Questions and Answers of Advanced Accounting

Refer to the data given in Problem 15.35 for Pally Communications Company prior to the JIT purchasing agreement. The lead time required to receive an order of XL-20 is one month.Required:1. Assuming
Bundaberg Glass Company is a distributor of ear windscreens. The windscreens are manufactured in Japan and shipped to Bundaberg. Management is expecting an annual demand of to 10 800 windscreens. The
Jack Smart recently ran into an old colleague, Bob Lee, at a cocktail party. They had both worked together at a major accounting firm until five years ago. Jack started telling Bob about the
Explain why it is important for organisations to create collaborative relationship with suppliers. To illustrate your answer, search the web to find a company that has created such relationships.
Farm Fresh Ltd is a manufacturer of farm equipment that is sold by a network of distributors across Australia and New Zealand. The Service Division manufactures spare parts for the various models of
Customer profitability analysis: manufacturer Feather Light manufactures optic cables for the telecommunications industry. The cost management staffs have just completed a customer profitability
Zelda Ltd manufactures toys and games. The table below shows the costs and revenues of a toy called Dragon Mouth over the first five years of its life. Dragon Mouth is a plastic monster that swallows
Hungry Jills (Ws) makes and delivers burgers for the takeaway market. Its home delivery service is a source of competitive advantage for the company, as most other fast food burger restaurants cater
Fast Lane Ltd manufactures motorbikes and is located in Brisbane. More than 70 percent of the caste the company's motorbikes consists of material and components, which are purchased from Australia,
Outline some criteria that may be used to select suppliers. Explain how these criteria can also be used to evaluate supplier performance.
Explain how activity-based costing can be used to determine the total cost of ownership.
Describe some measures that can be used to evaluate supplier delivery performance and supplier quality performance.
What are the likely implications for a business that uses EOQ data, if some of the underlying assumptions do not match reality? Provide an example to illustrate your answer.
Under EOQ approaches, order costs can be minimised by placing large infrequent orders of inventory. However, under JIT, inventory-related costs are reduced by ordering frequently and in small
Describe the traditional approaches to controlling costs used by many Australian businesses. How does cost management differ from these approaches?
What is a product life cycle and why is this concept important for managing process costs?
Explain the trade-off between pre-production costs and production costs over the product life cycle. How can understanding this trade-off help a business manage its costs?
How can a business use target costing to reduce costs and plan profits?
A target cost cannot lead to cost reduction, when it is simply the outcome of setting a target selling price and a target profit margin: Provide a response to this statement?
What is value-engineering, and what role does it play in target costing?
Explain the theory of constraints and how it may be used to manage costs.
According to throughput accounting, how should performance is measured at the operational level? What advantages and disadvantages do these measures offer?
Define quality and explain the difference between quality of design and quality of conformance.
When managing the costs of quality, explain why it is not necessarily a problem if appraisal costs and prevention costs increase.
Describe the similarities and differences between total quality management and Six Sigma.
Non-value-added activities also occur in service firms. Identify four potential non-value-added activates in a: 1. Library 2. Sports equipment retailer 3. Hospital. Provide your reasons.
Favio Ltd manufactures high-impact plastic bike helmets. The A-1 helmet is produced in two processes: plastic extruding and assembly. The company has adopted an activity-based costing system. The
Teskor Pty Ltd manufactures paintbrushes at Lonsdale. The management accountant, Mary Malone, has developed an activity-based costing system for the company. The activities in the timber handle area
Solarcare Ltd manufactures plastic lenses for sunglasses at Queanbeyan in New South Wales one of its too selling lines is the XRP Lens, which has a scratch-resistant polarised surface. Earlier this
Suppose you have just started a business to manufacture your latest invention, the Glammaglob gadget. You estimate that after a few years on the market these gadgets will sell for about $250. This
Target costing is often used to manage costs in the electronics industry and automotive industry. Required: Visit the website of a company that manufactures electronic products. Select a new product
Describe the four steps used in activity based management to reduce costs.
