管理会计12版加里森东北财经大学出版课后习题答案

THEMCGRAWHILLCOMPANIES,INC,2006ALLRIGHTSRESERVEDSOLUTIONSMANUAL,CHAPTER215CHAPTER2COSTTERMS,CONCEPTS,ANDCLASSIFICATIONSSOLUTIONSTOQUESTIONS21THETHREEMAJORELEMENTSOFPRODUCTCOSTSINAMANUFACTURINGCOMPANYAREDIRECTMATERIALS,DIRECTLABOR,ANDMANUFACTURINGOVERHEAD22ADIRECTMATERIALSAREANINTEGRALPARTOFAFINISHEDPRODUCTANDTHEIRCOSTSCANBECONVENIENTLYTRACEDTOITBINDIRECTMATERIALSAREGENERALLYSMALLITEMSOFMATERIALSUCHASGLUEANDNAILSTHEYMAYBEANINTEGRALPARTOFAFINISHEDPRODUCTBUTTHEIRCOSTSCANBETRACEDTOTHEPRODUCTONLYATGREATCOSTORINCONVENIENCEINDIRECTMATERIALSAREORDINARILYCLASSIFIEDASMANUFACTURINGOVERHEADCDIRECTLABORINCLUDESTHOSELABORCOSTSTHATCANBEEASILYTRACEDTOPARTICULARPRODUCTSDIRECTLABORISALSOCALLED“TOUCHLABOR”DINDIRECTLABORINCLUDESTHELABORCOSTSOFJANITORS,SUPERVISORS,MATERIALSHANDLERS,ANDOTHERFACTORYWORKERSTHATCANNOTBECONVENIENTLYTRACEDTOPARTICULARPRODUCTSTHESELABORCOSTSAREINCURREDTOSUPPORTPRODUCTION,BUTTHEWORKERSINVOLVEDDONOTDIRECTLYWORKONTHEPRODUCTEMANUFACTURINGOVERHEADINCLUDESALLMANUFACTURINGCOSTSEXCEPTDIRECTMATERIALSANDDIRECTLABOR23APRODUCTCOSTISANYCOSTINVOLVEDINPURCHASINGORMANUFACTURINGGOODSINTHECASEOFMANUFACTUREDGOODS,THESECOSTSCONSISTOFDIRECTMATERIALS,DIRECTLABOR,ANDMANUFACTURINGOVERHEADAPERIODCOSTISACOSTTHATISTAKENDIRECTLYTOTHEINCOMESTATEMENTASANEXPENSEINTHEPERIODINWHICHITISINCURRED24THEINCOMESTATEMENTOFAMANUFACTURINGCOMPANYDIFFERSFROMTHEINCOMESTATEMENTOFAMERCHANDISINGCOMPANYINTHECOSTOFGOODSSOLDSECTIONTHEMERCHANDISINGCOMPANYSELLSFINISHEDGOODSTHATITHASPURCHASEDFROMASUPPLIERTHESEGOODSARELISTEDAS“PURCHASES”INTHECOSTOFGOODSSOLDSECTIONSINCETHEMANUFACTURINGCOMPANYPRODUCESITSGOODSRATHERTHANBUYINGTHEMFROMASUPPLIER,ITLISTS“COSTOFGOODSMANUFACTURED”INPLACEOF“PURCHASES”ALSO,THEMANUFACTURINGCOMPANYIDENTIFIESITSINVENTORYINTHISSECTIONAS“FINISHEDGOODSINVENTORY,”RATHERTHANAS“MERCHANDISEINVENTORY”25THESCHEDULEOFCOSTOFGOODSMANUFACTUREDLISTSTHEMANUFACTURINGCOSTSTHATHAVEBEENINCURREDDURINGTHEPERIODTHESECOSTSAREORGANIZEDUNDERTHETHREEMAJORCATEGORIESOFDIRECTMATERIALS,DIRECTLABOR,ANDMANUFACTURINGOVERHEADTHETOTALCOSTSINCURREDAREADJUSTEDFORANYCHANGEINTHEWORKINPROCESSINVENTORYTODETERMINETHECOSTOFGOODSMANUFACTUREDIEFINISHEDDURINGTHEPERIODTHESCHEDULEOFCOSTOFGOODSMANUFACTUREDTIESINTOTHEINCOMESTATEMENTTHROUGHTHECOSTOFGOODSSOLDSECTIONTHECOSTOFGOODSMANUFACTUREDISADDEDTOTHEBEGINNINGFINISHEDGOODSINVENTORYTODETERMINETHEGOODSAVAILABLEFORSALEINEFFECT,THECOSTOFGOODSMANUFACTUREDTAKESTHEPLACEOFTHE“PURCHASES”ACCOUNTINAMERCHANDISINGFIRM26AMANUFACTURINGCOMPANYHASTHREEINVENTORYACCOUNTSRAWMATERIALS,WORKINPROCESS,ANDFINISHEDGOODSAMERCHANDISINGCOMPANYGENERALLYIDENTIFIESITSINVENTORYACCOUNTSIMPLYASMERCHANDISEINVENTORY27SINCEPRODUCTCOSTSACCOMPANYUNITSOFPRODUCTINTOINVENTORY,THEYARESOMETIMESCALLEDINVENTORIABLECOSTSTHEFLOWISFROMDIRECTMATERIALS,DIRECTLABOR,ANDMANUFACTURINGOVERHEADTOWORKINPROCESSASGOODSARECOMTHEMCGRAWHILLCOMPANIES,INC,2006ALLRIGHTSRESERVED16MANAGERIALACCOUNTING,11THEDITIONPLETED,THEIRCOSTISREMOVEDFROMWORKINPROCESSANDTRANSFERREDTOFINISHEDGOODSASGOODSARESOLD,THEIRCOSTISREMOVEDFROMFINISHEDGOODSANDTRANSFERREDTOCOSTOFGOODSSOLDCOSTOFGOODSSOLDISANEXPENSEONTHEINCOMESTATEMENT28YES,COSTSSUCHASSALARIESANDDEPRECIATIONCANENDUPASASSETSONTHEBALANCESHEETIFTHESEAREMANUFACTURINGCOSTSMANUFACTURINGCOSTSAREINVENTORIEDUNTILTHEASSOCIATEDFINISHEDGOODSARESOLDTHUS,IFSOMEUNITSARESTILLININVENTORY,SUCHCOSTSMAYBEPARTOFEITHERWORKINPROCESSINVENTORYORFINISHEDGOODSINVENTORYATTHEENDOFAPERIOD29COSTBEHAVIORREFERSTOHOWACOSTWILLREACTORRESPONDTOCHANGESINTHELEVELOFACTIVITY210NOAVARIABLECOSTISACOSTTHATVARIES,INTOTAL,INDIRECTPROPORTIONTOCHANGESINTHELEVELOFACTIVITYAVARIABLECOSTISCONSTANTPERUNITOFPRODUCTAFIXEDCOSTISFIXEDINTOTAL,BUTWILLVARYINVERSELYONANAVERAGEPERUNITBASISWITHCHANGESINTHELEVELOFACTIVITY211WHENFIXEDCOSTSAREINVOLVED,THEAVERAGECOSTOFAUNITOFPRODUCTWILLDEPENDONTHENUMBEROFUNITSBEINGMANUFACTUREDASPRODUCTIONINCREASES,THEAVERAGECOSTPERUNITWILLFALLASTHEFIXEDCOSTISSPREADOVERMOREUNITSCONVERSELY,ASPRODUCTIONDECLINES,THEAVERAGECOSTPERUNITWILLRISEASTHEFIXEDCOSTISSPREADOVERFEWERUNITS212MANUFACTURINGOVERHEADISANINDIRECTCOSTSINCETHESECOSTSCANNOTBEEASILYANDCONVENIENTLYTRACEDTOPARTICULARUNITSOFPRODUCTS213ADIFFERENTIALCOSTISACOSTTHATDIFFERSBETWEENALTERNATIVESINADECISIONANOPPORTUNITYCOSTISTHEPOTENTIALBENEFITTHATISGIVENUPWHENONEALTERNATIVEISSELECTEDOVERANOTHERASUNKCOSTISACOSTTHATHASALREADYBEENINCURREDANDCANNOTBEALTEREDBYANYDECISIONTAKENNOWORINTHEFUTURE214NODIFFERENTIALCOSTSCANBEEITHERVARIABLEORFIXEDFOREXAMPLE,THEALTERNATIVESMIGHTCONSISTOFPURCHASINGONEMACHINERATHERTHANANOTHERTOMAKEAPRODUCTTHEDIFFERENCEINTHEFIXEDCOSTSOFPURCHASINGTHETWOMACHINESWOULDBEADIFFERENTIALCOST215DIRECTLABORCOST34HOURS15PERHOUR510MANUFACTURINGOVERHEADCOST6HOURS15PERHOUR90TOTALWAGESEARNED600216DIRECTLABORCOST45HOURS14PERHOUR630MANUFACTURINGOVERHEADCOST5HOURS7PERHOUR35TOTALWAGESEARNED665217COSTSASSOCIATEDWITHTHEQUALITYOFCONFORMANCECANBEBROKENDOWNINTOPREVENTIONCOSTS,APPRAISALCOSTS,INTERNALFAILURECOSTS,ANDEXTERNALFAILURECOSTSPREVENTIONCOSTSAREINCURREDINANEFFORTTOKEEPDEFECTSFROMOCCURRINGAPPRAISALCOSTSAREINCURREDTODETECTDEFECTSBEFORETHEYCANCREATEFURTHERPROBLEMSINTERNALANDEXTERNALFAILURECOSTSAREINCURREDASARESULTOFPRODUCINGDEFECTIVEUNITS218TOTALQUALITYCOSTSAREUSUALLYMINIMIZEDBYINCREASINGPREVENTIONANDAPPRAISALCOSTSINORDERTOREDUCEINTERNALANDEXTERNALFAILURECOSTSTOTALQUALITYCOSTSUSUALLYDECREASEASPREVENTIONANDAPPRAISALCOSTSINCREASE219SHIFTINGTHEFOCUSTOPREVENTIONANDAWAYFROMAPPRAISALISUSUALLYTHEMOSTEFFECTIVEWAYTOREDUCETOTALQUALITYCOSTSITISUSUALLYMOREEFFECTIVETOPREVENTDEFECTSTHANTOATTEMPTTOFIXTHEMAFTERTHEYHAVEOCCURRED220FIRST,AQUALITYCOSTREPORTHELPSMANAGERSSEETHEFINANCIALCONSEQUENCESOFDEFECTSSECOND,THEREPORTMAYHELPMANAGERSIDENTIFYTHEMOSTIMPORTANTAREASFORIMPROVEMENTTHIRD,THEREPORTHELPSMANAGERSSEEWHETHERQUALITYCOSTSAREAPPROPRIATELYDISTRIBUTEDAMONGPREVENTION,APPRAISAL,INTERNALFAILURE,ANDEXTERNALFAILURECOSTS221MOSTACCOUNTINGSYSTEMSDONOTTRACKANDACCUMULATETHECOSTSOFQUALITYITISPARTICULARLYDIFFICULTTOGETAFEELFORTHEMAGNITUDEOFQUALITYCOSTSSINCETHEYAREINCURREDINMANYDEPARTMENTSTHROUGHOUTTHEORGANIZATIONTHEMCGRAWHILLCOMPANIES,INC,2006ALLRIGHTSRESERVEDSOLUTIONSMANUAL,CHAPTER217EXERCISE2115MINUTES1THECOSTOFAHARDDRIVEINSTALLEDINACOMPUTERDIRECTMATERIALSCOST2THECOSTOFADVERTISINGINTHEPUGETSOUNDCOMPUTERUSERNEWSPAPERMARKETINGANDSELLINGCOST3THEWAGESOFEMPLOYEESWHOASSEMBLECOMPUTERSFROMCOMPONENTSDIRECTLABORCOST4SALESCOMMISSIONSPAIDTOTHECOMPANYSSALESPEOPLEMARKETINGANDSELLINGCOST5THEWAGESOFTHEASSEMBLYSHOPSSUPERVISORMANUFACTURINGOVERHEADCOST6THEWAGESOFTHECOMPANYSACCOUNTANTADMINISTRATIVECOST7DEPRECIATIONONEQUIPMENTUSEDTOTESTASSEMBLEDCOMPUTERSBEFORERELEASETOCUSTOMERSMANUFACTURINGOVERHEADCOST8RENTONTHEFACILITYINTHEINDUSTRIALPARKACOMBINATIONOFMANUFACTURINGOVERHEAD,ADMINISTRATIVE,ANDMARKETINGANDSELLINGCOSTTHERENTWOULDMOSTLIKELYBEPRORATEDONTHEBASISOFTHEAMOUNTOFSPACEOCCUPIEDBYMANUFACTURING,ADMINISTRATIVE,ANDMARKETINGOPERATIONSTHEMCGRAWHILLCOMPANIES,INC,2006ALLRIGHTSRESERVED18MANAGERIALACCOUNTING,11THEDITIONEXERCISE2215MINUTESPRODUCTCOSTPERIODCOST1DEPRECIATIONONSALESPERSONSCARSX2RENTONEQUIPMENTUSEDINTHEFACTORYX3LUBRICANTSUSEDFORMAINTENANCEOFMACHINESX4SALARIESOFFINISHEDGOODSWAREHOUSEPERSONNELX5SOAPANDPAPERTOWELSUSEDBYFACTORYWORKERSATTHEENDOFASHIFTX6FACTORYSUPERVISORSSALARIESX7HEAT,WATER,ANDPOWERCONSUMEDINTHEFACTORYX8MATERIALSUSEDFORBOXINGPRODUCTSFORSHIPMENTOVERSEASUNITSARENOTNORMALLYBOXEDX9ADVERTISINGCOSTSX10WORKERSCOMPENSATIONINSURANCEONFACTORYEMPLOYEESX11DEPRECIATIONONCHAIRSANDTABLESINTHEFACTORYLUNCHROOMX12THEWAGESOFTHERECEPTIONISTINTHEADMINISTRATIVEOFFICESX13LEASECOSTOFTHECORPORATEJETUSEDBYTHECOMPANYSEXECUTIVESX14RENTONROOMSATAFLORIDARESORTFORHOLDINGTHEANNUALSALESCONFERENCEX15ATTRACTIVELYDESIGNEDBOXFORPACKAGINGTHECOMPANYSPRODUCTBREAKFASTCEREALXTHEMCGRAWHILLCOMPANIES,INC,2006ALLRIGHTSRESERVEDSOLUTIONSMANUAL,CHAPTER219EXERCISE2315MINUTESCYBERGAMESINCOMESTATEMENTSALES1,450,000COSTOFGOODSSOLDBEGINNINGMERCHANDISEINVENTORY240,000ADDPURCHASES950,000GOODSAVAILABLEFORSALE1,190,000DEDUCTENDINGMERCHANDISEINVENTORY170,0001,020,000GROSSMARGIN430,000LESSOPERATINGEXPENSESSELLINGEXPENSE210,000ADMINISTRATIVEEXPENSE180,000390,000NETOPERATINGINCOME40,000THEMCGRAWHILLCOMPANIES,INC,2006ALLRIGHTSRESERVED20MANAGERIALACCOUNTING,11THEDITIONEXERCISE2415MINUTESLOMPACPRODUCTSSCHEDULEOFCOSTOFGOODSMANUFACTUREDDIRECTMATERIALSBEGINNINGRAWMATERIALSINVENTORY60,000ADDPURCHASESOFRAWMATERIALS690,000RAWMATERIALSAVAILABLEFORUSE750,000DEDUCTENDINGRAWMATERIALSINVENTORY45,000RAWMATERIALSUSEDINPRODUCTION705,000DIRECTLABOR135,000MANUFACTURINGOVERHEAD370,000TOTALMANUFACTURINGCOSTS1,210,000ADDBEGINNINGWORKINPROCESSINVENTORY120,0001,330,000DEDUCTENDINGWORKINPROCESSINVENTORY130,000COSTOFGOODSMANUFACTURED1,200,000THEMCGRAWHILLCOMPANIES,INC,2006ALLRIGHTSRESERVEDSOLUTIONSMANUAL,CHAPTER221EXERCISE2515MINUTESAFEWOFTHESECOSTSMAYGENERATEDEBATEFOREXAMPLE,SOMEMAYARGUETHATTHECOSTOFADVERTISINGAMADONNAROCKCONCERTISAVARIABLECOSTSINCETHENUMBEROFPEOPLEWHOCOMETOTHEROCKCONCERTDEPENDSONTHEAMOUNTOFADVERTISINGHOWEVER,ONECANARGUETHATIFTHEPRICEISWITHINREASON,ANYMADONNAROCKCONCERTINNEWYORKCITYWILLBESOLDOUTANDTHEFUNCTIONOFADVERTISINGISSIMPLYTOLETPEOPLEKNOWTHEEVENTWILLBEHAPPENINGMOREOVER,WHILEADVERTISINGMAYAFFECTTHENUMBEROFPERSONSWHOULTIMATELYBUYTICKETS,THECAUSATIONISINONEDIRECTIONIFMOREPEOPLEBUYTICKETS,THEADVERTISINGCOSTSDONTGOUPCOSTBEHAVIORVARIABLEFIXED1XRAYFILMUSEDINTHERADIOLOGYLABATVIRGINIAMASONHOSPITALINSEATTLEX2THECOSTSOFADVERTISINGAMADONNAROCKCONCERTINNEWYORKCITYX3RENTALCOSTOFAMCDONALDSRESTAURANTBUILDINGINHONGKONGX4THEELECTRICALCOSTSOFRUNNINGAROLLERCOASTERATMAGICMOUNTAINX5PROPERTYTAXESONYOURLOCALCINEMAX6COMMISSIONSPAIDTOSALESPERSONSATNORDSTROMX7PROPERTYINSURANCEONACOCACOLABOTTLINGPLANTX8THECOSTSOFSYNTHETICMATERIALSUSEDTOMAKENIKERUNNINGSHOESX9THECOSTSOFSHIPPINGPANASONICTELEVISIONSTORETAILSTORESX10THECOSTOFLEASINGANULTRASCANDIAGNOSTICMACHINEATTHEAMERICANHOSPITALINPARISXTHEMCGRAWHILLCOMPANIES,INC,2006ALLRIGHTSRESERVED22MANAGERIALACCOUNTING,11THEDITIONEXERCISE2615MINUTESCOSTCOSTINGOBJECTDIRECTCOSTINDIRECTCOST1THEWAGESOFPEDIATRICNURSESTHEPEDIATRICDEPARTMENTX2PRESCRIPTIONDRUGSAPARTICULARPATIENTX3HEATINGTHEHOSPITALTHEPEDIATRICDEPARTMENTX4THESALARYOFTHEHEADOFPEDIATRICSTHEPEDIATRICDEPARTMENTX5THESALARYOFTHEHEADOFPEDIATRICSAPARTICULARPEDIATRICPATIENTX6HOSPITALCHAPLAINSSALARYAPARTICULARPATIENTX7LABTESTSBYOUTSIDECONTRACTORAPARTICULARPATIENTX8LABTESTSBYOUTSIDECONTRACTORAPARTICULARDEPARTMENTXTHEMCGRAWHILLCOMPANIES,INC,2006ALLRIGHTSRESERVEDSOLUTIONSMANUAL,CHAPTER223EXERCISE2715MINUTESITEMDIFFERENTIALCOSTOPPORTUNITYCOSTSUNKCOST1COSTOFTHEOLDXRAYMACHINEX2THESALARYOFTHEHEADOFTHERADIOLOGYDEPARTMENT3THESALARYOFTHEHEADOFTHEPEDIATRICSDEPARTMENT4COSTOFTHENEWCOLORLASERPRINTERX5RENTONTHESPACEOCCUPIEDBYRADIOLOGY6THECOSTOFMAINTAININGTHEOLDMACHINEX7BENEFITSFROMANEWDNAANALYZERX8COSTOFELECTRICITYTORUNTHEXRAYMACHINESXNOTETHECOSTSOFTHESALARIESOFTHEHEADOFTHERADIOLOGYDEPARTMENTANDPEDIATRICSDEPARTMENTANDTHERENTONTHESPACEOCCUPIEDBYRADIOLOGYARENEITHERDIFFERENTIALCOSTS,NOROPPORTUNITYCOSTS,NORSUNKCOSTSTHESEARECOSTSTHATDONOTDIFFERBETWEENTHEALTERNATIVESANDARETHEREFOREIRRELEVANTINTHEDECISION,BUTTHEYARENOTSUNKCOSTSSINCETHEYOCCURINTHEFUTURETHEMCGRAWHILLCOMPANIES,INC,2006ALLRIGHTSRESERVED24MANAGERIALACCOUNTING,11THEDITIONEXERCISE2815MINUTES1NOITAPPEARSTHATTHEOVERTIMESPENTCOMPLETINGTHEJOBWASSIMPLYAMATTEROFHOWTHEJOBHAPPENEDTOBESCHEDULEDUNDERTHESECIRCUMSTANCES,ANOVERTIMEPREMIUMPROBABLYSHOULDNOTBECHARGEDTOACUSTOMERWHOSEJOBHAPPENSTOFALLATTHEENDOFTHEDAYSSCHEDULE2DIRECTLABORCOST9HOURS14PERHOUR126GENERALOVERHEADCOST1HOUR7PERHOUR7TOTALLABORCOST1333ACHARGEFORANOVERTIMEPREMIUMMIGHTBEJUSTIFIEDIFTHECUSTOMERREQUESTEDA“RUSH”ORDERTHATCAUSEDTHEOVERTIMETHEMCGRAWHILLCOMPANIES,INC,2006ALLRIGHTSRESERVEDSOLUTIONSMANUAL,CHAPTER225EXERCISE2915MINUTES1PREVENTIONCOSTAPPRAISALCOSTINTERNALFAILURECOSTEXTERNALFAILURECOSTAPRODUCTTESTINGXBPRODUCTRECALLSXCREWORKLABORANDOVERHEADXDQUALITYCIRCLESXEDOWNTIMECAUSEDBYDEFECTSXFCOSTOFFIELDSERVICINGXGINSPECTIONOFGOODSXHQUALITYENGINEERINGXIWARRANTYREPAIRSXJSTATISTICALPROCESSCONTROLXKNETCOSTOFSCRAPXLDEPRECIATIONOFTESTEQUIPMENTXMRETURNSANDALLOWANCESARISINGFROMPOORQUALITYXNDISPOSALOFDEFECTIVEPRODUCTSXOTECHNICALSUPPORTTOSUPPLIERSXPSYSTEMSDEVELOPMENTXQWARRANTYREPLACEMENTSXRFIELDTESTINGATCUSTOMERSITEXSPRODUCTDESIGNX2PREVENTIONCOSTSANDAPPRAISALCOSTSAREINCURREDINANEFFORTTOKEEPPOORQUALITYOFCONFORMANCEFROMOCCURRINGINTERNALANDEXTERNALFAILURECOSTSAREINCURREDBECAUSEPOORQUALITYOFCONFORMANCEHASOCCURREDTHEMCGRAWHILLCOMPANIES,INC,2006ALLRIGHTSRESERVED26MANAGERIALACCOUNTING,11THEDITIONEXERCISE21030MINUTES1MASONCOMPANYSCHEDULEOFCOSTOFGOODSMANUFACTUREDDIRECTMATERIALSRAWMATERIALSINVENTORY,BEGINNING7,000ADDPURCHASESOFRAWMATERIALS118,000RAWMATERIALSAVAILABLEFORUSE125,000DEDUCTRAWMATERIALSINVENTORY,ENDING15,000RAWMATERIALSUSEDINPRODUCTION110,000DIRECTLABOR70,000MANUFACTURINGOVERHEADINDIRECTLABOR30,000MAINTENANCE,FACTORYEQUIPMENT6,000INSURANCE,FACTORYEQUIPMENT800RENT,FACTORYFACILITIES20,000SUPPLIES4,200DEPRECIATION,FACTORYEQUIPMENT19,000TOTALOVERHEADCOSTS80,000TOTALMANUFACTURINGCOSTS260,000ADDWORKINPROCESS,BEGINNING10,000270,000DEDUCTWORKINPROCESS,ENDING5,000COSTOFGOODSMANUFACTURED265,0002THECOSTOFGOODSSOLDSECTIONOFMASONCOMPANYSINCOMESTATEMENTFINISHEDGOODSINVENTORY,BEGINNING20,000ADDCOSTOFGOODSMANUFACTURED265,000GOODSAVAILABLEFORSALE285,000DEDUCTFINISHEDGOODSINVENTORY,ENDING35,000COSTOFGOODSSOLD250,000THEMCGRAWHILLCOMPANIES,INC,2006ALLRIGHTSRESERVEDSOLUTIONSMANUAL,CHAPTER227EXERCISE21115MINUTESSELLINGANDCOSTBEHAVIORADMINISTRATIVEPRODUCTCOSTITEMVARIABLEFIXEDCOSTCOST1HAMBURGERBUNSATAWENDYSOUTLETXX2ADVERTISINGBYADENTALOFFICEXX3APPLESPROCESSEDANDCANNEDBYDELMONTEXX4SHIPPINGCANNEDAPPLESFROMADELMONTEPLANTTOCUSTOMERSXX5INSURANCEONABAUSCHTHEREFORE,TRYTOAVOIDLENGTHYDISCUSSIONSABOUTHOWAPARTICULARCOSTISCLASSIFIEDVARIABLEORSELLINGADMINISTRATIVEMANUFACTURINGPRODUCTCOSTCOSTITEMFIXEDCOSTCOSTDIRECTINDIRECT1PROPERTYTAXES,FACTORYFX2BOXESUSEDFORPACKAGINGDETERGENTPRODUCEDBYTHECOMPANYVX3SALESPERSONSCOMMISSIONSVX4SUPERVISORSSALARY,FACTORYFX5DEPRECIATION,EXECUTIVEAUTOSFX6WAGESOFWORKERSASSEMBLINGCOMPUTERSVX7INSURANCE,FINISHEDGOODSWAREHOUSESFX8LUBRICANTSFORMACHINESVX9ADVERTISINGCOSTSFX10MICROCHIPSUSEDINPRODUCINGCALCULATORSVX11SHIPPINGCOSTSONMERCHANDISESOLDVX12MAGAZINESUBSCRIPTIONS,FACTORYLUNCHROOMFX13THREADINAGARMENTFACTORYVX14BILLINGCOSTSVX15EXECUTIVELIFEINSURANCEFXTHEMCGRAWHILLCOMPANIES,INC,2006ALLRIGHTSRESERVED32MANAGERIALACCOUNTING,11THEDITIONPROBLEM215CONTINUEDVARIABLEORSELLINGADMINISTRATIVEMANUFACTURINGPRODUCTCOSTCOSTITEMFIXEDCOSTCOSTDIRECTINDIRECT16INKUSEDINTEXTBOOKPRODUCTIONVX17FRINGEBENEFITS,ASSEMBLYLINEWORKERSVX18YARNUSEDINSWEATERPRODUCTIONVX19WAGESOFRECEPTIONIST,EXECUTIVEOFFICESFXCOULDBEADMINISTRATIVECOSTCOULDBEINDIRECTCOSTTHEMCGRAWHILLCOMPANIES,INC,2006ALLRIGHTSRESERVED33MANAGERIALACCOUNTING,11THEDITIONPROBLEM21630MINUTESCOSTBEHAVIORTOUNITSOFPRODUCTCOSTITEMVARIABLEFIXEDDIRECTINDIRECT1ELECTRICITYUSEDINOPERATINGMACHINESXX2RENTONAFACTORYBUILDINGXX3CLOTHUSEDINDRAPERYPRODUCTIONXX4PRODUCTIONSUPERINTENDENTSSALARYXX5WAGESOFLABORERSASSEMBLINGAPRODUCTXX6DEPRECIATIONOFAIRPURIFICATIONEQUIPMENTUSEDINFURNITUREPRODUCTIONXX7JANITORIALSALARIESXX8PEACHESUSEDINCANNINGFRUITXX9LUBRICANTSNEEDEDFORMACHINESXX10SUGARUSEDINSOFTDRINKPRODUCTIONXX11PROPERTYTAXESONTHEFACTORYXX12WAGESOFWORKERSPAINTINGAPRODUCTXX13DEPRECIATIONONCAFETERIAEQUIPMENTXX14INSURANCEONABUILDINGUSEDINPRODUCINGHELICOPTERSXX15COSTOFROTORBLADESUSEDINPRODUCINGHELICOPTERSXXTHEMCGRAWHILLCOMPANIES,INC,2006ALLRIGHTSRESERVED34MANAGERIALACCOUNTING,11THEDITIONPROBLEM21730MINUTES1TOTALWAGESFORTHEWEEKREGULARTIME40HOURS20PERHOUR800OVERTIME6HOURS30PERHOUR180TOTALWAGES980ALLOCATIONOFTOTALWAGESDIRECTLABOR46HOURS20PERHOUR920MANUFACTURINGOVERHEAD6HOURS10PERHOUR60TOTALWAGES9802TOTALWAGESFORTHEWEEKREGULARTIME40HOURS20PERHOUR800OVERTIME8HOURS30PERHOUR240TOTALWAGES1,040ALLOCATIONOFTOTALWAGESDIRECTLABOR45HOURS20PERHOUR900MANUFACTURINGOVERHEADIDLETIME3HOURS20PERHOUR60OVERTIMEPREMIUM8HOURS10PERHOUR80140TOTALWAGES1,0403TOTALWAGESANDFRINGEBENEFITSFORTHEWEEKREGULARTIME40HOURS20PERHOUR800OVERTIME10HOURS30PERHOUR300FRINGEBENEFITS50HOURS6PERHOUR300TOTALWAGESANDFRINGEBENEFITS1,400ALLOCATIONOFWAGESANDFRINGEBENEFITSDIRECTLABOR48HOURS20PERHOUR960MANUFACTURINGOVERHEADIDLETIME2HOURS20PERHOUR40OVERTIMEPREMIUM10HOURS10PERHOUR100FRINGEBENEFITS50HOURS6PERHOUR300440TOTALWAGESANDFRINGEBENEFITS1,400THEMCGRAWHILLCOMPANIES,INC,2006ALLRIGHTSRESERVEDSOLUTIONSMANUAL,CHAPTER235PROBLEM217CONTINUED4ALLOCATIONOFWAGESANDFRINGEBENEFITSDIRECTLABORWAGECOST48HOURS20PERHOUR960FRINGEBENEFITS48HOURS6PERHOUR2881,248MANUFACTURINGOVERHEADIDLETIME2HOURS20PERHOUR40OVERTIMEPREMIUM10HOURS10PERHOUR100FRINGEBENEFITS2HOURS6PERHOUR12152TOTALWAGESANDFRINGEBENEFITS1,400THEMCGRAWHILLCOMPANIES,INC,2006ALLRIGHTSRESERVED36MANAGERIALACCOUNTING,11THEDITIONPROBLEM21860MINUTES1FLOREXCOMPANYQUALITYCOSTREPORTTHISYEARLASTYEARAMOUNTPERCENTOFSALESAMOUNTPERCENTOFSALESPREVENTIONCOSTSQUALITYENGINEERING570076420056SYSTEMSDEVELOPMENT750100480064STATISTICALPROCESSCONTROL1800240000TOTALPREVENTIONCOSTS1,500200900120APPRAISALCOSTSINSPECTION900120750100PRODUCTTESTING1,200160810108SUPPLIESUSEDINTESTING6000830004DEPRECIATIONOFTESTINGEQUIPMENT240032210028TOTALAPPRAISALCOSTS2,4003201,800240INTERNALFAILURECOSTSNETCOSTOFSCRAP1,125150630084REWORKLABOR1,5002001,050140DISPOSALOFDEFECTIVEPRODUCTS975130720096TOTALINTERNALFAILURECOSTS3,6004802,400320EXTERNALFAILURECOSTSCOSTOFFIELDSERVICING9001201,200160WARRANTYREPAIRS1,0501403,600480PRODUCTRECALLS7501002,100280TOTALEXTERNALFAILURECOSTS2,7003606,900920TOTALQUALITYCOST10,200136012,0001600THEMCGRAWHILLCOMPANIES,INC,2006ALLRIGHTSRESERVEDSOLUTIONSMANUAL,CHAPTER237PROBLEM218CONTINUED202,0004,0006,0008,00010,00012,00014,000LASTYEARTHISYEARQUALITYCOSTSINTHOUSANDSEXTERNALFAILUREINTERNALFAILUREAPPRAISALPREVENTION024681012141618LASTYEARTHISYEARQUALITYCOSTSASAPERCENTAGEOFSALESEXTERNALFAILUREINTERNALFAILUREAPPRAISALPREVENTIONTHEMCGRAWHILLCOMPANIES,INC,2006ALLRIGHTSRESERVED38MANAGERIALACCOUNTING,11THEDITIONPROBLEM218CONTINUED3THEOVERALLIMPACTOFTHECOMPANYSINCREASEDEMPHASISONQUALITYOVERTHEPASTYEARHASBEENPOSITIVEINTHATTOTALQUALITYCOSTSHAVEDECREASEDFROM16OFSALESTO136OFSALESDESPITETHISIMPROVEMENT,THECOMPANYSTILLHASAPOORDISTRIBUTIONOFQUALITYCOSTSTHEBULKOFTHEQUALITYCOSTSINBOTHYEARS