: 4 ? 24 hours ? 364 days* = 34,944*Note: 364 days = 7 days ? 52 weeksNumber of nurses = 34,944 hrs./2,000 hrs. per nurse = 17.472 Annual nursing cost = (17 ? $45,000) + $22,500= $787,500Cost per patient day = $787,500/10,000 days= $78.75 per day (for either type of patient)2. Nursing hours act as the driver. If intensive care uses half of thehours and normal care the other half, then 50 percent of the cost is assigned to each patient category. Thus, the cost per patient day by patient category is as follows:Intensive care = $393,750*/2,000 days= $196.88 per dayNormal care = $393,750/8,000 days= $49.22 per day*$525,000/2 = $262,500The cost assignment reflects the actual usage of the nursing resource and, thus, should be more accurate. Patient days would be accurate only if intensive care patients used the same nursing hours per day as normal care patients.3. The salary of the nurse assigned only to intensive care is a directlytraceable cost. To assign the other nursing costs, the hours of additional usage would need to be measured. Thus, both direct tracing and driver tracing would be used to assign nursing costs for this new setting.2–61. Bella Obra CompanyStatement of Cost of Services SoldFor the Year Ended June 30, 2006 Direct materials:.............................................................................. Beginninginventory .............................................................. $ 300,000.............................................................................. Add: Purchases 600, .............................................................................. Materials available $ 900, .............................................................................. Less: Ending inventory .............................................................. 450,000*Direct materials used .......................................... $ 450,000 Direct labor .......................................................... 12,000,0 Overhead .............................................................. 1,500,00 Total service costs added .................................. $ 13,950,0 Add: Beginning work in process ....................... 900,000 Total production costs ........................................ $ 14,850,0 Less: Ending work in process ........................... 1,500,00 Cost of services sold .......................................... $ 13,350,0 *Materials available lessmaterials used2. The dominant cost is direct labor (presumably the salaries of the 100professionals). Although labor is the major cost of providing manyservices, it is not always the case. For example, the dominant costfor some medical services may be overhead (e.g., CAT scans). Insome services, the dominant cost may be materials (e.g., funeralservices).3. Bella Obra CompanyIncome StatementFor the Year Ended June 30, 2006 Sales ..................................................................... $ 21,000,0 Cost of services sold .......................................... 13,350,0 Gross margin ....................................................... $ 7,650,00 Less operating expenses:.............................................................................. Selling expenses $ 900, .............................................................................. Administrative expenses ............................................................................................................................... 750,000.............................................................. 