Questions and Answers of Management And Cost Accounting 11th

Refer to the opening vignette of Adam Mercer and The AM Bakery. Adam has hired you to help him make the decisions he needs to make. RequiredAnswer the four questions in the critical thinking
One of the major activities of the City Art Museum (CAM) is a Neighborhood Outreach Program, which was developed both as a public service and to market the museum and its other programs. One of the
To a manager making a decision, which is likely more important: gross margin or contribution margin? Why?
Swain Athletic Gear (SAG) operates six retail outlets in a large Midwest city. One is in center city on Cornwall Street and the others are scattered around the perimeter of the city. Management at
Lessing Toy and Hobby (LTH) is a chain of hobby and craft stores in the Southeast. LTH operates multiple stores and is organized into two divisions: Northern and Southern. Individual stores are
John Deere Company manufactures farm equipment. Managers at assembly plants must make many decisions, and for this, they use cost accounting information.RequiredFor each of the following managers,
Five Below is a discount retailer. RequiredFor each of the following decisions, indicate whether the decision maker would be more likely to get information from the financial (F) or cost (C)
Marquette Company manufactures and sells kits that homeowners can buy and assemble into office and home furniture. Marquette and one of its customers, Goulburn Furnishings, have a dispute about
Many companies, especially in the travel industry (airlines, hotels, and so on), have socalled loyalty programs offering members benefits that depend on the frequency of purchases, miles traveled,
Goodyear Tire and Rubber Company manufactures a well-known automotive tire. They are produced in Goodyear plants and sold to consumers in many outlets including auto parts retail chains such as Pep
How does cost accounting help determine an organization’s strategy? What problems might arise from a faulty cost accounting system?
As the owner of a wholesale firm that only sells to retailers, should you be interested in the efficiency of your customers (the retailers)? Why?
Explain how cost accounting supports value creation in the organization.
What are the four questions of the critical thinking framework?
Who are the customers of cost accounting?
Salvay Company is a small manufacturer that produces and sells one product for use in medical instruments. Demand is erratic and can vary widely from year to year. The financial managers at Salvay
Distinguish among the value chain, the supply chain, and the distribution chain.
A technology company called Luxe allows customers, through its app, to have valets who will meet the customer, take their car, and park it. Curtis Lee, the founder, was quoted as saying about a
Consider the Business Application “Operating Leverage as a Framework to Describe a Business Model.” From the description of the company in the text (and perhaps based on your experience), would
Bewick Company and Stout, Inc. both earn annual operating profits of $40 million on revenues of $150 million. Bewick Company has an operating leverage of 2.4 and Stout, Inc. has an operating leverage
The manager of Gratiot Flooring estimates operating costs for the year will include $540,000 in fixed costs.Requireda. Find the break-even point in sales dollars with a contribution margin ratio of
Grove Audio is considering the introduction of a new model of wireless speakers with the following price and cost characteristics.Requireda. What number must Grove Audio sell annually to break
Charlevoix Cases makes mobile phone cases. The company has collected the following price and cost characteristics:Requireda. How many cases must Charlevoix sell annually to break even?b. How many
Grandville Fittings earns a quarterly operating profit of $1,500,000 and has an operating leverage of 1.8. Wheeler Works, Inc. earns a quarterly operating profit of $660,000 and has an operating
Golden Gate Novelties (GGN) sells souvenir key chains at the local airport. GGN charges $12 per chain. The variable cost for a chain, including the wholesale cost of the chain, packaging, the
Northampton City Tours (NCT) offers personalized historical and architectural tours in a large midwestern city and the local suburbs. NCT charges $350 per trip to or from the airport. The variable
Stahelin Valves produces a single component, a valve. The valve sells for $23 per unit. Fixed costs are $1,585,000 annually. Production and sales of 405,000 units annually result in profit before
Braile Gear Works sells a single gear for a price of $55 per unit. The variable costs are $23 per gear and annual fixed costs are $448,000.Requireda. What is the break-even level of annual sales for
Pierson Pet Products produces two models of dog beds: Basic and Custom. Price, cost, and expected sales volume data for the two models are as follows:RequiredThe total fixed costs for the company are
Annchester Car Service offers limousine service to the local airport. The cost of a trip (one-way) is $95 and the variable costs of a trip are $42, which covers fuel, variable car maintenance, labor,
Rochester Street Taco Shop (RSTS) sells a variety of tacos to go all at a price of $4.50 each. The variable cost of an RSTS taco averages $2.40. RSTS incurs monthly fixed costs of $7,350. RSTS is
Kappa Co. produces Omega, an animal feed made by mixing and heating three ingredients: Alpha, Beta and Gamma. The company uses a standard costing system to monitor its costs.The standard material
Shoe Co., a shoe manufacturer, has developed a new product called ‘Smart Shoe’ for children, which has a built-in tracking device. The shoes are expected to have a life cycle of two years, at
Which of the following BEST describes target costing?(a) Setting a selling price for the company to aim for in the long run(b) Setting a cost for the use in the calculation of variances(c) Setting a
RT plc sells three products.Product R has a contribution to sales ratio of 30%.Product S has a contribution to sales ratio of 20%.Product T has a contribution to sales ratio of 25%.Monthly fixed
CD manufactures and sells a number of products. All of its products have a life cycle of less than one year. CD uses a four-stage life cycle model (Introduction, Growth, Maturity and Decline).CD has
