In the book Advanced Managerial Accounting, Robert P. Magee discusses monitoring cost variances. A cost variance is the difference between a budgeted cost and an actual cost. Magee describes the following situation:

Michael Bitner has responsibility for control of two manufacturing processes. Every week he receives a cost variance report for each of the two processes, broken down by labor costs, materials costs, and so on. One of the two processes, which we'll call process A , involves a stable, easily controlled production process with a little fluctuation in variances. Process B involves more random events: the equipment is more sensitive and prone to breakdown, the raw material prices fluctuate more, and so on.

     "It seems like I'm spending more of my time with process B than with process A," says Michael Bitner. "Yet I know that the probability of an inefficiency developing and the expected costs of inefficiencies are the same for the two processes. It's just the magnitude of random fluctuations that differs between the two, as you can see in the information below."

     "At present, I investigate variances if they exceed $2,789, regardless of whether it was process A or B. I suspect that such a policy is not the most efficient. I should probably set a higher limit for process B."

The means and standard deviations of the cost variances of processes A and B, when these processes are in control, are as follows: (Round your z value to 2 decimal places and final answers to 4 decimal places.):

Furthermore, the means and standard deviations of the cost variances of processes A and B, when these processes are out of control, are as follows:

(a) Recall that the current policy is to investigate a cost variance if it exceeds $2,789 for either process. Assume that cost variances are normally distributed and that both Process A and Process B cost variances are in control. Find the probability that a cost variance for Process A will be investigated. Find the probability that a cost variance for Process B will be investigated. Which in-control process will be investigated more often.

(Click to select)Process AProcess B is investigated more often

(b) Assume that cost variances are normally distributed and that both Process A and Process B cost variances are out of control. Find the probability that a cost variance for Process A will be investigated. Find the probability that a cost variance for Process B will be investigated. Which out-of-control process will be investigated more often.

(Click to select)Process AProcess B is investigated more often.

(c) If both Processes A and B are almost always in control, which process will be investigated more often.

(Click to select)Process AProcess B will be investigated more often.

(d) Suppose that we wish to reduce the probability that Process B will be investigated (when it is in control) to .2912. What cost variance investigation policy should be used? That is, how large a cost variance should trigger an investigation? Using this new policy, what is the probability that an out-of-control cost variance for Process B will be investigated?

In the book Advanced Managerial Accounting, Robert P. Magee discusses monitoring cost variances. A cost variance is the difference between a budgeted cost and an actual cost. Magee describes the following situation:

Michael Bitner has responsibility for control of two manufacturing processes. Every week he receives a cost variance report for each of the two processes, broken down by labor costs, materials costs, and so on. One of the two processes, which we'll call process A , involves a stable, easily controlled production process with a little fluctuation in variances. Process B involves more random events: the equipment is more sensitive and prone to breakdown, the raw material prices fluctuate more, and so on.

     "It seems like I'm spending more of my time with process B than with process A," says Michael Bitner. "Yet I know that the probability of an inefficiency developing and the expected costs of inefficiencies are the same for the two processes. It's just the magnitude of random fluctuations that differs between the two, as you can see in the information below."

     "At present, I investigate variances if they exceed $2,789, regardless of whether it was process A or B. I suspect that such a policy is not the most efficient. I should probably set a higher limit for process B."

The means and standard deviations of the cost variances of processes A and B, when these processes are in control, are as follows: (Round your z value to 2 decimal places and final answers to 4 decimal places.):

Furthermore, the means and standard deviations of the cost variances of processes A and B, when these processes are out of control, are as follows:

(a) Recall that the current policy is to investigate a cost variance if it exceeds $2,789 for either process. Assume that cost variances are normally distributed and that both Process A and Process B cost variances are in control. Find the probability that a cost variance for Process A will be investigated. Find the probability that a cost variance for Process B will be investigated. Which in-control process will be investigated more often.

(Click to select)Process AProcess B is investigated more often

(b) Assume that cost variances are normally distributed and that both Process A and Process B cost variances are out of control. Find the probability that a cost variance for Process A will be investigated. Find the probability that a cost variance for Process B will be investigated. Which out-of-control process will be investigated more often.

(Click to select)Process AProcess B is investigated more often.

(c) If both Processes A and B are almost always in control, which process will be investigated more often.

(Click to select)Process BProcess A will be investigated more often.

(d) Suppose that we wish to reduce the probability that Process B will be investigated (when it is in control) to .2912. What cost variance investigation policy should be used? That is, how large a cost variance should trigger an investigation? Using this new policy, what is the probability that an out-of-control cost variance for Process B will be investigated?

Total Cost Concept of Product Costing

Willis Products Inc. uses the total cost concept of applying the cost-plus approach to product pricing. The costs of producing and selling 5,000 units of medical tablets are as follows:

Willis Products desires a profit equal to a 20% rate of return on invested assets of $733,875.

a. Determine the amount of desired profit from the production and sale of 5,000 units.
$ 146,775

b. Determine the total costs for the production of 5,000 units.

Determine the cost amount per unit for the production and sale of 5,000 units.
$ per unit

c. Determine the total cost markup percentage per unit. (rounded to one decimal place).
%

d. Determine the selling price per unit. Round to the nearest cent.
$ per unit

Cost Flows in a Job Cost System

Costs to date by job are shown.

Use the flow chart to complete the following sentences.