1,650,000Income before income taxes .............................. $ 6,000,00 4. Services have four attributes that are not possessed by tangible products: (1) intangibility, (2) perishability, (3) inseparability, and (4)heterogeneity. Intangibility means that the buyers of services cannotsee, feel, hear, or taste a service before it is bought. Perishabilitymeans that services cannot be stored. This property affects thecomputation in Requirement 1. Inability to store services means thatthere will never be any finished goods inventories, thus making thecost of services produced equivalent to cost of services sold.Inseparability simply means that providers and buyers of servicesmust be in direct contact for an exchange to take place.Heterogeneity refers to the greater chance for variation in theperformance of services than in the production of tangible products.2–71. Direct materials:Magazine (5,000 ? $0.40) $ 2,000Brochure (10,000 ? $0.08) 800 $ 2,800 Direct labor:Magazine [(5,000/20) ? $10] $ 2,500Brochure [(10,000/100) ? $10] 1,000 3,500 Manufacturing overhead:Rent $ 1,400Depreciation [($40,000/20,000) ? 350*] 700Setups 600Insurance 140Power 350 3,190 Cost of goods manufactured $ 9,490*Production is 20 units per printing hour for magazines and 100units per printing hour for brochures, yielding monthly machinehours of 350 [(5,000/20) + (10,000/100)]. This is also monthly laborhours, as machine labor only operates the presses.2. Direct materials $ 2,800Direct labor 3,500Total prime costs $ 6,300Magazine:Direct materials $ 2,000Direct labor 2,500Total prime costs $ 4,500Brochure:Direct materials $ 800Direct labor 1,000Total prime costs $ 1,800Direct tracing was used to assign prime costs to the two products.3. Total monthly conversion cost:Direct labor $ 3,500Overhead 3,190Total $ 6,690Magazine:Direct labor $ 2,500 Overhead:Power ($1 ? 250) $ 250Depreciation ($2 ? 250) 500Setups (2/3 ? $600) 400Rent and insurance ($4.40 ? 250 DLH)* 1,100 2,250 Total $ 4,750 Brochure:Direct labor $ 1,000 Overhead:Power ($1 ? 100) $ 100Depreciation ($2 ? 100) 200Setups (1/3 ? $600) 200Rent and insurance ($4.40 ? 100 DLH)* 440 940 Total $ 1,940 *Rent and insurance cannot be traced to each product so the costsare assigned using direct labor hours: $1,540/350 DLH = $4.40 perdirect labor hour. The other overhead costs are traced according totheir usage. Depreciation and power are assigned by using machine hours (250 for magazines and 100 for brochures): $350/350 = $1.00 per machine hour for power and $40,000/20,000 = $2.00 per machine hour for depreciation. Setups are assigned according to the time required. Since magazines use twice as much time, they receive twice the cost: Letting X = the proportion of setup time used for brochures, 2X + X = 1 implies a cost assignment ratio of 2/3 for magazines and 1/3 for brochures.Exercises3–11. Resource Total Cost Unit CostPlastic1$ 10,800 $0.027Direct labor andvariable overhead28,000 0.020Mold sets320,000 0.050Other facility costs410,000 0.025 Total $ 48,800 $0.12210.90 ? $0.03 ? 400,000 = $10,800; $10,800/400,000 = $0.0272$0.02 ? 400,000 = $8,000; $8,000/400,000 = $0.023$5,000 ? 4 quarters = $20,000; $20,000/400,000 = $0.054$10,000; $10,000/400,000 = $0.0252. Plastic, direct labor, and variable overhead are flexible resources;molds and other facility costs are committed resources. The cost of plastic, direct labor, and variable overhead are strictly variable. The cost of the molds is fixed for the particular action figure being produced; it is a step cost for the production of action figures in general. Other facility costs are strictly fixed.3–3High (1,400, $7,950); Low (700, $5,150)V = ($7,950 – $5,150)/(1,400 – 700)= $2,800/700 = $4 per oil changeF = $5,150 – $4(700)= $5,150 – $2,800 = $2,350Cost = $2,350 + $4 (oil changes)Predicted cost for January = $2,350 + $4(1,000) = $6,350problems3–61. High (1,700, $21,000); Low (700, $15,000)V = (Y2– Y1)/(X2– X1)= ($21,000 – $15,000)/(1,700 – 700) = $6 per receiving orderF = Y2– VX2= $21,000 – ($6)(1,700) = $10,800Y = $10,800 + $6X2. Output of spreadsheet regression routine with number of receivingorders as the independent variable:Constant 4512.98701298698 Std. Err. of Y Est. 3456.24317476605 R Squared 0.633710482694768 No. of10ObservationsDegrees of8 FreedomX Coefficient(s) 