Obtain from your library (or instructor or course pack, as appropriate) a copy of the following article: K. Snead, D. Stott, and A. Garcia, "The Causes of Misapplied Capacity-Related Manufacturing Costs and Corresponding Reporting Implications: A Conceptual Perspective," Journal of Accounting Education, Vol. 28 (2010), pp. 85-102.

Requirements

1. In general, how does this article relate to the material covered in Chapter 15?

2.What do the authors of this article mean when they use the term "misapplied" manufacturing overhead costs?

3. Into what three components do the authors feel the production volume variance should be decomposed? How are each of the three component variances calculated?

4. According to the authors, what is the connection between the variance-decomposition model they are proposing and the managerial control of capacity-related costs?

5. What do the authors of this article indicate are the financial-reporting consequences of their proposed reporting framework?