Life is simple at the Sleepy Time Company. The business produces a single product in a straightforward production process involving machines A, B and C, each run by a separate department. The process
Mick and Donald run a fast food outlet on the road between Hay and Narrandera in New South Wales. This road is one of the main transport corridors between Adelaide and Sydney. For most of the day,
The following costs were incurred by Valley Fabrications Ltd to maintain the quality of its products during April• Operating an X-ray machine to detect faulty welds, $5400• Repairs to faulty
You are the management accountant for Runmoe Springs Ltd, a company that manufactures suspension components for the automotive industry. Currently, costing in the manufacturing area is based on a
Eric's Engines Ltd (EEL) manufactures a variety of small engine parts for The company's manufacturing overhead cost budget for the current year is as follows:These budgeted overhead costs total $1
Outline the differences between root cause cost drivers and activity cost driver.
Refer to the data for Pickwick Paper Company in Problem 16.39. Required: 1. Draw a diagram of the current production process. 2. Suggest ways in which the process could be re-engineered. 3.
In a recent state government budget, the Motor Registration and Licensing Office suffered substantial cutbacks. As a result, each department has been asked to submit a cost budget for the coming year
Pandana Fashions Ltd produces clothes for the 'young professionals' market. The desing department currently working on two potential product lines: After-five Wear and Weekend Wear. The market
Ellipsis Electrocs Ltd produces speakers for high fidelity sound systems. Because of the rapid rate of technological innovation in the hi-fi market, most of the company's products have short life
Alexis Klark, managing director of Pharsalia Electronics (PE), is concerned about the prospects of one of its major products. She has been reviewing a marketing report with Jeff Keller, marketing
Landers Ltd is a major Australian bicycle manufacturer. Over the last decade, bicycle manufactures. Taiwan and Korea have been able to price their bikes below those of the Landers products, but the
The concept of sustainable development applies to national economies but has nothing to do with individual businesses. Discuss.
Explain why managers might wish to recognise Tier 4 and Tier 5 environmental costs, both of which are external to the organisation?
Explain how environmental and social cost information may change management decision making. Provide two examples.
Provide an example of an environmental and social impact that, if reduced could not reduce costs for: (a) A local government council (b) A motor vehicle repairer (c) A university.
Refer to the 'Real life'. Explain how a supply chain perspective enables GH Michel; reduce the costs and environmental impact of its wool processing.
Refer to the 'Real life'. What did the life cycle assessment for Oxford outstanding win show? How might managers across the value chain use this information to reduce the environmental impact of this
Provide two examples to illustrate how organisations can work with Customer to reduce environmental impacts.
Outline the major types of performance indicators that may be used under ISO 14031. Provide examples of each type.
How can the balanced scorecard be adapted to include sustainability measures?
Review the sustainability balanced scorecard in Exhibit 17.10. For each of the four perspective provide an additional performance indicator that addresses an aspect of environment impact social
Describe how the capital expenditure evaluation process can take into account environmental social impacts.
The 'Real life' states that an increasing number of companies are reporting their sustainability performance. Explain why organisations report their sustainability performance, particularly when in
Provide three examples of social impacts that may be associated with the block of residential apartments in a Brisbane inner suburb.
Freaky Furniture Ltd is looking at two alternatives for disposing of an annual production of 300 kilolitres of waste paint, both of which are acceptable to the Victorian Environment Protection
Prepare a life cycle analysis for the production of a McDonald's burger. Identify possible environmental and social impacts for each stage of your life cycle analysis.
Return to the Windsor General Hospital problem, P12.34. For each of the five departments, provide two different examples of performance measures that could be used to monitor economic, environmental
Penmark Orchards and Cannery is considering buying high pressure cleaning equipment that vacuums waste liquids into a storage tank and then purifies the waste. The waste water can then be pumped back
An aluminium refinery in Gladstone is planning to implement an environmental management project. The project is to purchase new equipment that will lower operating costs and reduce emissions from the
Surf Life Saving Australia (SLSA) is Australia's major water safety, drowning prevent rescue organisation. SLSA aims to create a safe environment at beaches around Australia water patrols and through
Penrith Parts manufacturer's components for the European auto industry auto and needs to be complaints ISO 14031. Oriana Davies has been hired by the CEO to develop a system of performance measures
What are integrated reports and how do they relate to sustainability reports?
The environmental Guidelines of Lufthansa Airlines state:Environmental protection is a high priority goat-Protecting the environment is an expression of corporate responsibility. We aim for constant
The 'Peal life' explains ho Arriurn has structured its sustainability approach around five sustainability drivers-economic community environment, people and market-and the two core values of safety
Take a walk around your campus with your friends. Make a list of any potential environmental costs for which you see evidence. Classify each of these costs according to the framework in Exhibit 17.5.