13.3766233766234Std. Err. of Coef. 3.59557461331427V = $13.38 per receiving order (rounded)F = $4,513 (rounded)Y = $4,513 + $13.38XR2 = 0.634, or 63.4%Receiving orders explain about 63.4 percent of the variability in receiving cost, providing evidence that Tracy’s choi ce of a cost driver is reasonable. However, other drivers may need to be considered because 63.4 percent may not be strong enough to justify the use of only receiving orders.3. Regression with pounds of material as the independent variable:Constant 5632.28109733183 Std. Err. of Y Est. 2390.10628259277 R Squared 0.824833789433823 No. of10ObservationsDegrees of8 FreedomX Coefficient(s) 0.0449642991356633Std. Err. of Coef. 0.0073259640055344V = $0.045 per pound of material delivered (rounded)F = $5,632 (rounded)Y = $5,632 + $0.045XR2 = 0.825, or 82.5%Pounds of material delivered explains about 82.5 percent of the variability in receiving cost. This is a better result than that ofthe receiving orders and should convince Tracy to try multiple regression.4. Regression routine with pounds of material and number of receiving orders as the independent variables:Constant 752.104072925631 Std. Err. of Y Est. 1350.46286973443 R Squared 0.951068418023306 No. of10ObservationsDegrees of7 FreedomX Coefficient(s) 0.0333883151096915 7.14702865269395 Std. Err. of Coef. 0.00495524841198368 1.68182916088492 V1= $0.033 per pound of material delivered (rounded)V2= $7.147 per receiving order (rounded)F = $752 (rounded)Y = $752 + $0.033a + $7.147bR2= 0.95, or 95%Multiple regression with both variables explains 95 percent of thevariability in receiving cost. This is the best result.5–21. Job #57 Job #58 Job #59Balance, 7/1 $ 22,450 $ 0 $ 0Direct materials 12,900 9,900 35,350Direct labor 20,000 6,500 13,000Applied overhead:Power 750 600 3,600Material handling 1,500 300 6,000Purchasing 250 1,000 250 Total cost $ 57,850 $ 18,300 $ 58,2002. Ending balance in Work in Process = Job #58 = $18,3003. Ending balance in Finished Goods = Job #59 = $58,2004. Cost of Goods Sold = Job #57 = $57,850problems5–31. Overhead rate = $180/$900 = 0.20 or 20% of direct labor dollars.(This rate was calculated using information from the Ladan job;however, the Myron and Coe jobs would give the same answer.)2. Ladan Myron Coe Walker WillisBeginning WIP $ 1,730 $1,180 $2,500 $ 0 $ 0 Direct materials 400 150 260 800 760 Direct labor 800 900 650 350 900 Applied overhead 160 180 130 70 180 Total $ 3,090 $2,410 $3,540 $ 1,220 $ 1,840 Note: This is just one way of setting up the job-order cost sheets.You might prefer to keep the detail on the materials, labor, andoverhead in beginning inventory costs.3. Since the Ladan and Myron jobs were completed, the others muststill be in process. Therefore, the ending balance in Work in Process is the sum of the costs of the Coe, Walker, and Willis jobs.Coe $3,540Walker 1,220Willis 1,840Ending Work in Process $6,600Cost of Goods Sold = Ladan job + Myron job = $3,090 + $2,410 = $5,5004. Naman CompanyIncome StatementFor the Month Ended June 30, 20XXSales (1.5 ? $5,500) ................................................................... $8,250 Cost of goods sold ................................................................... 5,500 Gross margin ............................................................................ $2,750 Marketing and administrative expenses ................................ 