Kinn Co produces a single product. Each finished product requires 3kg of raw materials. The raw material costs $6 per kg. You are given the following information:1. Kinn Co prepares budgets on a
A company’s managers are considering investing in a project that has an expected life of five years. The project is expected to generate a positive net present value of $240,000 when cash flows are
A company has recorded the following variances for a period:Sales volume variance .................................. $10,000 adverseSales price variance ...................................... $5,000
Tabula Ltd manufactures a range of writing desks. One type, the Office Standard, has a standard cost of £95 made up as follows:The standard selling price of the desk is £120. The monthly budget
A company’s operating costs are 60 per cent variable and 40 per cent fixed.Which of the following variances’ values would change if the company switched from standard marginal costing to standard
Product GX consists of a mix of three materials J, K and L. The standards material cost of a unit of GX is as follows:During March, 3,000 units of GX were produced and actual usage was:What was the
A company uses marginal costing. The following variances occurred in the last period when the actual net profit was $40,000.Materials ................................................... $900
PlasBas Co. uses recycled plastic to manufacture shopping baskets for local retailers. The standard price of the recycle plastic is $0.50 per kg and standard usage of recycled plastic is 0.2kg for
Glove Co. makes high quality, handmade gloves which it sells for an average of $180 per pair. The standard cost of labour for each pair is $42 and the standard labour time for each pair is three
The School Uniform Company (SU Co.) manufactures school uniforms. One of its largest contracts is with the Girls’ Private School Trust, which has 35 schools across the country, all with the same
‘In the control of divisional operations within a large company, conflicts often arise between the aims of the organization as a whole and the aspirations of the individual divisions.’What forms
Divisionalized structures are normal in large firms, and occur even when centralized structures would be feasible.Required:(a) Explain and discuss the arguments for divisionalized structures in large
The director of Donny Co. is reviewing the performance of its division.The following information is available for the year ending 31 March 20X9 for its South division.South division operates in the
A company has capital employed of $200,000.It has a cost of capital of 12% per cent per year. Its residual income is $36,000.What is the company’s return on investment?
At the end of 20X1, an investment centre has net assets of $1m and annual operating profits of $190,000. However, the bookkeeper forgot to account for the following:A machine with a net book value of
Sports Co. is a large manufacturing company specializing in the manufacture of a wide range of sports clothing and equipment. The company has two divisions: Clothing (Division C) and Equipment
Jenson, Lewis and Webb (JLW) manufactures tubes of acrylic paint for sale to artists and craft shops in Kayland and Seeland. JLW has two divisions, Domestic division and Export division, both based
A manufacturing company, Man Co., has two divisions: Division L and Division M. Both divisions make a single standardized product. Division L makes component L, which is supplied to both Division M
The One Stop Car Co. (OSC Co.) offers a range of services for car owners at its 55 service centres across the country. The car maintenance business is extremely competitive in all regions across the
Which of the following are suitable measures of performance at strategic level?1 Return on investment2 Market share3 Number of customer complaints(a) 2 and 3(b) 1 and 3(c) 2 only(d) 1 and 2
A government is trying to assess schools by using a range of financial and non-financial factors. One of the chosen methods is the percentage of students passing five exams or more.Which of the three
Victoria-Yeeland Logistics (Victoria) is a logistics support business, which operates a fleet of lorries to deliver packages of goods on behalf of its customers within the country of Yeeland.
A manufacturing company benchmarks the performance of its accounts receivable department with that of a leading credit card company.Which type of benchmarking is the company using?(a) Internal
Helot Co. develops and sells computer games. It is well known for launching innovative and interactive role-playing games and its new releases are always eagerly anticipated by the gaming community.
Dibble is formed of two autonomous divisions, Timber and Steel, and manufactures components for use in the construction industry. Dibble has always absorbed production overheads to the cost of each
Which of the following techniques is NOT relevant to target costing?(a) Value analysis(b) Variance analysis(c) Functional analysis(d) Activity analysis
(a) Contrast the features of organizations that would benefit from ABC with those that would not.(b) Explain in what ways ABC may be used to manage costs, and the limitations of these approaches.(c)
Luvij manufactures high quality, luxury women’s footwear. It sells its products on its own website and also to small independent retailers. In order to monitor performance and aid decision-making,
Identify whether each of the following statements about the uses of big data analytics in organizations is TRUE or FALSE.(a) It helps to better understand customer behaviour and preferences.(b) It
A manufacturer and retailer of kitchens introduces an enterprise resource planning system.Which of the following is NOT likely to be a potential benefit of introducing this system?(a) Schedules of
A government department generates information which should not be disclosed to anyone who works outside of the department. There are many other government departments working within the same
P plc is a multinational conglomerate company with manufacturing divisions, trading in numerous countries across various continents. Trade takes place between a number of the divisions in different
Discuss the conditions that should apply if linear regression analysis is to be used to analyse cost behaviour.
