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cost accounting
Cost Accounting A Managerial Emphasis 13th Edition Charles T. Horngren, Srikant M.Dater, George Foster, Madhav - Solutions
Describe two benefits of improving quality.
How does conformance quality differ from design quality? Explain.
Name two items classified as prevention costs.
Distinguish between internal failure costs and external failure costs.
Describe three methods that companies use to identify quality problems.
Companies should focus on financial measures of quality because these are the only measures of quality that can be linked to bottom-line performance. Do you agree? Explain
Give two examples of non-financial measures of customer satisfaction relating to quality in a balanced scorecard.
Given two examples of non-financials measures of internal-business-process quality in a balanced scorecard?
Distinguish between customer-response time and manufacturing lead time.
There is no trade-off between customer-response time and on-time performance. Do you agree? Explain.
Give two reasons why delays occur.
Companies should always make and sell all products whose selling prices exceed variable costs. Assuming fixed costs are irrelevant, do you agree? Explain
Describe the three main measures used in the theory of constraints.
Describe the four key steps in managing bottleneck operations.
Describe three ways to improve the performance of a bottleneck operation.
What is a management control system?
Describe three criteria you would use to evaluate whether a management control system is effective?
What is the relationship among motivation, goal congruence, and effort?
Name three benefits and two costs of decentralization?
Organizations typically adopt a consistent decentralization or centralization philosophy across all their business functions. Do you agree? Explain.
Transfer pricing is confined to profit centers. Do you agree? Explain.
What are three methods for determining transfer prices?
What properties should transfer-pricing systems have?
All transfer-pricing methods give the same division operating income. Do you agree? Explain.
Under what conditions is market-based transfer price optimal?
What is one potential limitation of full-cost-based transfer prices?
Give two reasons why the dual-pricing system of transfer pricing is not widely used?
Cost and price information play no role in negotiated transfer prices. Do you agree? Explain.
Under the general guideline for transfer pricing, the minimum transfer price will vary depending on whether the supplying division has unused capacity or not. Do you agree? Explain.
How should managers consider income tax issues when choosing a transfer-pricing method?
Give examples of financial and nonfinancial performance measures that can be found in each of the four perspectives of the balanced scorecard.
What are the six steps in designing accounting-based performance measures?
What factors affecting ROI does the DuPont method of profitability analysis highlight?
RI is not identical to ROI, although both measures incorporate income and investment into their computations. Do you agree? Explain.
Describe EVA.
Give three definitions of investment used in practice when computing ROI.
Distinguish between measuring assets based on current cost and historical cost.
What special problems arise when evaluating performance in multinational companies?
Why is it important to distinguish between the performance of a manager and the performance of the organization subunit for which the manager is responsible? Give an example.
Describe moral hazard.
Managers should be rewarded only on the basis of their performance measures. They should be paid no salary. Do you agree? Explain.
Explain the role of benchmarking in evaluating managers.
Explain the incentive problems that can arise when employees must perform multiple tasks as part of their jobs?
Describe two disclosures required by the SEC with respect to executive compensation.
Describe the four levers of control.