1,200 Operating income ..................................................................... $1,550 5–201. Overhead rate = $470,000/50,000 = $9.40 per MHr2. Department A: $250,000/40,000 = $6.25 per MHrDepartment B: $220,000/10,000 = $22.00 per MHr3. Job #73 Job #74Plantwide:70 ? $9.40 = $658 70 ? $9.40 = $658Departmental:20 ? $6.25 $ 125.00 50 ? $6.25 $ 312.5050 ? $22 1,100.00 20 ? $22 440.00$ 1,225.00 $ 752.50Department B appears to be more overhead intensive, so jobs spending more time in Department B ought to receive more overhead. Thus, departmental rates provide more accuracy.4. Plantwide rate: $250,000/40,000 = $6.25Department B: $62,500/10,000 = $6.25Job #73 Job #74Plantwide:70 ? $6.25 = $437.50 70 ? $6.25 = $437.50Departmental:20 ? $6.25 $ 125.00 50 ? $6.25 $ 312.5050 ? $6.25 312.50 20 ? $6.25 125.00$ 437.50 $ 437.50 Assuming that machine hours is a good cost driver, the departmental rates reveal that overhead consumption is the same in each department. In this case, there is no need for departmental rates, anda plantwide rate is sufficient.5–41. Overhead rate = $470,000/50,000 = $9.40 per MHr2. Department A: $250,000/40,000 = $6.25 per MHrDepartment B: $220,000/10,000 = $22.00 per MHr3. Job #73 Job #74Plantwide:70 ? $9.40 = $658 70 ? $9.40 = $658Departmental:20 ? $6.25 $ 125.00 50 ? $6.25 $ 312.5050 ? $22 1,100.00 20 ? $22 440.00$ 1,225.00 $ 752.50 Department B appears to be more overhead intensive, so jobs spending more time in Department B ought to receive more overhead. Thus, departmental rates provide more accuracy.4. Plantwide rate: $250,000/40,000 = $6.25Department B: $62,500/10,000 = $6.25Job #73 Job #74Plantwide:70 ? $6.25 = $437.50 70 ? $6.25 = $437.50Departmental:20 ? $6.25 $ 125.00 50 ? $6.25 $ 312.5050 ? $6.25 312.50 20 ? $6.25 125.00$ 437.50 $ 437.50 Assuming that machine hours is a good cost driver, the departmental rates reveal that overhead consumption is the same in each department. In this case, thereis no need for departmental rates, anda plantwide rate is sufficient.5–51. Last year’s unit-based overhead rate = $50,000/10,000 = $5This year’s unit-based overhead rate = $100,000/10,000 = $10Last Year This Year Bike cost:2 ? $20 $ 40 $ 403 ? $12 36 36Overhead:5 ? $5 255 ? $10 50Total $101 $126P rice last year = $101 ? 1.40 = $141.40/dayPrice this year = $126 ? 1.40 = $176.40/dayThis is a $35 increase over last year, nearly a 25 percent increase. No doubt the Carsons are not pleased and would consider looking around for other recreational possibilities.2. Purchasing rate = $30,000/10,000 = $3 per purchase orderPower rate = $20,000/50,000 = $0.40 per kilowatt hourMaintenance rate = $6,000/600 = $10 per maintenance hour Other rate = $44,000/22,000 = $2 per DLHBike Rental Picnic Catering Purchasing$3 ? 7,000 $21,000$3 ? 3,000 $ 9,000 Power$0.40 ? 5,000 2,000$0.40 ? 45,000 18,000 Maintenance$10 ? 500 5,000$10 ? 100 1,000 Other$2 ? 11,000 22,000 22,000 Total overhead $50,000 $50,000 3. This year’s bike rental overhead rate = $50,000/10,000 = $5 Carson rental cost = (2 ? $20) + (3 ? $12) + (5 ? $5) = $101 Price = 1.4 ? $101 = $141.40/day4. Catering rate = $50,000/11,000 = $4.55* per DLHCost of Estes job:Bike rental rate (2 ? $7.50) $15.00Bike conversion cost (2 ? $5.00) 10.00Catering materials 12.00Catering conversion (1 ? $4.55) 4.55Total cost $41.55*Rounded5. The use of ABC gives Mountain View Rentals a better idea of thetypes and costs of activities that are used in their business. Adding Level 4 bikes will increase the use of the most expensive activities, meaning that the rental rate will no longer be an average of $5 per rental day. Mountain View Rentals might need to set a Level 4 price based on the increased cost of both the bike and conversion cost.分步成本法6–11. C utting Sewing PackagingDepartment Department Department Direct materials $5,400 $ 900 $ 225 Direct labor 150 1,800 900 Applied overhead 750 3,600 900 Transferred-in cost:From cutting 6,300From sewing 12,600 Total manufacturing cost $6,300 $12,600 $14,625 2. a. Work in Process—Sewing ................. 6,300 Work in Process—Cutting .......... 6,300b. Work in Process—Packaging ............ 12,600Work in Process—Sewing .......... 12,600c. Finished Goods ................................... 14,625Work in Process—Packaging ..... 