The ending inventory balance in the Work in Process-Assembly Dept is $

The cost of goods transferred into the Work in Process-Test & Packaging Dept is $

The cost of goods transferred out of the Work in Process- Test & Packaging Dept is $

The ending inventory balance in the Work in Process- Test & Packaging Dept is $

Cost Behavior Analysis in a Restaurant: High-Low Cost Estimation
Assume a Papa John's restaurant has the following information available regarding costs at representative levels of monthly sales:

(a) Identify each cost as being variable, fixed, or mixed.

Cost of food sold
AnswerVariableFixedMixed

Wages and fringe benefits
AnswerVariableFixedMixed

Fees paid delivery help
AnswerVariableFixedMixed

Rent on building
AnswerVariableFixedMixed

Depreciation on equipment
AnswerVariableFixedMixed

Utilities
AnswerVariableFixedMixed

Supplies (soap, floor wax, etc.)
AnswerVariableFixedMixed

Administrative costs
AnswerVariableFixedMixed

(b) Use the high-low method to develop a schedule identifying the amount of each cost that is fixed per month or variable per unit. Total the amounts under each category to develop an equation for total monthly costs.

Round variable cost answers to two decimal places.

(c) Predict total costs for a monthly sales volume of 9,800 units.
$Answer

In the book Advanced Managerial Accounting, Robert P. Magee discusses monitoring cost variances. A cost variance is the difference between a budgeted cost and an actual cost. Magee describes the following situation:

Michael Bitner has responsibility for control of two manufacturing processes. Every week he receives a cost variance report for each of the two processes, broken down by labor costs, materials costs, and so on. One of the two processes, which we'll call process A , involves a stable, easily controlled production process with a little fluctuation in variances. Process B involves more random events: the equipment is more sensitive and prone to breakdown, the raw material prices fluctuate more, and so on.

     "It seems like I'm spending more of my time with process B than with process A," says Michael Bitner. "Yet I know that the probability of an inefficiency developing and the expected costs of inefficiencies are the same for the two processes. It's just the magnitude of random fluctuations that differs between the two, as you can see in the information below."

     "At present, I investigate variances if they exceed $2,931, regardless of whether it was process A or B. I suspect that such a policy is not the most efficient. I should probably set a higher limit for process B."

The means and standard deviations of the cost variances of processes A and B, when these processes are in control, are as follows: (Round your z value to 2 decimal places and final answers to 4 decimal places.):

Furthermore, the means and standard deviations of the cost variances of processes A and B, when these processes are out of control, are as follows:

(a) Recall that the current policy is to investigate a cost variance if it exceeds $2,931 for either process. Assume that cost variances are normally distributed and that both Process A and Process B cost variances are in control. Find the probability that a cost variance for Process A will be investigated. Find the probability that a cost variance for Process B will be investigated. Which in-control process will be investigated more often.

(b) Assume that cost variances are normally distributed and that both Process A and Process B cost variances are out of control. Find the probability that a cost variance for Process A will be investigated. Find the probability that a cost variance for Process B will be investigated. Which out-of-control process will be investigated more often.

(c) If both Processes A and B are almost always in control, which process will be investigated more often.

(d) Suppose that we wish to reduce the probability that Process B will be investigated (when it is in control) to .2877. What cost variance investigation policy should be used? That is, how large a cost variance should trigger an investigation? Using this new policy, what is the probability that an out-of-control cost variance for Process B will be investigated?

Cost of Production Report: Average Cost Method

Sunrise Coffee Company roasts and packs coffee beans. The process begins in the Roasting Department. From the Roasting Department, the coffee beans are transferred to the Packing Department. The following is a partial work in process account of the Roasting Department at December 31:

Required:

Prepare a cost of production report, using the average cost method, and identify the missing amounts for Work in Process—Roasting Department. If required, round your cost per equivalent unit answer to two decimal places.

Kookaburra Ltd used the cost model to measure its machine. Machine Z had cost of $80 000 and had a carrying amount of $70 000 at 30 June 2020 and is depreciated on a straight-line basis over a 10-year period.

On 31 December 2020, the directors of Kookaburra Ltd decided to change the basis of measuring the equipment from the cost model to the revaluation model. Machine Z was revalued to $70 000 with an expected useful life of 8 years.

REQUIRED

Provide the numbers for the journal entries in the blanks below for Machine Z on 31 December 2020 and on 30 June 2021. Complete the four blanks.(You don't need to provide the numbers for "??")

-----

31 December 2020

a)

            Depreciation expense – Machine Z                          Dr   

                     Accumulated depreciation – Machine Z          Cr                                       

b)

            Accumulated depreciation – Machine Z                   Dr   

                     Machine Z                                                        Cr                                       

c)

            Machine Z                                                                 Dr    

                     Gain on revaluation – Machine Z (OCI)         Cr                                       

            Gain on revaluation – Machine Z (OCI)                  Dr ??

                     Asset revaluation surplus – Machine Z           Cr ??   

30 June 2021

d)

            Depreciation expense – Machine Z                          Dr   

                     Accumulated depreciation – Machine Z          Cr                                       

Cost of Production Report: Average Cost Method

Sunrise Coffee Company roasts and packs coffee beans. The process begins in the Roasting Department. From the Roasting Department, the coffee beans are transferred to the Packing Department. The following is a partial work in process account of the Roasting Department at December 31:

Required:

Prepare a cost of production report, using the average cost method, and identify the missing amounts for Work in Process—Roasting Department. If required, round your cost per equivalent unit answer to two decimal places.