The solution to Accounting Problems

Extracted Content from Question Files:

Chapter 12, 13, 14
12-29 Fixed- and Variable-Cost Pools
The city of Cedarcrest signed a lease for a photocopy machine at $2,000 per month and $.02
per copy. Operating costs for toner, paper, operator salary, and so on are all variable at $.03
per copy. Departments had projected a need for 50,000 copies a month. The Public Works
Department predicted its usage at 18,000 copies a month. It made 21,000 copies in August.
1. Suppose one predetermined rate per copy was used to allocate all photocopy costs. What
rate would be used and how much cost would be allocated to the Public Works Department
in August?
2. Suppose fixed- and variable-cost pools were allocated separately. Specify how each pool
should be allocated. Compute the cost allocated to the Public Works Department in August.
3. Which method, the one in number 1 or the one in number 2, do you prefer? Explain.

12-37 By-products Costing Allsap Apple Company buys apples from local orchards and
presses them to produce apple juice. The pulp that remains after pressing is sold to farmers
as livestock food. This livestock food is accounted for as a by-product. During the 20X7
fiscal year, the company paid $800,000 to purchase 8 million pounds of apples. After
processing, 1 million pounds of pulp remained. Allsap spent $30,000 to package and ship
the pulp, which was sold for $50,000.
1. How much of the joint cost of the apples is allocated to the pulp?
2. Compute the total inventory cost (and therefore the cost of goods sold) for the pulp.
3. Assume that $130,000 was spent to press the apples and $150,000 was spent to filter,
pasteurize, and pack the apple juice. Compute the total inventory cost of the apple juice
produced.
13-41 Underapplied and Overapplied Overhead

14-25 Analysis of Job-Cost Data
The Cabrillo Construction Company constructs houses on speculation. That is, the houses
are begun before any buyer is known. Even if the buyer agrees to purchase a house under
construction, no sales are recorded until the house is completed and accepted for delivery.
The job-cost records contained the following (in thousands):
1. Compute Cabrillo’s cost of (a) construction-in-process inventory at September 30 and
October 31, (b) finished-houses inventory at September 30 and October 31, and (c) cost of
houses sold for September and October.
2. Prepare summary journal entries for the transfer of completed houses from construction
in process to finished houses for September and October.
3. Record the cash sale (price = $345,000) and cost of house sold for Job 53.

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Chapter 9 and 10

9-32 Key Performance Indicators
Research on performance management suggests that organizations can compete most
effectively by identifying and monitoring those elements that are most closely linked to
organizational success. A key performance indicator can be thought of as a measure that
drives organizational success. For each of the following companies or organizations,
identify two possible key performances indicators.

1. Northwest Airlines
2. Wal-Mart
3. Hewlett Packard
4. New York Department of Motor Vehicles

9-35 Common Measures on a Balanced Scorecard
Listed below are common performance measures appearing on balanced scorecards.
Indicate whether the listed measure is primarily associated with the financial, customer,
internal process, or learningand growth perspective. (Note that some measures might
reasonably be associated with more than one perspective.)
• Return on sales
• Retention of target customers
• Net cash flow
• Training hours
• Employee turnover rate
• Materials handling cost per unit
• Market share
• Product-development cycle time
• Revenue growth in segments
• Occupational injuries and illness
• Days sales in inventory
• Average cost per invoice
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10-29 Simple ROI and Economic Profit Calculations

10-34 Variable Costs as a Transfer Price

A chair’s variable cost is $50 and its market value as a piece of unfinished furniture is $63
at a transfer point from the Assembly Division to the Finishing Division. The Finishing
Division’s variable cost of sanding and finishing the chair is $28, and the selling price of the
finished chair is $85.
1. Prepare a tabulation of the contribution margin per unit for the Finishing Division’s
performance and overall company performance under the two alternatives of (a) selling to
outsiders at the transfer point and (b) sanding and finishing the chair and then selling to
outsiders.
2. As Finishing Division manager, which alternative would you choose? Explain.