Solution manual an introduction to the finite element method 3rd. Question, answer key to mcgraw hill connect intermediate accounting spiceland 7th ed isbn isbn Understanding change and change management processes, a case study by carlo d ortenzio.
Managerial accounting 13th e instructor solutions manual authors, garrison, noreen, brewer managing business and professional communication 2nd ed carley h.
Solution financial management theory and practice questions brigham 11e1 muhammad saddam uddin. Cost behaviour refers to how a cost will react or respond to changes in the level of business activity. Utilizing the managerial chapters of wild's best-selling, financial and managerial accounting text, managerial accounting responds to the market's need for an integrated solution with balanced managerial content that has a corporate approach throughout.
Management accounting innovations mais , such as activity-based. See more ideas about Bmw z4, Bmw z3 and Bmw. The dealer had a blue Z4 sitting on a three foot stand under bright sunshine. Find Utility available to buy right now online! Lori reveals tips to tell the difference between soda lime glass, pressed, molded, and cut glass. Solution Manual Managerial Accounting. The predetermined plantwide overhead rate is computed as follows: Estimated manufacturing overhead a The overhead applied to Job Bravo is computed as follows: Direct labor-hours worked on Bravo a The predetermined overhead rate in Assembly is computed as follows: Estimated manufacturing overhead a The predetermined overhead rate in Fabrication is computed as follows: Estimated manufacturing overhead a The overhead applied to Job Bravo is computed as follows: Quantity of allocation base used a Predetermined overhead rate b Problem 15 minutes 1.
Total manufacturing cost assigned to Mr. Wilkes: Direct materials Total cost assigned to Mr. The price charged to Mr. Wilkes is computed as follows: Total manufacturing cost Estimated total DLHs b Problem continued 2.
Total overhead cost Total cost of Job Direct materials Manufacturing overhead applied.. Unit product cost for Job Total manufacturing cost a Number of units in the job b Problem 45 minutes 1a. Estimated total patient-days b Problem continued 1b.
The total cost assign to Patients A and B is computed as follows: Direct materials Total cost Problem continued 2b. The total cost assigned to Patient A: Direct materials Total cost assigned to Patient A The total cost assigned to Patient B: Direct materials Relying on just one predetermined overhead rates overlooks the fact that some departments are more intensive users of overhead resources than others.
As the name implies, patients in the ICU require more in-tensive and expensive care than other patients in other departments. Broadly, speaking, relying on only one overhead rate, will most likely overcost patients with less severe illnesses and undercost patients with more severe illnesses.
Problem 30 minutes 1. The plantwide predetermined overhead rate is computed as follows: Estimated manufacturing overhead a The predetermined overhead rate in Machining is computed as follows: Estimated manufacturing overhead a The overhead applied to Job A is computed as follows: Quantity of allocation base used a. Problem continued The overhead applied to Job B is computed as follows: Quantity of allocation base used a. The plantwide approach will overcost jobs that are intensive users of Assembly and minimal users of Machining.
Conversely, it will undercost products that are intensive users of Machining and minimal users of Assembly. Jobs that get overcosted will have selling prices that are greater than the prices that would be established using departmental overhead allocation. Jobs that get undercosted will have selling prices that are less than the prices that would be established using departmental overhead allocation. Estimated manufacturing overhead cost a Estimated direct labor cost b Total applied overhead The bulk of the labor cost on the Koopers job is in the Assembly Department, which incurs very little overhead cost.
Therefore, as shown above, use of departmental overhead rates results in a relatively small amount of overhead cost being charged to the job. Case continued cost and results in a large amount of overhead cost being charged to the Koopers job, as shown in Part 1.
This may explain why the company bid too high and lost the job. Too much overhead cost was assigned to the job for the kind of work being done on the job in the plant. On jobs that require a large amount of labor in the Fabricating or Machining Departments the opposite will be true, and the company will tend to charge too little overhead cost to the jobs if a plantwide overhead rate is being used.
Manufacturing overhead applied see requirement 1b Bidding rate Total bid price If departmental overhead rates had been used, the bid would have been: Direct materials Activity rates are computed as follows:.
Machine setups Special processing General factory Unit product cost Exercise 2A-2 45 minutes 1. Direct labor-hours per unit b Total manufacturing overhead a Total direct labor-hours b Exercise 2A-2 continued 2. The unit product costs using activity-based absorption costing can be computed as follows:.
