TEST BANK
Fundamentals of Cost Accounting, 7th Edition
by Lanen & Maher Chapters 1 - 18
Versionj1 1
,TABLE OF CONTENTS
j j j
INTRODUCTIONjANDjOVERVIEW
ChapterjOne:jCostjAccounting:jInformationjforjDecisionjMaking
ChapterjTwo:jCostjConceptsjandjBehavior
COSTjANALYSISjANDjESTIMATION
ChapterjThree:jFundamentalsjofjCost-Volume-ProfitjAnalysis
ChapterjFour:jFundamentalsjofjCostjAnalysisjforjDecisionjMaking
ChapterjFive:jCostjEstimation
COSTjMANAGEMENTjSYSTEMS
ChapterjSix:jFundamentalsjofjProductjandjServicejCosting
ChapterjSeven:jJobjCosting
ChapterjEight:jProcessjCosting
ChapterjNine:jActivity-BasedjCosting
ChapterjTen:jFundamentalsjofjCostjManagement
ChapterjEleven:jServicejDepartmentjandjJointjCostjAllocation
MANAGEMENTjCONTROLjSYSTEMS
ChapterjTwelve:jFundamentalsjofjManagementjControljSystems
ChapterjThirteen:jPlanningjandjBudgeting
ChapterjFourteen:jBusinessjUnitjPerformancejMeasurement
ChapterjFifteen:jTransferjPricing
ChapterjSixteen:jFundamentalsjofjVariancejAnalysis
ChapterjSeventeen:jAdditionaljTopicsjinjVariancejAnalysis
ChapterjEighteen:jPerformancejMeasurementjtojSupportjBusinessjStrategy j
Versionj1 2
,Chapterj01j7
ej
Answers at the end of each chapter
j j j j j j
1) CarleyjIncorporatedjincursjmanyjtypesjofjcostsjinjitsjoperations.jPlacejthejnumberjofj
thejappropriatejstagejinjthejvaluejchainjinjColumnj2jinjthejblankjnextjtojeachjcostjinjColumnj
1.
Cost StagejinjthejValuejChain
Transportationjcostsjtojshipjvansjtojcustomers 1. CustomerjService
Laborjcostsjforjfactoryjworkers 2.jDistribution
Overtimejcostsjforjscientistsjworkingjonjnewjengine 3. Researchj&jD
jtechnology evelopment
Utilitiesjcostjforjthejdesignjtestingjcenter 4. Marketing
Costsjtojsurveyjcustomersjaboutjtheirjsatisfaction
5. Production
Costsjtojsponsorjajsportingjevent 6.jDesign
2) SuperMaxjisjanjintegratedjproviderjofjgeneticallyjengineeredjcorn.jManyjtypesjofjc
ostsjarejincurredjinjitsjoperations.jPlacejthejnumberjofjthejappropriatejstagejinjthejvaluejch
ainjinjColumnj2jinjthejblankjnextjtojeachjcostjinjColumnj1.
Cost StagejinjthejValue
Chain
Warehousejcostsjtojstorejseedjawaitingjshipmen 1. CustomerjService
tjtojcustomers
Utilityjcostsjforjseedjmill 2.jDistribution
Equipmentjcostsjinjgeneticsjlaboratory 3.jResearchj&
Development
Laborjcostsjtojstaffjhelp-linejcalljcenterj j 4.jMarketing
Costsjtojpreparejadvertisingjcampaignjinjnationaljagr 5. Production
iculturejmagazine
Costsjtojcontractjwithjgrowersjtojprovidejseed 6. Design
Versionj1 3
, 3) Travon'sjLimojServicejprovidesjtransportationjservicesjinjandjaroundjBentonville.jIt
sjprofitsjhavejbeenjdeclining,jandjmanagementjisjplanningjtojaddjajpackagejdeliveryjservic
ejthatjisjexpectedjtojincreasejrevenuejbyj$275,000jperjyear.jThejtotaljcostjtojleasejaddition
aljdeliveryjvehiclesjfromjthejlocaljdealerjisj$60,000jperjyear.jThejpresentjmanagerjwilljconti
nuejtojsupervisejalljservices.jHowever,jlaborjandjutilitiesjcostsjwilljincreasejbyj40%jandjrentj
andjotherjcostsjwilljincreasejbyj15%jwhenjthejpackagejdeliveryjservicejisjadded.
Travon’sjLimojServicejAnnua
ljIncomejStatement
Before Expansion
SalesjRevenue $j960,000
Costs:
VehiclejLeases $j400,000
Labor 290,000
Utilities 50,000
Rent 100,000
OtherjCosts 60,000
Manager’sjSalary 120,000
TotaljCosts 1,020,000
OperatingjProfitj(Loss) $j(60,000)
a. Preparejajreportjofjthejdifferentialjcostsjandjrevenuesjifjthejdeliveryjservicejisjadded.
b. Shouldjmanagementjstartjupjthejdeliveryjservice?jExplainjyourjanswer.
