Managerial Accounting
15th Edition
ISBN: 9781337912020
Author: Carl Warren, Ph.d. Cma William B. Tayler
Publisher: South-Western College Pub
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Textbook Question
Chapter 2, Problem 3TIF
Communication
Carol Creedence, the plant manager of the Clearwater Company’s Revival plant, has prepared the following graph of the unit costs from the
Carol is concerned about the erratic and increasing cost of Product CCR and has asked for your help. Prepare a one-half page memo to Carol, interpreting this graph and requesting any additional information that might be needed to explain this situation.
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Carol Creedence, the plant manager of the Clearwater Company’s Revival plant, has prepared the following graph of the unit costs from the job cost reports for the plant’s highest volume product, Product CCR:
Attachment
Carol is concerned about the erratic and increasing cost of Product CCR and has asked for your help. Prepare a half-page memo to Carol, interpreting this graph and requesting any additional information that might be needed to explain this situation.
Question 2: Walker Co. designs and builds computer servers for data centers. They use job costing to determine the cost of
the systems that they install which consist of server racks. Each system requires a different number of server racks to be installed.
Use the forecasts below to determine the total cost of each customer's system.
One manager must be hired for every twenty direct labor hours that will be spent on installations in total (round up for fractions),
and the advertising expenses are used to run local television advertisements in the hopes of enticing new business.
The cost of a typical project is shown below, along with details about several customer orders.
Direct Materials
$5,000 per server rack
Direct Labor
$60 per hour
$3,000 per person
Manager Salary
Advertising Expenses
$10,000 per month
Direct Labor Time
2 hours per server rack
Customers
Alice
Ben
Chris
Doris
Hours
Alice
Ben
Chris
Doris
Size of System in Racks
10
4
15
20
14
30
(A) What driver should Walker Co. use…
Using job order costing in a service company
Chance Realtors, a real estate consulting firm, specializes in advising companies on potential new plant sites. The company uses a job order costing system with a predetermined overhead allocation rate, computed as a percentage of direct labor costs.
At the beginning of 2018, managing partner Andrew Chance prepared the following budget for the year:
Maynard Manufacturing, Inc. is inviting several consultants to bid for work. Andrew Chance wants to submit a bid. He estimates that this job will require about 180 direct labor hours.
Requirements
Compute Chance Realtors’ (a) hourly direct labor cost rate and predetermined overhead allocation rate.
Compute the predicted cost of the Maynard Manufacturing job.
If Chance wants to earn a profit that equals 25% of the job’s cost, how much should he bid for the Maynard Manufacturing job?
Chapter 2 Solutions
Managerial Accounting
Ch. 2 - A. Name two principal types of cost accounting...Ch. 2 - What kind of firm would use a job order cost...Ch. 2 - Which account is used in the job order cost system...Ch. 2 - What document is the source for (A) debiting the...Ch. 2 - What is a job cost sheet?Ch. 2 - Prob. 6DQCh. 2 - Discuss how the predetermined factory overhead...Ch. 2 - A. How is a predetermined factory overhead rate...Ch. 2 - Prob. 9DQCh. 2 - Describe how a job order cost system can be used...
Ch. 2 - Issuance of materials On May 7, Bergan Company...Ch. 2 - Direct labor costs During May, Bergan Company...Ch. 2 - Factory overhead costs During May, Bergan Company...Ch. 2 - Applying factory overhead Bergan Company estimates...Ch. 2 - Job costs At the end of May, Bergan Company had...Ch. 2 - Cost of goods sold Pine Creek Company completed...Ch. 2 - Transactions in a job order cost system Five...Ch. 2 - The following information is available for the...Ch. 2 - Cost of materials issuances under the FIFO method...Ch. 2 - Materials issued are as follows: Journalize the...Ch. 2 - Kingsford Furnishings Company manufactures...Ch. 2 - A summary of the time tickets is as follows:...Ch. 2 - Entry for factory labor costs The weekly time...Ch. 2 - Schumacher Industries Inc. manufactures...Ch. 2 - Eclipse Solar Company operates two factories. The...Ch. 2 - Exotic Engine Shop uses a job order cost system to...Ch. 2 - Predetermined factory overhead rate Poehling...Ch. 2 - The following account appears in the ledger prior...Ch. 2 - Collegiate Publishing Inc. began printing...Ch. 2 - The following events took place for Rushmore...Ch. 2 - Job order cost accounting for a service company...Ch. 2 - Job order cost accounting for a service company...Ch. 2 - Barnes Company uses a job order cost system. The...Ch. 2 - Entries and schedules for unfinished jobs and...Ch. 2 - Job cost sheet Remnant Carpet Company sells and...Ch. 2 - Analyzing manufacturing cost accounts Fire Rock...Ch. 2 - Prob. 5PACh. 2 - Entries for costs in a job order cost system Royal...Ch. 2 - Entries and schedules for unfinished jobs and...Ch. 2 - Job cost sheet Stretch and Trim Carpet Company...Ch. 2 - Analyzing manufacturing cost accounts Clapton...Ch. 2 - Flow of costs and income statement Technology...Ch. 2 - Antolini Enterprises produces mens sports coats...Ch. 2 - Alvarez Manufacturing Inc. is a job shop. The...Ch. 2 - Prob. 3MADCh. 2 - Prob. 4MADCh. 2 - Ethics in Action TAC Industries Inc. sells heavy...Ch. 2 - Prob. 2TIFCh. 2 - Communication Carol Creedence, the plant manager...Ch. 2 - RIRA Company makes attachments such as backhoes...Ch. 2 - Todd Lay just began working as a cost accountant...Ch. 2 - Baldwin Printing Company uses a job order cost...Ch. 2 - John Sheng, a cost accountant at Starlet Company,...Ch. 2 - Lucy Sportswear manufactures a specialty line of...Ch. 2 - Patterson Corporation expects to incur 70,000 of...
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