Value chain and classification of costs computer company, Company Computer incurs the following costs:a. Electricity costs for the plant assembling the Presario computer line of productsb. Transportation costs for shipping the Presario line of products to a retail chainc. Payments to David Kelly
Value chain and classification of costs, pharmaceutical company Merck, a pharmaceutical company, incurs the following costs.a. Cost of redesigning blister packs to make drug containers more tamperproof.b. Cost of videos sent to doctors to promote sales of a new drug.c. Cost of a toll-free telephone
Value chain and classification of costs, fast food restaurant Burger King, a hamburger fast food restaurant, incurs the following costs:a. Cost of oil for the deep fryer.b. Wages of the counter help who give customers the food they orderc. Cost of the costume for the King on the Burger King
Value chain, supply chain, and key success factors. A survey on the ways organizations are changing their management accounting systems reported the following:a. Company A now prepares a value-chain income statement for each brand it sells.b. Company B now presents in a single report all costs
Planning and control decisions. Conner Company makes and sells brooms and mops. It takes the following actions, not necessarily in the order given below. For each action (a—e below,) state whether it is a planning decision or a control decision.a. Conner asks its marketing team to consider ways
Five-step decision-making process, manufacturing. Garnicki Foods makes frozen dinners that it sells through grocery stores. Typical products include turkey dinners, pot roast fried chicken, and meat loaf. The managers at Garnicki have recently introduced a line of frozen chicken pies. They take the
Five-step decision-making process, service firm. Brite Exteriors is a firm that provides house painting services. Robert Brite, the owner, is trying to find new ways to increase revenues. Mr Brite per forms the following actions, not in the order listed.Classify each action below according to its
Professional ethics and reporting division performance. Marcia Miller is division controller and Tom Maloney is division manager of the Ramses Shoe Company. Miller has line responsibility to Maloney, but she also has staff responsibility to the company controllerMaloney is under severe pressure to
Planning and control decisions, Internet company. WebNews.com offers its subscribers several services, such as an annotated TV guide and local-area information on weather, restaurants, and movie theaters. Its main revenue sources are fees for banner advertisements and fees from subscribers. Recent
Strategic decisions and management accounting. A series of independent situations in which a firm is about to make a strategic decision follow.Decisions:a. Roger Phones is about to decide whether to launch production and sale of a cell phone with standard features.b. Computer Magic is trying to
Management accounting guidelines. For each of the following items, identify which of the management accounting guidelines applies: cost-benefit approach, behavioral and technical considerations, or different costs for different purposes.1. Analyzing whether to keep the billing function within an
Role of controller, role of chief financial officer. George Perez is the controller at Allied Electronics, a manufacturer of devices for the computer industry. He is being considered for a promotion to chief financial officer.1. In this table, indicate which executive is primarily responsible for
Software-procurement decision, ethics. Jorge Michaels is the Chicago-based controller of Fiesta Foods, a rapidly growing manufacturer and marketer of Mexican food products. Michaels is currently considering the purchase of a new cost-management package for use by each of the company’s six
Professional ethics and end-of-year actions. Janet Taylor is the new division controller of the snack-foods division of Gourmet Foods. Gourmet Foods has reported a minimum 15% growth in annual earnings for each of the past five years. The snack-foods division has reported annual earnings growth of
Professional ethics and earnings management. Harvest Day Corporation is a publishing company that produces trade magazines. The company’s stockholders are awaiting the announcement of Harvest Day’s earnings for the fiscal year, which ends on December 31. Market analysts have predicted earnings
Global company, ethical challenges. In June 2009, the government of Vartan invited bids for the construction of a cellular telephone network. ZenTel, an experienced communications company, was eager to enter the growing field of cellular telephone networks in countries with poor infrastructures for
Computing and interpreting manufacturing unit costs. Minnesota Office Products (MOP) produces three different paper products at the plant. It currently uses the following three-part classification for its manufacturing costs; direct materials, direct manufacturing labor, and manufacturing overhead
Direct indirect fixed and variable casts, Ceramica Company manufactures three kinds of hand- painted ceramic figurines in a two-step process. The first step is automated; in the Baking Department a machine presses the clay figurines into molds and bakes them. In the Painting Department the baked
Classification of casts, service sector Consumer Focus is a marketing research firm that organizes focus groups for consumer-product companies. Each focus group has eight individuals who are paid $50 per session to provide comments on new products. These focus groups meet in hotels and are led by a
Classification at costs, merchandising sector Home Entertainment Center (HEC) operates a large store in San Francisco. The store has both a video section and a music (compact disks and tapes) section. HEC reports revenues for the video section separately from the music section.Classify each of the
Classification of costs, manufacturing sector, the Fremont, California, plant of New United Motor Manufacturing, Inc. (NUMMI), a joint venture of General Motors and Toyota, assembles two types of cars (Corollas and Geo Prisms). Separate assembly lines are used for each type of car. Classify each of
Variable costs, fixed costs, total costs. Ana Compo is getting ready to open a small restaurant. She is on a tight budget and must choose between the following long-distance phone plans:Plan A: Pay 8 cents per minute of long-distance calling.Plan B: Pay a fixed monthly fee of $16 for up to 300
Variable costs and fixed costs Consolidated Minerals (CM) owns the rights to extract minerals from beach sands on Fraser Island. CM has costs in three areas:a. Payment to a mining subcontractor who charges $80 per ton of beach sand mined and returned to the beach (after being processed on the
Variable costs, fixed costs, relevant range. Yumball Candies manufactures jaw-breaker candies in a fully automated process. The machine that produces candies was purchased recently and can make 4,000 per month. The machine costs $6,000 and is depreciated using straight line depreciation over ten
Cost drivers and value chain. Prentice-Hall Publishing is developing a new book for international accounting. For the development and publication of this book, the company has undertaken the following activities in its value chain:Identify the customer need (what do faculty and students want in a
Cost drivers and functions. The list of representative cost drivers in the right column of this table are randomized with respect to the list of functions in the left column. That is, they do not match.Function
Total costs and unit costs, A student association has hired a band and a caterer for a graduation party. The band will charge a fixed fee of $1,000 for an evening of music, and the caterer will charge a fixed fee of $600 for the party setup and an additional $9 per person who attends. Snacks and
Total and unit cost decision making. Graham’s Glassworks makes glass flanges fur scientific use. Materials cost $1 per flange, and the glass blowers are paid a wage rate of $20 per hour. A glass blower blows 10 flanges per hour. Fixed manufacturing costs for flanges are $20,000 per period. Period
Inventoriable costs versus period costs. Each of the following cost items pertains to one of these companies: General Electric (a manufacturing-sector company), Safeway (a merchandising-sector company), and Google (a service-sector company):a. Perrier mineral water purchased by Safeway for sale to
Flow of inventoriable Costs Hofstra Plastics? selected data for August 2008 is presented here (in millions): Calculate the following costs: 1. Direct materials inventory 8/31/2008 2. Fixed manufacturing overhead costs for August 3. Direct manufacturing labor costs for August 4. Work-in-process
Computing cost of goads purchased and cast of goods sold. The following data are for Marvin Department Store. The account balances (in thousands) are for 2008. Compute (1) the cost of goods purchased and (2) the cost of goodssold.
Cost of goods manufactured. Consider the following account balances (in thousands) for the Canseco Company: If you want to use Excel to solve this problem, go to the Excel lab at www.prenhall.com/harngren/cost13e and download the template for Exhibit 2-8. 1. Prepare a schedule for the cost of
Income statement and schedule of cost of goods manufactured. The Howell Corporation has the following account balances (in millions): Prepare an income statement and a supporting schedule of cost of goods manufactured for the year ended December 31, 2009. (For additional questions regarding these
Interpretation of statements1. How would the answer to Problem 2-32 be modified if you were asked for a schedule of cost of goods manufactured and sold instead of a schedule of cost of goods manufactured? Be specific.2. Would the sales manager’s salary (included in marketing, distribution, and
Income statement and schedule of cost of goods manufactured. The following items (in millions) pertain to Chan Corporation: Chan?s manufacturing costing system uses a three-part classification of direct materials, direct manufacturing labor, and manufacturing overhead costs.? Prepare an income
Terminology, interpretation of statements 1. Calculate total prime costs and total conversion costs.2. Compute total inventoriable costs and period costs.3. Design costs and R&D costs are not considered product costs for financial statement purposes. When might some of these costs be
Labor cost overtime and idle time. Len Lippart is a line worker in the assembly department of Maxart Manufacturing. He normally earns $12 per hour, but gets time and a halt ($18 per hour) for overtime, over 40 hours per week. He earns double time if he works holidays even if he has not worked 40
Fire Loss, computing inventory costs a distraught employee, Fang W. Arson, put a torch to a manufacturing plant on a blustery February 26. The resulting blaze destroyed the plant and its contents. Fortunately, certain accounting records were kept in another building. They reveal the following for
Comprehensive problem on unit costs, product costs Tampa Office Equipment manufactures and sells metal shelving. It began operations on January 1, 2009. Costs incurred for 2009 are as follows (V stands for variable; F stands for fixed): Variable manufacturing costs are variable with respect to
Labor cost classification; ethics. Zix Manufacturing has recently opened a plant in Costa Melon in order to take advantage of certain tax benefits. In order to qualify for these tax benefits, the company’s direct manufacturing labor costs must be at least 20% of total manufacturing costs for the
Finding unknown amounts an auditor for the Internal Revenue Service is trying to reconstruct some partially destroyed records of two taxpayers. For each of the cases in the accompanying list, find the unknowns designated by the letters A throughD.
