the download link of the sample of the solutions manual and test bank
http://www.mediafire.com/view/awia1liiqsja9rt/Introduction_to_Managerial_Accounting_6e_Brewer_Garrison_SOLUTIONS_MANUALBGN_CH02_SM.doc
http://www.mediafire.com/view/h07fr2orr29bf8h/Brewer_-_Introduction_to_Managerial_Accounting_-_6e%2C_Test_bank_0078025419ch2.docx
Sample of solutions manual and thest bank
Chapter 2
Job-Order Costing
Solutions to Questions
2-1 By definition, manufacturing overhead consists of costs that cannot be practically traced to jobs. Therefore, if these costs are to be assigned to jobs, they must be allocated rather than traced.
2-2 The first step is to estimate the total amount of the allocation base (the denominator) that will be required for next period’s estimated level of production. The second step is to estimate the total fixed manufacturing overhead cost for the coming period and the variable manufacturing overhead cost per unit of the allocation base. The third step is to use the cost formula Y = a + bX to estimate the total manufacturing overhead cost (the numerator) for the coming period. The fourth step is to compute the predetermined overhead rate.
2-3 The job cost sheet is used to record all costs that are assigned to a particular job. These costs include direct materials costs traced to the job, direct labor costs traced to the job, and manufacturing overhead costs applied to the job. When a job is completed, the job cost sheet is used to compute the unit product cost.
2-4 Some production costs such as a factory manager’s salary cannot be traced to a particular product or job, but rather are incurred as a result of overall production activities. In addition, some production costs such as indirect materials cannot be easily traced to jobs. If these costs are to be assigned to products, they must be allocated to the products.
2-5 If actual manufacturing overhead cost is applied to jobs, the company must wait until the end of the accounting period to apply overhead and to cost jobs. If the company computes actual overhead rates more frequently to get around this problem, the rates may fluctuate widely due to seasonal factors or variations in output. For this reason, most companies use predetermined overhead rates to apply manufacturing overhead costs to jobs.
2-6 The measure of activity used as the allocation base should drive the overhead cost; that is, the allocation base should cause the overhead cost. If the allocation base does not really cause the overhead, then costs will be incorrectly attributed to products and jobs and product costs will be distorted.
2-7 Assigning manufacturing overhead costs to jobs does not ensure a profit. The units produced may not be sold and if they are sold, they may not be sold at prices sufficient to cover all costs. It is a myth that assigning costs to products or jobs ensures that those costs will be recovered. Costs are recovered only by selling to customers—not by allocating costs.
2-8 The Manufacturing Overhead account is credited when overhead cost is applied to Work in Process. Generally, the amount of overhead applied will not be the same as the amount of actual cost incurred because the predetermined overhead rate is based on estimates.
2-9 Underapplied overhead occurs when the actual overhead cost exceeds the amount of overhead cost applied to Work in Process inventory during the period. Overapplied overhead occurs when the actual overhead cost is less than the amount of overhead cost applied to Work in Process inventory during the period. Underapplied or overapplied overhead is disposed of by closing out the amount to Cost of Goods Sold. The adjustment for underapplied overhead increases Cost of Goods Sold whereas the adjustment for overapplied overhead decreases Cost of Goods Sold.
2-10 Manufacturing overhead may be underapplied for several reasons. Control over overhead spending may be poor. Or, some of the overhead may be fixed and the actual amount of the allocation base may be less than estimated at the beginning of the period. In this situation, the amount of overhead applied to inventory will be less than the actual overhead cost incurred.
2-11 Underapplied overhead implies that not enough overhead was assigned to jobs during the period and therefore cost of goods sold was understated. Therefore, underapplied overhead is added to cost of goods sold. On the other hand, overapplied overhead is deducted from cost of goods sold.
* Given
Problem 2-23A (45 minutes)
1. The cost of raw materials put into production was:
| Raw materials inventory, 1/1.................... | $ 30,000 |
| Debits (purchases of materials)................ | 420,000 |
| Materials available for use........................ | 450,000 |
| Raw materials inventory, 12/31................ | 60,000 |
| Materials requisitioned for production........ | $390,000 |
2. Of the $390,000 in materials requisitioned for production, $320,000 was debited to Work in Process as direct materials. Therefore, the difference of $70,000 ($390,000 – $320,000 = $70,000) would have been debited to Manufacturing Overhead as indirect materials.