(a) Briefly discuss the problems that occur in constructing cost estimation equations for estimating costs at different output levels.(b) Describe four different cost estimation methods and for each
Present a table of production times showing the following columns for E. Condon Ltd, which produces up to 16 units while experiencing a 90 per cent learning curve, the first unit requiring 100 hours
The following statements relate to the advantages that linear regression analysis has over the high–low method in the analysis of cost behaviour:1. The reliability of the analysis can be
Which TWO of the following are feasible values for the correlation coefficient?(a) + 1.40(b) + 1.04(c) 0(d) – 0.94
The number of daily complaints to a local government office has a mean of 12 and a standard deviation of 3 complaints.What is the coefficient of variation as a percentage?
A company is developing a new product. During its expected life, 16,000 units of the product will be sold for $82 per unit.Production will be in batches of 1,000 units throughout the life of the
A company always determines its order quantity for a raw material by using the economic order quantity (EOQ) model.What would be the effects on the EOQ and the total annual holding cost of a decrease
The purchase price of an inventory item is $25 per unit. In each three-month period the usage of the item is 20,000 units. The annual holding costs associated with one unit equate to 6 per cent of
Gregorie Tool & Die reports the following information for the quarter:RequiredSelect the answer for each of the following costs.a. Variable cost per unit.1. $302. $353. $424. $45 b.
Consider again the Business Application “Components of Cost of Goods Sold for a Retailer.” Some of the costs associated with opening during the COVID-19 pandemic were outlay costs and some were
Lillibridge & Friends, Inc. provides you with the following data for its single product: RequiredGive the amounts for each of the following:a. Prime cost per unit.b. Contribution margin per
Lillibridge & Friends, Inc. provides you with the following data for its single product: RequiredGive the amounts for each of the following:a. Prime cost per unit.b. Contribution margin per
Harbor Island Investments (HII) is a discount brokerage firm offering clients investment advice, trading services, and a variety of mutual funds for investment. HII has collected the following
Trumball Catering served 4,000 meals last month. Trumball recorded the following costs with those meals:RequiredUnit variable costs and total fixed costs are expected to remain unchanged next month.
Otsego Industries manufactured 300,000 units of product last year and identified the following costs associated with the manufacturing activity:RequiredUnit variable costs and total fixed costs are
Baubee Meal Delivery Service (BMDS) provides restaurant to customer meal deliveries for food establishments in a suburban neighborhood. The company provides you with the following information for the
Alwar Brothers is a small, family-owned business that produces animal feed for dairy farms. The administrative offices and manufacturing plant of Alwar share the same building. Financial records
Cheyenne Contractors makes fixtures for aircraft fueling and hydraulic systems. As a supplier to the aircraft industry, the annual volumes can vary greatly depending on both civilian and military
Kessler Brothers produces products for farms and ranches. The administrative and manufacturing operations occupy the same 240,000-square-foot building. The manufacturing plant uses 180,000 square
Guilford Boards started operations on March 3. There were no direct materials in inventory as of March 2. Data for the month of March include the following:a. Unit cost based on units produced in
The chapter describes how to incorporate income taxes into CVP analysis. Why are other taxes not discussed? Is CVP analysis unable to analyze other taxes, such as property taxes, carbon taxes, sales
Coastal Bistro has the following information for July, when several new employees were added to the waitstaff: a 10 percent of this cost was for food that was not used by the expiration date,
Accounting records for The Ralston Company show the following for the most recent fiscal year:RequiredPrepare:a. A gross margin income statement.b. A contribution margin income statement. Units
The controller at Wesson Company’s manufacturing plant has provided you with the following information for the first quarter’s operations: RequiredDetermine each of the following unit
In product costing, the costs attributed to each unit of production may be calculated by using either:(i) Absorption costing, or(ii) Marginal (or direct or variable) costing.Similarly, in
Discuss the arguments for and against the inclusion of fixed overheads in stock valuation for the purpose of internal profit measurement.
The accountant’s approach to cost–volume– profit analysis has been criticized in that, among other matters, it does not deal with the following:(a) Situations where sales volume differs
A company makes and sells product X and product Y. Twice as many units of product Y are made and sold as that of product X. Each unit of product X makes a contribution of £10 and each unit of
Swim Co offers training to athletes and has prepared the following break-even chart:Required:(a) State the break-even sales revenue for Swim Co and estimate, to the nearest $10,000, the company’s
A manufacturing company uses three processes to make its two products, X and Y. The time available on the three processes is reduced because of the need for preventative maintenance and rest
The Aika Hotel is situated in a major city close to many theatres and restaurants. The Aika Hotel has 25 double bedrooms and it charges guests $180 per room per night, regardless of single or double

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