Manufacturing overhead is assigned to the two products as follows: Rascon:. Exercise 2A-2 continued The unit product costs combine direct materials, direct labor, and over-head costs: Direct materials The unit product cost of the high-volume product, Parcel, declines under the activity-based approach, whereas the unit product cost of the lowvolume product, Rascon, increases. This occurs because half of the overhead is applied on the basis of engineering design hours instead of direct labor-hours.
When the overhead was applied on the basis of direct labor-hours, most of the overhead was applied to the high-volume product. However, when the overhead is applied on the basis of engineering-hours, more of the overhead cost is shifted over to the low-volume product.
Engineering-hours is a product-level activity, so the higher the volume, the lower the unit cost and the lower the volume, the higher the unit cost.
Exercise 2A-3 45 minutes 1. Supporting direct labor Batch setups Safety testing Exercise 2A-3 continued Activity-based absorption costing unit product costs are computed as follows:. Problem 2A-4 60 minutes 1. Problem 2A-4 continued b. The unit product cost of each model under the activity-based ap-proach would be computed as follows:. Manufacturing overhead above Total unit product cost The increase in unit product cost for Model X can be explained as follows: First, where possible, overhead costs have been traced to the products rather than being lumped together and spread uniformly over production.
Therefore, the special processing costs, which are traceable to Model X, have all been assigned to Model X and none assigned to Model X99 under the activity-based approach. It is common in industry to have some products that require special handling or special processing of some type. This is especially true in modern factories that produce a variety of products. Activity-based costing provides a vehicle for assigning these costs to the appropriate products.
Solutions Manual, Appendix 2A. Problem 2A-4 continued Second, the costs associated with the batch- level activity machine setups have also been assigned to the specific products to which they relate.
These costs have been assigned according to the number of setups completed for each product. However, because a batch-level activity is involved, another factor affecting unit costs comes into play.
That factor is batch size. Some products are produced in large batches and some are produced in small batches. The smaller the batch, the higher the per unit cost of the batch activity. In the case at hand, the data can be analyzed as follows: Model X Cost to complete one setup see requirement 2a Model X Cost to complete one setup see requirement 2a Thus, the cost per unit for setups is three times as great for Model X, the low-volume product, as it is for Model X99, the high-volume product.
Such differences in cost are obscured when direct labor-hours or any other volume measure is used as a basis for applying overhead cost to products. In sum, overhead cost has shifted from the high-volume product to the low-volume product as a result of more appropriately assigning some costs to the products on the basis of the activities involved, rather than on the basis of direct labor-hours.
Problem 2A-5 60 minutes 1. Activity Cost Pool Purchasing Problem 2A-5 continued 3. The overhead applied to each product can be determined as follows:. Problem 2A-5 continued b. Using activity-based absorption costing, the unit product cost of each model would be: Direct materials Manufacturing overhead above. Unit costs appear to be distorted as a result of using direct labor-hours as the base for assigning overhead cost to products.
Although the deluxe model requires twice as much labor time as the regular model, it still is not being assigned enough overhead cost, as shown in the analysis in part 3 a. This suggests that less than half the overhead cost is being assigned to the deluxe model that ought to be assigned, and unit costs for the deluxe model are understated. If these costs are being used as a basis for pricing, then the selling price for the deluxe model may be too low.
This may be the reason why profits have been steadily declining over the last several years. It may also be the reason why sales of the deluxe model have been increasing rapidly. Case 2A-6 90 minutes 1. The predetermined overhead rate would be computed as follows: Expected manufacturing overhead cost. Direct materials given Direct labor given Manufacturing overhead: 0. Case 2A-6 continued Before we can determine the amount of overhead cost to assign to the products we must first determine the activity for each of the products in the six activity centers.
Case 2A-6 continued b. According to the activity-based absorption costing system, the manu-facturing overhead cost per pound is:. Total overhead cost assigned above a Number of pounds manufactured b The unit product costs according to the activity-based absorption costing system are: Direct materials given These activities include purchase orders issued, number of setups for material processing, and number of batches processed.
An implication of the activity-based approach is that our low-volume products may not be covering the costs of the manufacturing resources they use. Under our present costing and pricing system, our high-volume products, such as our Kenya Dark coffee, may be subsidizing our low-volume products. Some adjustments in prices may be required. However, the per pound cost can also be computed as shown below. This alternative approach provides.
Material handling.. Quality control Note particularly how batch size impacts unit cost data. Twenty thousand pounds of the Kenya Dark coffee are purchased per order with four orders per year , and just pounds of the Viet Select coffee are purchased per order with eight orders per year. Thus, the purchase order cost per pound for the Kenya Dark coffee is just 1. As stated in the text, this is one reason why unit costs of low-vol-ume products, such as the Viet Select coffee, increase so dramatically when activity-based costing is used.