| 3. | Total factory wages accrued during the year (credits to the Factory Wages Payable account) | $175,000 |
| Less direct labor cost (from Work in Process)...... | 110,000 | |
| Indirect labor cost........................................... | $ 65,000 | |
4. The cost of goods manufactured for the year was $810,000—the credits to Work in Process.
5. The Cost of Goods Sold for the year was:
| Finished goods inventory, 1/1...................................... | $ 40,000 |
| Add: Cost of goods manufactured (from Work in Process) | 810,000 |
| Cost of goods available for sale.................................... | 850,000 |
| Deduct: Finished goods inventory, 12/31....................... | 130,000 |
| Cost of goods sold...................................................... | $720,000 |
Prologue
Managerial Accounting: An Overview
Solutions to Questions
P-1 Financial accounting is concerned
with reporting financial information to external parties, such as stockholders,
creditors, and regulators. Managerial accounting is concerned with providing
information to managers for use within the organization. Financial accounting
emphasizes the financial consequences of past transactions, objectivity and
verifiability, precision, and companywide performance, whereas managerial
accounting emphasizes decisions affecting the future, relevance, timeliness,
and segment performance. Financial accounting is
mandatory for external reports and it needs to comply with rules, such as
generally accepted accounting principles (GAAP) and international financial reporting
standards (IFRS), whereas managerial accounting is not mandatory and it does
not need to comply with externally imposed rules.
P-2 Five
examples of planning activities include (1) estimating the advertising revenues
for a future period, (2) estimating the total expenses for a future period,
including the salaries of all actors, news reporters, and sportscasters, (3)
planning how many new television shows to introduce to the market, (4) planning
each television show’s designated broadcast time slot, and (5) planning the
network’s advertising activities and expenditures.
Five examples of controlling
activities include (1) comparing the actual number of viewers for each show to
its viewership projections, (2) comparing the actual costs of producing a made-for-television
movie to its budget, (3) comparing the revenues earned from broadcasting a
sporting event to the costs incurred to broadcast that event, (4) comparing the
actual costs of running a production studio to the budget, and (5) comparing
the actual cost of providing global, on-location news coverage to the budget.
P-3 The
quantitative analysis would focus on determining the potential cost savings
from buying the part rather than making it. The qualitative analysis would
focus on broader issues such as strategy, risks, and corporate social
responsibility. For example, if the part is critical to the organization’s
strategy, it may continue making the part regardless of any potential cost
savings from outsourcing. If the overseas supplier might create quality control
problems that could threaten the end consumers’ welfare, then the risks of
outsourcing may swamp any cost savings. Finally, from a social responsibility
standpoint, a company may decide against outsourcing if it would result in
layoffs at its domestic manufacturing facility.
P-4 Companies
use budgets to translate plans into formal quantitative terms. Budgets are used
for various purposes, such as forcing managers to plan ahead, allocating
resources across departments, coordinating activities across departments,
establishing goals that motivate people, and evaluating and rewarding
employees. These various purposes often conflict with one another, which makes
budgeting one of management’s most challenging activities.
P-5 Managerial
accounting is relevant to all business students because all managers engage in
planning, controlling, and decision making activities. If managers wish to
influence co-workers across the organization, they must be able to speak in
financial terms to justify their proposed courses of action.
P-6 The
Institute of Management Accountants
P-7 Deere
& Company is an example of a company that competes in terms of product
leadership. The company’s slogan “nothing runs like a Deere” emphasizes its
product leadership customer value proposition.
Amazon.com
competes in terms of operational excellence. The company focuses on delivering
products faster, more conveniently, and at a lower price than competitors.
Charles Schwab competes in terms of
customer intimacy. It focuses on building personal relationships with clients
so that it can tailor investment strategies to individual needs.
P-8 Planning,
controlling, and decision making must be performed within the context of a
company’s strategy. For example, if a company that competes as a product leader
plans to grow too quickly, it may diminish quality and threaten the company’s
customer value proposition. A company that competes in terms of operational
excellence would select control measures that focus on time-based performance,
convenience, and cost. A company that competes in terms of customer intimacy
may decide against outsourcing employee training to cut costs because it might
diminish the quality of customer service.
P-9 This
answer is based on Nike, which has suppliers in over 40 countries. One risk
that Nike faces is that its suppliers will fail to manage their employees in a
socially responsible manner. Nike conducts Management Audit Verifications at
its overseas plants to minimize this risk.
Nike
faces the risk that unsatisfactory environmental performance will diminish its
brand image. The company is investing substantial resources to develop products
that minimize adverse impacts on the environment.
Nike faces the risk that customers
will not like its new products. The company uses focus group research to
proactively assess the customers’ reaction to its new products.
P-10 Airlines face the risk that large spikes in fuel
prices will lower their profitability. Therefore, they may reduce this risk by
spending money on hedging contracts that enable them to lock-in future fuel
prices that will not change even if the market price increases.
Steel
manufacturers face major risks related to employee safety, so they create and
monitor control measures related to occupational safety compliance and
performance.
Restaurants face the risk that an
economic downturn will reduce customer traffic and lower sales. They reduce
this risk by choosing to create menus during economic downturns that offer more
low-priced entrees.