Margaret River Winery has developed the following analysis of its environmental costs and revenues for the last financial year: Employee training cost to improve the management of effluent
The EPA Victoria website (www.epa.vic.gov.au/business-and-industry/lower-your-imact/ereps/erep-case-studies) has a series of case studies of organisation ions that have undertaken environmental and
Clean Living Ltd is a travel companies that specialises in 'green' tours-package tours to environmentally sensitive destinations. These types of tours are growing in popularity, and while Clean
Parks Spice Company is considering making dramatic changes to the company. It currently has production facilities in Wollongong. New South Wales. as well as in South East Asia. The CEO, Jayne
Stakeholder groups, such as employees, customers and community groups may influence organisations to adopt sustainable work practices. For each stakeholder group, provide an example of how it can
Origin Energy is an integrated energy company, involved in gas exploration and production, power generation and energy retailing. The company operates Australia's market. Origin supplies electricity
Explain how management accounting systems can be adapted to enable an organisation 'to engage in sustainability reporting.
Outline the challenges for organisatioris that seek to measure the future impact of their current activities on the environment and society.
What is an environmental management system (EMS) and how does this relate to environmental management accounting (EMA)?
Provide two examples of how management accounting information can be used to support a sustainability approach.
Explain the difference between Tier 2 and Tier 3 environmental costs and provide two examples of each.
Briefly explain how the break-even point is calculated(a) In sales units(b) In sales dollars.(c) Using a graph.
Refer to the Real life on page 815. How could cost volume profit analysis be used in budgeting and making decisions about pricing coffee and cakes in a cafe?
Using the example of the salmon producer Tassal, as described in the Real life, explain what sales mix means. How could a weighted average contribution margin and used in CVP analysis?
A car rental agency rents small, medium and family-sized cars. What assumptions would be made for the purpose of a cost volume profit analysis? Does this mean that CVP analyst is of little value to
Explain how income taxes affect the calculation of a firm's break-even point.
I've studied economics, so I know that the price of a product can influence the quantity sold. CVP ignores this. Discuss.
Explain briefly how an activity based approach to analysing production costs and customer-related costs would affect cost volume profit analysis.
Explain how sensitivity analysis can be used to help deal with uncertainty in cost volume profit analysis. How can computer modelling help with sensitivity analysis?
Explain how computer modelling can help a business to use a CVP approach when its cost structure is not consistent with the assumptions underlying CVP analysis.
What is operating leverage? How can an understanding of this concept be useful to managers?
East Ltd manufactures Blu-ray players using a completely automated production process. West Ltd also manufactures Blu-ray players, but its products are assembled manually. How will these two firms
A company with capital intensive processes typically will have a higher break-even point, greater operating leverage, and larger safety margin than will a labour intensive firm. True or false?
Refer to the data given in Exercise 18.23. (Ignore income taxes)Required1. Prepare a fully labelled profit volume graph for the Sydney HiTops.2. What is the safety margin if the team plays a 1o-game
Lucid Images Ltd manufactures premium high definition televisions. The firm's fixed costs are $4 000 000 per year. The variable cost of each TV is $2000, and the TVs are sold for $3000 each. The
Racing Wheels Bicycle Shop sells racing bicycles. For the purposes of a cost volume profit analysis, the shop owner has divided sales into two categories, as followsThree-quarters of the shop's sales
Risky Scaffolding provides services to building contractors. The firm's contribution margin ratio is 0.25 and its annual fixed costs are $400 000. The firm's income tax rate is 40 percent.Required:1.
East Asian Publications specializes in reference books that keep abreast of the rapidly changing political and economic issues in the Asia-Pacific region. The results of the company's operations
A contribution margin statement for Pavlova Lodge is shown below. (Ignore income taxes.)Required:1. Show the hotel's cost structure by indicating the percentage of the hotel's revenue represented by
Explain how the formula to estimate break-even sales revenue can be adjusted to estimate the sales revenue required to achieve a target net profit (both before and tax).
Refer to the data given in Exercise 18.29.In E18.29 A contribution margin statement for Pavlova Lodge is shown below. (Ignore income taxes.)Required: Prepare a new contribution margin statement for
Brighton Electronics Ltd produces a single product called The Gismo. To produce this product, Bright purchases a key component from Supplier A. Supplier A has two versions of this component and both

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