CVP Computations Fill in the blanks for each of the following independentcases.
CVP computations Patel Manufacturing sold 200,000 units of its product for $30 per unit In 2008. Variable cost per unit is $25 and total fixed costs are $800,000.1. Calculate la) contribution margin and (b) operating income2. Patel’s current manufacturing process is labor intensive. Kate
CVP analysis, changing revenues and costs Sunshine Travel Agency specializes in flights between Toronto and Jamaica. It books passengers on Canadian Air. Sunshine’s fixed costs are $22,000 per month. Canadian Air charges passengers $1,000 per round-trip ticket Calculate the number of tickets
CVP exercises the Super Donut owns and operates six doughnut outlets in and around Kansas City. You are given the following corporate budget data for next year:Revenues $10,000,000Fixed costs $ 1,800,000Variable costs $ 8,000,000Variable costs change with respect to the number of doughnuts
CV exercises. The Doral Company manufactures and sells pens. Currently, 5,000,000 units are sold per year at$0.50 per unit. Fixed costs are $900,000 per year. Variable costs are $0.30 per unit. Consider each case separately:1. a. What is the current annual operating income?b. What is the present
CVP analysis, income taxes Diego Motors is a small car dealership. On average, it sells a car for $26,000, which it purchases from the manufacturer for $22,000 each month, Diego Motors pays $60,000 in rent and utilities and $70,000 for salespeople’s salaries. In addition to their salaries,
CVP analysis, income taxes The Rapid Meal has two restaurants that are open 24 hours a day. Fixed costs for the two restaurants together total $450,000 per year Service varies from a cup of coffee to full meals. The average sales check per customer is $8.00. The average cost of food and other
CVP analysis, sensitivity analysis Hoot Washington is the newly elected leader of the Republican Party. Media Publishers is negotiating to publish Hoot’s Manifesto, a new book that promises to be an instant best-seller the fixed costs of producing and marketing the book will be $500,000. The
CVP analysis, margin of safety Suppose Latin Corp.’s breakeven point is revenues of $1,500,000. Fixed costs are $600,000.1. Compute the contribution margin percentage.2. Compute the selling price if variable costs are $15 per unit3. Suppose 80,000 units are sold. Compute the margin of safety in
Operating leverage Color Rugs is holding a two-week carpet sale at Jerry’s Club, a local warehouse store. Color Rugs plans to sell carpets for $500 each. The company will purchase the carpets from a local distributor for $350 each, with the privilege of returning any unsold units for a full
CVP analysis, international cost structure differences Knitwear, Inc., is considering three countries for the sole manufacturing site of its new sweater: Singapore, Thailand, or the United States. All sweaters are to be sold to retail outlets in the United States at $32 per unit these retail
Sales mix, new and upgrade customers. Zapo 1-2-3 is a top-selling electronic spreadsheet product. Zapo is about to release version 5.0. It divides its customers into two groups: new customers and upgrade customers (those who previously purchased Zapo 1-2-3, 4.0 or earlier versions). Although the
CVP analysis, multiple cost drivers Susan Wong is a distributor of brass picture frames. For 2008, she plans to purchase frames for $30 each and sell them for $45 each. Susan’s fixed costs are expected to be $240,000. Susan’s only other costs will be variable costs of $60 per shipment for
CVP, Not for profit the Sunrise Group (SG) is an environmentally conscious organization that buys land with the objective of preserving the natural environment. SG receives private contributions and takes no assistance from the government.Fixed costs of operating the organization are $1,000,000 per
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