Versionj1 4
Fundamentals of Cost Accounting, 7th Edition
by Lanen & Maher Chapters 1 - 18
Versionj1 1
,TABLE OF CONTENTS
j j j
INTRODUCTIONjANDjOVERVIEW
ChapterjOne:jCostjAccounting:jInformationjforjDecisionjMaking
ChapterjTwo:jCostjConceptsjandjBehavior
COSTjANALYSISjANDjESTIMATION
ChapterjThree:jFundamentalsjofjCost-Volume-ProfitjAnalysis
ChapterjFour:jFundamentalsjofjCostjAnalysisjforjDecisionjMaking
ChapterjFive:jCostjEstimation
COSTjMANAGEMENTjSYSTEMS
ChapterjSix:jFundamentalsjofjProductjandjServicejCosting
ChapterjSeven:jJobjCosting
ChapterjEight:jProcessjCosting
ChapterjNine:jActivity-BasedjCosting
ChapterjTen:jFundamentalsjofjCostjManagement
ChapterjEleven:jServicejDepartmentjandjJointjCostjAllocation
MANAGEMENTjCONTROLjSYSTEMS
ChapterjTwelve:jFundamentalsjofjManagementjControljSystems
ChapterjThirteen:jPlanningjandjBudgeting
ChapterjFourteen:jBusinessjUnitjPerformancejMeasurement
ChapterjFifteen:jTransferjPricing
ChapterjSixteen:jFundamentalsjofjVariancejAnalysis
ChapterjSeventeen:jAdditionaljTopicsjinjVariancejAnalysis
ChapterjEighteen:jPerformancejMeasurementjtojSupportjBusinessjStrategy j
Versionj1 2
,Chapterj01j7
ej
Answers at the end of each chapter
j j j j j j
1) CarleyjIncorporatedjincursjmanyjtypesjofjcostsjinjitsjoperations.jPlacejthejnumberjofj
thejappropriatejstagejinjthejvaluejchainjinjColumnj2jinjthejblankjnextjtojeachjcostjinjColumnj
1.
Cost StagejinjthejValuejChain
Transportationjcostsjtojshipjvansjtojcustomers 1. CustomerjService
Laborjcostsjforjfactoryjworkers 2.jDistribution
Overtimejcostsjforjscientistsjworkingjonjnewjengine 3. Researchj&jD
jtechnology evelopment
Utilitiesjcostjforjthejdesignjtestingjcenter 4. Marketing
Costsjtojsurveyjcustomersjaboutjtheirjsatisfaction
5. Production
Costsjtojsponsorjajsportingjevent 6.jDesign
2) SuperMaxjisjanjintegratedjproviderjofjgeneticallyjengineeredjcorn.jManyjtypesjofjc
ostsjarejincurredjinjitsjoperations.jPlacejthejnumberjofjthejappropriatejstagejinjthejvaluejch
ainjinjColumnj2jinjthejblankjnextjtojeachjcostjinjColumnj1.
Cost StagejinjthejValue
Chain
Warehousejcostsjtojstorejseedjawaitingjshipmen 1. CustomerjService
tjtojcustomers
Utilityjcostsjforjseedjmill 2.jDistribution
Equipmentjcostsjinjgeneticsjlaboratory 3.jResearchj&
Development
Laborjcostsjtojstaffjhelp-linejcalljcenterj j 4.jMarketing
Costsjtojpreparejadvertisingjcampaignjinjnationaljagr 5. Production
iculturejmagazine
Costsjtojcontractjwithjgrowersjtojprovidejseed 6. Design
Versionj1 3
, 3) Travon'sjLimojServicejprovidesjtransportationjservicesjinjandjaroundjBentonville.jIt
sjprofitsjhavejbeenjdeclining,jandjmanagementjisjplanningjtojaddjajpackagejdeliveryjservic
ejthatjisjexpectedjtojincreasejrevenuejbyj$275,000jperjyear.jThejtotaljcostjtojleasejaddition
aljdeliveryjvehiclesjfromjthejlocaljdealerjisj$60,000jperjyear.jThejpresentjmanagerjwilljconti
nuejtojsupervisejalljservices.jHowever,jlaborjandjutilitiesjcostsjwilljincreasejbyj40%jandjrentj
andjotherjcostsjwilljincreasejbyj15%jwhenjthejpackagejdeliveryjservicejisjadded.
Travon’sjLimojServicejAnnua
ljIncomejStatement
Before Expansion
SalesjRevenue $j960,000
Costs:
VehiclejLeases $j400,000
Labor 290,000
Utilities 50,000
Rent 100,000
OtherjCosts 60,000
Manager’sjSalary 120,000
TotaljCosts 1,020,000
OperatingjProfitj(Loss) $j(60,000)
a. Preparejajreportjofjthejdifferentialjcostsjandjrevenuesjifjthejdeliveryjservicejisjadded.
b. Shouldjmanagementjstartjupjthejdeliveryjservice?jExplainjyourjanswer.
Versionj1 4