There were no beginning or ending inventories, so all of the jobs were started, finished, and sold during the month. Therefore cost of goods sold equals the total manufacturing cost. We can verify that by computing the cost of goods sold as shown below: Manufacturing costs charged to jobs: Direct materials Totalmanufacturingcostchargedtojobs 26, Add: Beginning work in process inventory Add: Cost of goods manufactured Goodsavailableforsale Deduct: Ending finished goods inventory At the end of the month, the cost of unused capacity is computed as shown below: Amount of the allocation base at capacity a.
Solutions Manual, Appendix 2B. Exercise 2B-1 continued Consequently, the income statement, prepared for internal management purposes, would appear as follows: Wixis Cabinets Income Statement Sales Grossmargin 17, Other expenses: Cost of unused capacity When the predetermined overhead rate is based on capacity, unused capacity costs ordinarily arise because manufacturing overhead usually contains significant amounts of fixed costs. Therefore, unused capacity costs will arise.
Exercise 2B-2 30 minutes 1. The overhead applied to Mrs. Estimated overhead cost a If the actual overhead cost and the actual professional hours charged turn out to be exactly as estimated there would be no cost of unused capacity.
Predetermined overhead rate see above If the predetermined overhead rate is based on the professional staff hours available, the computations would be:. Exercise 2B-2 continued 4. Amount of the allocation base at capacity a Estimated studio overhead cost a If the predetermined overhead rate is based on the hours of studio service at capacity, the computations would be: Estimated studio overhead cost at capacity a Hours of studio service at capacity b Overhead applied to the Verde Baja job The cost of unused capacity for both years is computed as follows: Amount of the allocation base at capacity a Actual amount of the allocation base b Unused capacity in hours a — b Unused capacity in hours a Proponents of this method suggest that the cost of unused capacity should be treated as a period expense that is disclosed separately on the income statement.
Problem 2B-3 continued 4. The competition is able to offer the latest equipment, excellent service, and attractive prices. The company must do something to counter this threat or it will ultimately face failure. Under the conventional approach in which the predetermined overhead rate is based on the estimated studio hours, the apparent cost of the Verde Baja job has increased between last year and this year.
This results in costs that seem to increase as the volume declines. Under the conventional method, managers may be misled into thinking that they are actually losing money on the Verde Baja job and they might refuse such jobs in the future—another sure road to disaster.
It is true that the cost of unused capacity under the alternative approach is much larger than under the conventional approach and is growing. However, if it is properly labeled as the cost of unused capacity, management is much more likely to draw the appropriate conclu-sion that the real problem is the loss of business and therefore more idle capacity rather than an increase in costs. Case 2B-4 minutes 1a. Vault Hard Drives, Inc.
Selling and administrative expenses Net operating income Case 2B-4 continued 2. Fixed overhead applied to each unit of additional inventory b Estimated number of units produced Actual number of units to be produced Net operating income is more volatile under the new method than under the old method.
The term is opportunity cost. The full, regular price of a set might be appropriate here, because the company is operating at full capacity, and this is the amount that must be given up benefit forgone to sell a set to the brother-in-law.
Case 60 minutes 1. High-low method: High level of activity Fixed element Case continued 2. The change in equipment lease cost from a fixed fee to an hourly rate causes the slope of the regression line to be steeper above 19, DLH, and to be discontinuous between the fixed fee and hourly rate points.
The cost formulas computed with the high-low and regression methods are faulty since they are based on the assumption that a single straight line provides the best fit to the data.
Creating two data sets related to the two relevant ranges will enable more accurate cost estimates. Case 30 minutes 1.
The scattergraph of direct labor cost versus the number of units produced is presented below:. The scattergraph of the direct labor cost versus the number of paid days is presented below:. Case continued 3. The number of paid days should be used as the activity base rather than the number of units produced. The scattergraphs reveal a much stronger relation i.
Variations in the direct labor costs apparently occur because of the number of paid days in the month and have little to do with the number of units that are produced.
It appears that the direct labor costs are basically fixed with respect to how many units are produced in a month. This would happen if the direct labor workers are treated as full-time employees who are paid even if there is insufficient work to keep them busy.
Moreover, for planning purposes, the company is likely to be able to predict the number of paid days in the month with much greater accuracy than the number of units that will be produced. The scattergraph plot and least-squares regression estimates of fixed and variable costs using Microsoft Excel are shown below:.