P-11 Barnes & Noble could segment its companywide
performance by individual store, by sales channel (i.e., bricks-and-mortar
versus on-line), and by product line (e.g., non-fiction books, fiction books,
music CDs, toys, etc.).
Procter & Gamble could segment
its performance by product category (e.g., beauty and grooming, household care,
and health and well-being), product line (e.g., Crest, Tide, and Bounty), and
stock keeping units (e.g., Crest Cavity Protection toothpaste, Crest Extra
Whitening toothpaste, and Crest Sensitivity toothpaste).
P-12 Timberland publishes quarterly corporate social
responsibility (CSR) metrics (see www.earthkeeper.com/CSR/csrdownloads. Three of those metrics include metric tons of carbon emissions, the
percentage of total cotton sourced that is organic, and renewable energy use as
a percent of total energy usage.
Timberland’s corporate slogan of
“doing well by doing good” suggests that the company publishes CSR reports because it believes that its
financial success (i.e., doing well) is positively influenced by its social and
environmental performance (i.e., doing good).
P-13 Companies that use lean
production only make units in response to customer orders. They produce units just
in time to satisfy customer demand, which results in minimal inventories.
P-14 Organizations are managed by
people that have their own personal interests, insecurities, beliefs, and
data-supported conclusions that ensure unanimous support for a given course of
action is the exception rather than the rule. Therefore, managers must possess
strong leadership skills if they wish to channel their co-workers’ efforts
towards achieving organizational goals.
P-15 Ethical behavior is the
lubricant that keeps the economy running. Without that lubricant, the economy
would operate much less efficiently—less would be available to consumers,
quality would be lower, and prices would be higher.
Test bank for ch2 Key
1.
|
The use of
predetermined overhead rates in a job-order cost system makes it possible to
estimate the total cost of a given job as soon as production is
completed.
TRUE |
AACSB: Reflective Thinking
AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Remember Brewer - Chapter 02 #1 Difficulty: 1 Easy Learning Objective: 02-01 Compute a predetermined overhead rate. Topic: Job-Order Costing |
2.
|
A job cost
sheet is used to accumulate costs charged to a job.
TRUE |
AACSB: Reflective Thinking
AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Remember Brewer - Chapter 02 #2 Difficulty: 1 Easy Learning Objective: 02-03 Compute the total cost and average cost per unit of a job. Topic: Job-Order Costing |
3.
|
The following
journal entry would be made to apply overhead cost to jobs in a job-order
costing system:
 FALSE |
AACSB: Reflective Thinking
AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Understand Brewer - Chapter 02 #3 Difficulty: 2 Medium Learning Objective: 02-02 Apply overhead cost to jobs using a predetermined overhead rate. Learning Objective: 02-04 Understand the flow of costs in a job-order costing system and prepare appropriate journal entries to record costs. Topic: Job-Order Costing Topic: Job-Order Costing—The Flow of Costs |
4.
|
Under a
job-order cost system the Work in Process account is debited with the cost of
materials purchased.
FALSE |
AACSB: Reflective Thinking
AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Understand Brewer - Chapter 02 #4 Difficulty: 2 Medium Learning Objective: 02-04 Understand the flow of costs in a job-order costing system and prepare appropriate journal entries to record costs. Topic: Job-Order Costing—The Flow of Costs |
14.
|
In computing
its predetermined overhead rate, Marple Company inadvertently left its
indirect labor costs out of the computation. This oversight will cause:
|
AACSB: Reflective Thinking
AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Understand Brewer - Chapter 02 #14 Difficulty: 3 Hard Learning Objective: 02-01 Compute a predetermined overhead rate. Learning Objective: 02-05 Use T-accounts to show the flow of costs in a job-order costing system. Topic: Job-Order Costing Topic: Job-Order Costing—The Flow of Costs |
15.
|
Which of the
following is the correct formula to compute the predetermined overhead
rate?
|
AACSB: Reflective Thinking
AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Remember Brewer - Chapter 02 #15 Difficulty: 1 Easy Learning Objective: 02-01 Compute a predetermined overhead rate. Topic: Job-Order Costing |
16.
|
Which of the
following would probably be the least appropriate allocation base for
allocating overhead in a highly automated manufacturer of specialty
valves?
|
AACSB: Reflective Thinking
AICPA BB: Critical Thinking AICPA FN: Measurement Blooms: Remember Brewer - Chapter 02 #16 Difficulty: 3 Hard Learning Objective: 02-01 Compute a predetermined overhead rate. Topic: Job-Order Costing |
17.
|
What document
is used to determine the actual amount of direct labor to record on a job
cost sheet?
|
i cannot access the link. Please help.
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ReplyDeletecould I download all the chapters, I can not see the content in the second link
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