Questions and Answers of Cost And Management Accounting An Introduction

Describe a traditional responsibility accounting system. LO5
Describe a contemporary responsibility accounting system. How does it differ from traditional respon¬ sibility accounting? LO5
Explain how materials price variances can work against the JIT objectives of zero inventories and total quality control. LO5
Explain how materials usage variances can impede JIT manufacturing. LO5
Traditional currently attainable standards are not compatible with the objective of continuous im¬ provement. Do you agree? Explain your reasoning. LO5
What are the two dimensions of the activity-based management model? How do they differ? LO5
What is driver analysis? What role does it play in process value analysis? LO5
What is meant by activity inputs? Activity output? Activity output measurement? LO5
What is activity analysis? Why is this approach com¬ patible with the goal of continuous improvement? LO5
Identify and define four different ways to manage activities so that costs can be reduced. LO5
What are nonvalue-added activities? Nonvalue- added costs? Give an example of each. LO5
What are value-added costs? LO5
Explain how value-added standards are used to identify value-added and nonvalue-added costs. LO5
What is the standard cost allowed for nonvalue- added activities that are unnecessary? Explain why. LO5
Explain how trend reports of nonvalue-added cost can be used. LO5
Explain how benchmarking can be used to improve activity performance. LO5
In controlling nonvalue-added costs, explain how ac¬ tivity output measures (activity drivers) can induce behavior that is either beneficial or harmful. How can value-added standards be used to
Describe the benefits of life cycle cost budgeting. LO5
Explain how the use of multiple activity drivers can improve performance reports that compare actual costs with budgeted costs. LO5
What is the meaning of the fixed activity volume variance? Explain how the unused capacity variance is useful to managers. LO5
Why are nonfinancial measures of performance used more at the operating level? LO5
In a non-JIT company, price reductions for raw ma¬ terials are often obtained through the use of quantity discounts. In a JIT company, how are price reduc¬ tions obtained? LO5
Identify and define two operational measures of de¬ livery performance. LO5
What is cycle time? Velocity? LO5
What is manufacturing cycle efficiency? LO5
Explain why time-based performance measures are becoming more important. LO5
Identify two operational measures of machine performance. LO5
Machine performance is more important in a JIT en¬ vironment than in a non-JIT environment. Do you agree? Explain. LO5
Define joint costs, split-off point and further processing costs. (p. 188)
Distinguish between joint products and by-products. (p. 188)
Provide examples of industries that produce both joint products and by-products.(pp. 187-188)
Explain why it is necessary to allocate joint costs to products. (pp. 188-189)
Describe the four different methods of allocating joint costs to products.(pp. 189-193)
Why is the physical measure method considered to be an unsatisfactory joint-cost allocation method? (p. 790)
Explain the factors that should influence the choice of method when allocating joint costs to products. (p. 193)
Explain the financial information that should be included in a decision as to whether a product should be sold at the split-off point or further processed. (pp. 195-196)
Describe the accounting treatment of by-products. (op. 196-197)
Acompany simultaneously produces three products (X, Y and Z) from a single process. X and Y are processed further before they can be sold; Z is a by-product that is sold immediately for $6 per unit
In a process where there are no work in progress stocks, two joint products(J and K) are created. Information (in units) relating to last month is as follows:Joint production costs last month were
Two products (W and X) are created from a joint process. Both products can be sold immediately after spilt-off. There are no opening inventories or work in progress. The following information is
Two products G and H are created from a joint process. G can be sold immediately after split-off. H requires further processing into product HH before it is in a saleable condition. There are no
Two joint products A and B are produced in a process. Data for the process for the last period are as follows:Common production costs in the period were $12 000. There was no opening inventory. Both
At the end of manufacturing in Process |, product K can be sold for £10 per litre.Alternatively, product K could be further processed into product KK in process II at an additional cost of £1 per
Joint cost apportionment and decisions on further processing A process costing £200000 produces three products - A, B and C. Output details are as follows: 1 Product A 6000 litres Product B 10000
Required:(a) Explain the following terms:(i) normal process loss;(ii) joint product;(iii) by-product;and state the appropriate costing treatments for normal process loss and for by-products.(10
Process costing and a decision on further processing Luiz Ltd operates several manufacturing processes in which stocks of work in progress are never held. In process K, joint products (P1 and P2) are
Explain the role of the accountant in the international environment. LO1
Discuss the varying levels of involvement that firms can take in interna¬ tional trade. LO2