Note that the R2 is approximately 0. Exercise 2A-2 20 minutes 1. The scattergraph plot and regression estimates of fixed and variable costs using Microsoft Excel are shown below:. This is a very high R2 which indicates a very good fit. Total expected cost Problem 2A-3 30 minutes 1. Problem 2A-3 continued 2. This is a very high R2 which is an indication of a very good fit.
The company should probably use direct labor-hours as the activity base, since the fit of the regression line to the data is much tighter than it is with tons mined. The R2 for the regression using direct labor-hours as the activity base is twice as large as for the regression using tons mined as the activity base.
However, managers should look more closely at the costs and try to determine why utilities costs are more closely tied to direct labor-hours than to the number of tons mined. Problem 2A-4 30 minutes 1. Problem 2A-4 continued 3. Expected total cost would be: Fixed cost These approximations appear to be reasonably accurate within the range of 2 to 6 sections, but they may be invalid outside this range.
CASE 2A-5 45 minutes 1. The scattergraph reveals three interesting findings. First, it indicates the relation between overhead expense and labor hours is approximated reasonably well by a straight line. However, there appears to be a slight downward bend in the plot as the labor-hours increase—evidence of increasing returns to scale. This is a common occurrence in practice. Second, the data points are all fairly close to the straight line. This indicates that most of the variation in overhead expenses is explained by labor hours.
Third, most of the overhead expense appears to be fixed. Maria should ask herself if this is reasonable. Does the company have large fixed expenses such as rent, depreciation, and salaries? Solutions Manual, Appendix 2A. Using the least-squares regression estimate of the variable overhead cost, the total variable cost per guest is computed as follows: Food and beverages Labor 0. Overhead 0.
Total variable cost per guest Contribution to profit Fixed costs are not included in the above computation because there is no indication that any additional fixed costs would be incurred as a consequence of catering the cocktail party. If additional fixed costs were incurred, they should also be subtracted from revenue. CASE 2A-5 continued 5. However, the price need not be publicized and the lower price could be justified to future clients because this is a charity event.
Another possibility would be for Maria to maintain her normal price but throw in additional services at no cost to the customer. Whether to compete on price or service is a delicate issue that Maria will have to decide after getting to know the personality and preferences of the customer.
Quality of conformance 2. Quality costs 3. Quality circles 4. Prevention costs, appraisal costs 5. Internal failure costs, external failure costs 6. External failure costs 7. Appraisal costs 8. Prevention costs 9. Internal failure costs External failure costs Prevention costs, appraisal costs Quality cost report. Product testing Product recalls Rework labor and overhead. Quality circles Downtime caused by defects Cost of field servicing Inspection of goods Quality engineering Warranty repairs Statistical process control Net cost of scrap Depreciation of test equipment Returns and allowances arising from poor quality Disposal of defective products Technical support to suppliers Systems development Warranty replacements Field testing at customer site Product design Prevention costs and appraisal costs are incurred in an effort to keep poor quality of conformance from occurring.
Internal and external failure costs are incurred because poor quality of conformance has occurred. Problem 2B-3 60 minutes 1. Prevention costs: Machine maintenance Training suppliers Total prevention costs Appraisal costs: Incoming inspection Final testing Total appraisal costs Internal failure costs: Rework Total internal failure costs External failure costs: Warranty repairs Customer returns Total external failure costs Total quality cost Problem 2B-3 continued From the above analysis it would appear that Mercury, Inc.
These declines in warranty repairs and customer returns should result in increased sales in the future. This increase has probably resulted from the increase in appraisal activities. Defective units are now being spotted more frequently before they are shipped to customers.
The initial effect of emphasizing prevention and appraisal was to reduce external failure costs and increase internal failure costs. The increase in appraisal activities resulted in catching more defective units before they were shipped to customers. As a consequence, rework and scrap costs increased. In the future, an increased emphasis on prevention should result in a decrease in internal failure costs.
And as defect rates are reduced, resources devoted to appraisal can be reduced. To measure the cost of not implementing the quality program, management could assume that sales and market share would continue to decline and then calculate the lost profit. Or, management might assume that the company will have to cut its prices to hang on to its market share. The impact on profits of lowering prices could be estimated.
Prevention costs: Quality engineering Statistical process control. External failure costs: Cost of field servicing Total external failure costs..
Appraisal costs Inspection Supplies used in testing Depreciation of testing equipment Internal failure costs: Net cost of scrap Rework labor Problem 2B-4 continued 3.
Despite this improvement, the company still has a poor distribution of quality costs. The bulk of the quality costs in both years is traceable to internal and external failure, rather than to prevention and appraisal. Although the distribution of these costs is poor, the trend this year is toward more prevention and appraisal as the company has given more emphasis on quality.
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