(Responsibility reports) To respond to increased competition and a reduction in profitability, a nationwide law firm, U.S....
Question:
(Responsibility reports) To respond to increased competition and a reduction in profitability, a nationwide law firm, U.S. Law, recently instituted a respon¬ sibility accounting system. One of the several responsibility centers estab¬ lished was the Civil Litigation Division. This division is treated as a cost center for control purposes. In the first year (2006) after the new system was established, the responsibility report for the Civil Litigation Division con¬ tained the following comparisons:
For 2006, the division projected it would handle 1,000 cases, but its actual case load was 990.
a. What are the major weaknesses in the preceding responsibility report?
b. Recast the responsibility report in a more meaningful format for cost control evaluation.
c. If U.S. Law uses a management by exception philosophy, which costs are likely to receive additional investigation? Explain. LO.1
Step by Step Answer:
Cost Accounting Foundations And Evolutions
ISBN: 9780324235012
6th Edition
Authors: Michael R. Kinney, Jenice Prather-Kinsey, Cecily A. Raiborn