Explain the ways accountants can manage foreign currency risk. LO3
Explain why multinational firms choose to decentralize. LO4
Explain how environmental factors can affect performance evaluation in the multinational firm. LO5
Discuss the role of transfer pricing in the multinational firm. LO6
Discuss efhical issues that affect firms operating in the international environment. LO7
How do international issues affect the role of the accountant? LO7
What is a foreign trade zone, and what advantages does it offer U.S. companies? LO7
Define outsourcing, and discuss why companies may outsource various functions. LO7
What are joint ventures, and why do companies en¬ gage in them? LO7
What are maquiladoras? Why have so many U.S. firms joined forces with maquiladoras? LO7
What is an exchange rate for currency? What is the difference between a spot rate and future rate? LO7
Define currency appreciation. What impact does cur¬ rency appreciation have on a company's ability to import goods? LO7
What impact does currency appreciation have on a company's ability to export its goods? LO7
Mexico is considering devaluing the peso versus the dollar. You are the controller for a company consid¬ ering production in Mexico through the maquiladora program. How does this news affect the
What is transaction risk? Economic risk? Translation risk? LO7
What is hedging? If a company imports raw mate¬ rials, payable in full in 90 days in the foreign cur¬ rency, why might the company want to hedge? LO7
The performance of the subsidiary manager is equiv¬ alent to the performance of a subsidiary. Do you agree? Explain. LO7
What environmental factors may affect divisional performance in a multinational firm? LO7
Define the term budget. How are budgets used in planning? LO5
Define control. How are budgets used to control? LO5
Discuss some of the reasons for budgeting. LO5
What is the master budget? An operating budget? A financial budget? LO5
Explain the role of a sales forecast in budgeting. What is the difference between a sales forecast and a sales budget? LO5
All budgets depend on the sales budget. Is this true? Explain. LO5
How do the master budgets differ among manufac- turing, merchandising, and service organizations? LO5
Why is goal congruence important? LO5
Discuss the roles of monetary and nonmonetary in¬ centives. Do you believe that nonmonetary incen¬ tives are needed? Why? LO5
What is participative budgeting? Discuss some of its advantages. LO5
A budget too easily achieved will lead to diminished performance. Do you agree? Explain. LO5
What is the role of top management in participative budgeting? LO5
Explain why a manager has an incentive to build slack into the budget. LO5
Discuss the differences between static and flexible budgets. Why are flexible budgets superior to static budgets for performance reporting? LO5
Why is it important for a manager to receive fre¬ quent feedback on his or her performance? LO5
Explain how a manager can milk the firm to improve budgetary performance. LO5
Identify performance measures other than budgets that can be used to discourage myopic behavior. Dis¬ cuss how you would use these measures. LO5
How important are the behavioral aspects of a bud¬ getary control system? Explain. LO5
Explain the difference between incremental budget¬ ing and zero-base budgeting. LO5
Advocates of zero-base budgeting maintain that padding the budget is easier imder an incremental system than under a zero-base system. Explain why padding is less likely for a zero-base budgeting
Distinguish between an integrated and interlocking accounting system. (p. 122)
Explain the purpose of control accounts. (9. 122)
List the accounting entries for the purchase of issues of direct and indirect materials.(pp. 122-126)
List the accounting entries for the payment and the allocation of gross wages.(pp. 126-127)
List the accounting entries for the payment and the allocation of overheads.(pp. 128-129)
Explain the major features of contract costing. (op. 132-135)
Define progress payments, architect’s certificates, retention money, cost of work certified and notional profit. (9p. 133-137)
Describe the four guidelines that should be used to determine the amount of profit that should be taken for a contract during a specific period. (pp. 136-137)
Acompany operates an integrated cost and financial accounting system. The accounting entries for the return of unused direct materials from production would be:(a) DR Work in progress account; CR
In an integrated bookkeeping system, when the actual production overheads exceed the absorbed production overheads, the accounting entries to close off the production overhead account at the end of
A company uses a blanket overhead absorption rate of $5 per direct labour hour.Actual overhead expenditure in a period was as budgeted.The under/over absorbed overhead account for the period has the
XYZ operates an integrated accounting system. The material control account at 31 March shows the following information:The $125 000 credit entry represents the value of the transfer to the (a) cost
In an interlocking accounting system, the profit shown in the financial accounts was £79252 but the cost accounts showed £74 294 profit. The following stock valuations were the only differences
The following data have been taken from the books of CB plc, which uses a nonintegrated accounting system:The effect of these stock valuation differences on the profit reported by the financial and

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