亨格瑞管理会计英文第15版练习答案04.doc

CHAPTER 4COVERAGE OF LEARNING OBJECTIVES LEARNING OBJECTIVEFUNDA-MENTAL ASSIGN-MENTMATERIALCRITICAL THINKING EXERCISES AND EXERCISESPROBLEMSCASES, EXCEL, COLLAB. & INTERNET EXERCISESLO1: Describe the purposes of cost management systems.31, 3450LO2: Explain the relationship between cost, cost object, cost accumulation, and cost assignment.4556LO3: Distinguish between direct and indirect costs.A1,B136, 37, 38, 39, 4445, 4956LO4: Explain the major reasons for allocating costs.B233, 414654LO5: Identify the main types of manufacturing costs: direct materials, direct labor, and indirect production costs.36, 37, 38, 39LO6: Explain how the financial statements of merchandisers and manufacturers differ because of the types of goods they sell.A257, 60, 61LO7: Understand the main differences between traditional and activity-based costing systems and why ABC systems provide value to managers.A3, A4, B3, B433, 40, 41, 4248, 49, 5055, 56, 57, 58, 59, 60, 61LO8: Use activity-based cost information to make strategic and operational control decisions.A4, B432, 37, 4348, 49, 5055, 56, 60CHAPTER 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 inventory0Finished goods inventory 97,000Total inventories$137,0003.NILE ELECTRONICS PRODUCTSStatement of Operating IncomeFor the Year Ended December 31, 20X9Sales (9,000 units at $170)$1,530,000Cost of goods sold:Beginning inventory$ 0Purchases 970,000Cost of goods available for sale$ 970,000Less ending inventory 97,000Cost of goods sold (an expense) 873,000Gross margin or gross profit$ 657,000Less other expenses: selling & administrative costs 185,000Operating income (also income before taxes in this example)$ 472,000123Copyright 2011 Pearson Education, Inc., Publishing as Prentice Hall. TABLE 4-A1STATEMENT OF OPERATING INCOME OPERATING INCOME BY PRODUCT LINEEXTERNAL REPORTING PURPOSE INTERNAL STRATEGIC DECISION MAKING PURPOSECustomLargeSmallDetailed Std. Std.Cost Type, Assignment MethodSales$155,000$30,000$45,000$80,000Cost of goods sold: Direct material40,0005,00015,00020,000 Direct, Direct Trace Indirect manufacturing 41,000 28,0001 5,000 8,000 Indirect, Alloc. Mach. Hours 81,000 33,000 20,000 28,000Gross profit 74,000 (3,000) 25,000 52,000Selling and administrative expenses:Commissions15,0001,5003,50010,000 Direct, Direct TraceDistribution to warehouses 10,400 1,0002 3,000 6,400 Indirect, Allocation - WeightTotal selling and admin. expenses 25,400 2,500 6,500 16,400Contribution to corporate expenses and profit 48,600$(5,500)$18,500$35,600Unallocated expenses:Administrative salaries8,000Other administrative expenses 4,000Total unallocated expenses 12,000Operating income before tax$ 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 allocation 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 = $1,000.178Copyright 2011 Pearson Education, Inc., Publishing as Prentice Hall. 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 used530,000Direct labor290,000Indirect manufacturing 150,000Total mfg. costs to account for$970,000Less ending work-in- process inventory 0 970,000Cost of goods available for sale$970,000Less ending finished goods inventory 97,000Cost of goods sold (an expense) 873,000Gross margin or gross profit$ 657,000Less other expenses: selling and administrative costs 185,000Operating income (also income before taxes in this example)$ 472,0005.The balance sheet for the merchandiser (Nile) has just one line for inventories, 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 finished goods inventory.The income statements are similar except for the computation of cost of goods available for sale. The merchandiser (Nile) simply shows purchases for the year plus beginning inventory. In contrast, the manufacturer (Orinoco) shows beginning work-in-process inventory plus the three categories of cost that comprise manufacturing cost (direct materials 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 goods manufactured to get the cost of goods available for sale.6.The purpose is providing aggregate measures of inventory value and cost of 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 the listed cost driver and behavior. The purpose of this exercise is to generate an active discussion regarding those chosen by First Banks managers. One point that should be emphasized is that many times managers choose cost drivers that are not the most plausible or reliable because of lack of data availability. Cost drivers are also used as a basis to allocate activity and resource costs and so the availability of data is often an important consideration.ActivityOrCostResourceCost DriverBehaviora.*RNumber of square feetFb.*RNumber of person hoursFc.RNumber of computer transactionsVd.ANumber of schedulese.RNumber of person hoursFf.RNumber of loan inquiries Vg.*ANumber of investmentsh.ANumber of applicationsi.RNumber of person hoursVj.RNumber of minutesVk.RNumber of person hoursFl.ANumber 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) the utilization of the resources increases (decreases) and eventually, management will need to make a decision whether to expand capacity (or whether to cut back on labor). This is an example of a step cost that is fixed over wide ranges of cost-driver level.* Students may try to determine the cost behavior of activities even though the problem requirements do not ask for it. Point out that activities almost always have mixed cost behavior because they consume various resources. Some of these are fixed-cost and others variable-cost resources. For example, the activity “research to evaluate a loan application” consumes such fixed-cost resources as manager labor time and computers (assumed owned by the bank). This activity also consumes variable-cost resources such as telecommunications time and external computing services.4-A4(20-30 min.)1.The first step is to determine the cost per cost-driver unit for each activity:MonthlyCost-Cost perManufacturingDriverDriverActivity Cost driverOverheadActivityUnitMaterial Handling Direct materials cost$12,000$200,000$ 0.06Engineering Engineering change notices20,000201,000.00Power Kilowatt hours 16,000400,0000.04Total Manufacturing Overhead$48,000Next, the costs of each activity can be allocated to each of the three products:PHYSICAL FLOW / ALLOCATED COSTCostSeniorBasicDeluxeMaterial Handling$.06 25,000 = $1,500$.06 50,000 = $ 3,000$.06 125,000 = $ 7,500Engineering$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 = 6,000Total$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 a small amount of labor but large amounts of other resources, especially power.3.The product costs in requirement 1 are more accurate if the cost drivers are good indicators of the causes of the costs - they are both plausible and reliable. For example, kilowatt hours is certainly a better 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 are likewise 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/cost criteria 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 (part b vs. part a). Departmental rates that use direct-labor hours as the 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 Bs 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 of direct labor hours. But it uses 40% of the machine hours, and there 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-B1 STATEMENT OF OPERATING INCOMEOPERATING INCOME BY PRODUCT LINEThousands of DollarsLawnHandScooterMowerToolCost Type,PartsPartsParts Assignment MethodLawn Mower Parts Hand Tool PartsCost Type, Assignment MethodSales$990$350$380$260Cost of goods sold: Direct material400175125100 Direct, Direct Trace Indirect manufacturing 94 68 1 14 12 Indirect Mach.Hrs 494 243 139 112Gross profit 496 107 241 148Selling and administrative expenses:Commissions55252010 Direct, Direct TraceDistribution to warehouses 150 20 2 80 50 Indirect - WeightTotal selling and administrative expenses 205 45 100 60Contribution to corporate expenses and profit 291$ 62$141$ 88Unallocated expenses:Corporate salaries11Other 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 is then $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 per kilogram is then $150,000 750,000 kg = $0.20. The allocation to scooter parts is $0.20 100,000 kg = $20,000.4-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 costs 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):Dir