14,6253. Unit cost = $14,625/600 = $24.38* per pair6–21. Units transferred out: 27,000 + 33,000 – 16,200 = 43,8002. Units started and completed: 43,800 – 27,000 = 16,8003. Physical flow schedule:Units in beginning work in process 27,000Units started during the period 33,000 Total units to account for 60,000 Units started and completed 16,800Units completed from beginning work in process 27,000Units in ending work in process 16,200 Total units accounted for 60,0004. Equivalent units of production:Materials Conversion Units completed 43,800 43,800 Add: Units in ending work in process:(16,200 ? 100%) 16,200(16,200 ? 25%) 4,050 Equivalent units of output 60,000 47,850 6–31. Physical flow schedule:Units to account for:Units in beginning work in process 80,000 Units started during the period 160,000 Total units to account for 240,000 Units accounted for:Units completed and transferred out:Started and completed 120,000From beginning work in process 80,000 200,000 Units inending work in process 40,000 Total units accounted for 240,000 2. Units completed 200,000Add: Units in ending WIP ? Fraction complete(40,000 ? 20%) 8,000 Equivalent units of output 208,0003. Unit cost = ($374,400 + $1,258,400)/208,000 = $7.854. Cost transferred out = 200,000 ? $7.85 = $1,570,000Cost of ending WIP = 8,000 ? $7.85 = $62,8005. Costs to account for:Beginning work in process $ 374,400Incurred during June 1,258,400Total costs to account for $ 1,632,800Costs accounted for:Goods transferred out $ 1,570,000Goods in ending work in process 62,800 Total costs accounted for $ 1,632,8006–31、Units t0 account for:Units in beginning work in process(25% completed) 10000 Units started during the period 70000 Total units to account for 80000 Units accounted forUnits completed and transferred outStarted and completed 50000From beginning work in process 10000 60000 Units in ending work in process(60% completed) 20000 Total units accounted for 80000 2、60000+20000×60%=72000（units ） 3、Unit cost for materials:4900035100056000020000+=+（$/unit ）Unit cost for convension:2625787351.136000012000+=+（$/unit ）Total unit cost:5+1.13=6.13（$/unit ）4、The cost of units of transferred out:60000×6.13=367800($)The cost of units of ending work in process:20000×5+20000×20%×1.13=113560($)作业成本法4–21. Predetermined rates:Drilling Department: Rate = $600,000/280,000 = $2.14* per MHrAssembly Department: Rate = $392,000/200,000= $1.96 per DLH*Rounded2. Applied overhead:Drilling Department: $2.14 ? 288,000 = $616,320Assembly Department: $1.96 ? 196,000 = $384,160Overhead variances:Drilling Assembly Total Actual overhead $602,000 $ 412,000 $ 1,014,000 Applied overhead 616,320 384,160 1,000,480 Overhead variance $ (14,320) over $ 27,840 under $ 13,520 3. Unit overhead cost = [($2.14 ? 4,000) + ($1.96 ? 1,600)]/8,000 = $11,696/8,000= $1.46**Rounded4–31. Yes. Since direct materials and direct labor are directly traceable toeach product, their cost assignment should be accurate.2. Elegant: (1.75 ? $9,000)/3,000 = $5.25 per briefcaseFina: (1.75 ? $3,000)/3,000 = $1.75 per briefcaseNote: Overhead rate = $21,000/$12,000 = $1.75 per direct labor dollar (or 175 percent of direct labor cost).There are more machine and setup costs assigned to Elegant thanFina. This is clearly a distortion because the production of Fina isautomated and uses the machine resources much more than thehandcrafted Elegant. In fact, the consumption ratio for machining is0.10 and 0.90 (using machine hours as the measure of usage). Thus,Fina uses nine times the machining resources as Elegant. Setupcosts are similarly distorted. The products use an equal number of setups hours. Yet, if direct labor dollars are used, then the Elegant briefcase receives three times more machining costs than the Finabriefcase.3. Overhead rate = $21,000/5,000= $4.20 per MHrElegant: ($4.20 ? 500)/3,000 = $0.70 per briefcaseFina: ($4.20 ? 4,500)/3,000 = $6.30 per briefcaseThis cost assignment appears more reasonable given the relativedemands each product places on machine resources. However, oncea firm moves to a multiproduct setting, using only one activity driverto assign costs will likely produce product cost distortions. Productstend to make different demands on overhead activities, and thisshould be reflected in overhead cost assignments. Usually, thismeans the use of both unit- and nonunit-level activity drivers. In thisexample, there is a unit-level activity (machining) and a nonunit-levelactivity (setting up equipment). The consumption ratios for each(using machine hours and setup hours as the activity drivers) are asfollows:Elegant FinaMachining 0.10 0.90 (500/5,000 and4,500/5,000)Setups 0.50 0.50 (100/200 and 100/200)Setup costs are not assigned accurately. Two activity rates are needed—one based on machine hours and the other on setup hours:Machine rate: $18,000/5,000 = $3.60 per MHrSetup rate: $3,000/200 = $15 per setup hourCosts assigned to each product:Machining: Elegant Fina$3.60 ? 500 $ 1,800$3.60 ? 4,500 $ 16,200Setups:$15 ? 100 1,500 1,500Total $ 3,300 $ 17,700Units ÷3,000 ÷3,000Unit overhead cost $ 1.10 $ 5.904：Elegant Unit overhead cost：[9000+3000+18000*500/5000+3000/2]/3000=$5.1 Fina Unit overhead cost：[3000+3000+18000*4500/5000+3000/2]/3000=$7.94–51. Deluxe Percent Regular PercentPrice $900 100% $750 100%Cost 576 64 600 80Unit gross profit $324 36% $150 20% Total gross profit:($324 ? 100,000) $32,400,000($150 ? 800,000) $120,000,000 2. Calculation of unit overhead costs:Deluxe gularUnit-level:Machining:$200 ? 100,000 $20,000,000$200 ? 300,000 $60,000,000 Batch-level:Setups:$3,000 ? 300 900,000$3,000 ? 200 600,000 Packing:$20 ? 100,000 2,000,000$20 ? 400,000 8,000,000 Product-level:Engineering:$40 ? 50,000 2,000,000$40 ? 100,000 4,000,000 Facility-level:Providing space:$1 ? 200,000 200,000$1 ? 800,000 800,000 Total overhead $25,100,000 $73,400,000 Units ÷100,000 ÷ 800,000 Overhead per unit $251 $91.75Deluxe Percent Regular Percent Price $900 100% $750.00 100% Cost 780* 87*** 574.50** 77*** Unit gross profit $120 13%*** $175.50 23%*** Total gross profit:($120 ? 100,000) $12,000,000($175.50 ? 800,000) $140,400,000*$529 + $251**$482.75 + $91.753. Using activity-based costing, a much different picture of the deluxeand regular products emerges. The regular model appears to be more profitable. Perhaps it should be emphasized.4–61. JIT Non-JITSales a$12,500,000 $12,500,000Allocation b750,000 750,000a$125 ?100,000, where $125 = $100 + ($100 ?0.25), and 100,000 is the average order size times the number of orders b0.50 ? $1,500,0002. Activity rates:Ordering rate = $880,000/220 = $4,000 per sales orderSelling rate = $320,000/40 = $8,000 per sales callService rate = $300,000/150 = $2,000 per service callJIT Non-JIT Ordering costs:$4,000 ? 200 $ 800,000$4,000 ? 20 $ 80,000 Selling costs:$8,000 ? 20 160,000$8,000 ? 20 160,000 Service costs:$2,000 ? 100 200,000$2,000 ? 50 100,000 T otal $1,160,000 $340,0 0For the non-JIT customers, the customer costs amount to $750,000/20 = $37,500 per order under the original allocation. Using activity assignments, this drops to $340,000/20 = $17,000 per order, a difference of $20,500 per order. For an order of 5,000 units, the order price can be decreased by $4.10 per unit without affecting customer profitability. Overall profitability will decrease, however, unless the price for orders is increased to JIT customers.3. It sounds like the JIT buyers are switching their inventory carryingcosts to Emery without any significant benefit to Emery. Emery needs to increase prices to reflect the additional demands on customer-support activities. Furthermore, additional price increases may be needed to reflect the increased number of setups, purchases, and so on, that are likely occurring inside the plant. Emery should also immediately initiate discussions with its JIT customers to begin negotiations for achieving some of the benefits that a JIT supplier should have, such as long-term contracts. The benefits of long-term。