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cost accounting
Introduction To Cost Accounting 1st International Edition Don R. Hansen, Maryanne Mowen, Liming Guan, Mowen/Hansen - Solutions
What is the difference between penetration pricing and price skimming?LO1
Why do gas stations in the middle of town typically charge a little less for gasoline than do gas stations located on interstate highway turnoffs?LO1
What is price discrimination? Is it legal?LO1
Why do firms measure profit? Why do regulated firms care about the level of profit?LO1
What is a segment, and why would a company want to measure profits of segments?LO1
How does absorption costing differ from variable costing? When will absorption- costing operating income exceed variable-costing operating income?LO1
What are some advantages and disadvantages of using net income as a measure of profitability?LO1
Why do some firms measure customer profitability? In what situation(s) would a firm not want to measure customer profitability?LO1
What variances do managers use in trying to understand the difference between actual and planned revenue?LO1
Describe the product life cycle. How do unit-level costs behave in relation to the product life cycle? Batch-level costs? Product-level costs? Facility-level costs?LO1
Blalack Company had total sales of $2,000,000 for fiscal 2011. The costs of qualityrelated activities are given below.Required:LO1 Returns/allowances $100,000 Design changes 120,000 Prototype inspection 26,000 Downtime 80,000 Quality circles 4,000 Packaging inspection 28,000 Field testing 12,000
Harrison, Inc., had the following quality costs for the years ended December 31, 2010 and 2011:At the end of 2010, management decided to increase its investment in control costs by 50 percent for each category’s items with the expectation that failure costs would decrease by 20 percent for each
Lemmons Company implemented a quality improvement program and tracked the following for the five years:Required:1. Prepare a bar graph that reveals the trend in quality cost as a percentage of sales (time on the horizontal axis and percentages on the vertical). Comment on the message of the
Kimmering Company had actual quality costs for the year ended June 30, 2011, as given below.At the zero-defect state, Kimmering expects to spend $150,000 on quality engineering, $30,000 on vendor certification, and $20,000 on packaging inspection. Assume sales to be $10,000,000.Required:LO1
Greun Company reported operating costs of $40,000,000 as of December 31, 2011, with the following environmental costs:Required:LO1 Testing for contamination Inspecting products Treating toxic waste $ 560,000 336,000 1,680,000 Obtaining ISO 14001 certification 840,000 Designing processes Cleaning up
Anderson, Inc., had the following environmental activities and product information:Required:1. Calculate the activity rates that will be used to assign environmental costs to products.2. Determine the unit environmental and unit costs of each product using ABC.3. What ifthe design costs increased
Rachel Boyce, president of a company that manufactures electronic components, has a number of questions concerning quality and quality costs. She has heard a few things about quality and has asked you to respond to the following:Required:1. What does it mean to have a quality product or service?
Milton Company estimates its hidden external failure costs using the Taguchi loss function.Milton produces plastic sheets that vary in thickness and grade. For one of its largevolume products, it was determined that k = $20,000 and T= 0.25 inches in diameter.A sample of four units produced the
Classify the following quality costs as prevention costs, appraisal costs, internal failure costs, or external failure costs:LO1 1. Inspection of reworked units 2. Inspecting and testing a newly developed product (not yet being sold) 3. Retesting a reworked product 4. Repairing a computer still
Kinnamon Company produces two different carburetors and is concerned about their quality. The company has identified the following quality activities and costs associated with the two products:Required:1. Calculate the quality cost per unit for each product, and break this unit cost into quality
Benton Company reported sales of $8,100,000 in 2011. At the end of the calendar year, the following quality costs were reported:Required:1. Prepare a quality cost report.2. Prepare a graph (pie chart or bar graph) that shows the relative distribution of quality costs, and comment on the
Pawnee Company had sales of $30,000,000 in 2007. In 2011, sales had increased to$37,500,000. A quality improvement program was implemented at the beginning of 2007. Overall conformance quality was targeted for improvement. The quality costs for 2007 and 2011 follow. Assume any changes in quality
In 2010, Tru-Delite Frozen Desserts, Inc., instituted a quality improvement program.At the end of 2011, the management of the corporation requested a report to show the amount saved by the measures taken during the year. The actual sales and quality costs for 2010 and 2011 are as
At the end of 2011, Hender Chemicals began to implement an environmental quality management program. As a first step, it identified the following costs in its accounting records as environmentally related for the calendar year just ended:Required:LO1 2011 Settling personal injury claims $1,200,000
Timpanogas Company manufactures a component for small portable DVD players(designed for use on automobile trips). Weight and durability of the component are the two most important quality characteristics for the DVD manufacturers. With respect to the weight dimension, the component has a target
Classify the following quality costs as prevention, appraisal, internal failure, or external failure. Also, label each cost as variable or fixed with respect to sales volume.LO1 1. Quality engineering 2. Scrap 3. Product recalls 4. Returns and allowances because of quality problems 5. Sales data
Recently, Ulrich Company received a report from an external consulting group on its quality costs. The consultants reported that the company’s quality costs total about 21 percent of its sales revenues. Somewhat shocked by the magnitude of the costs, Rob Rustin, president of Ulrich Company,
Paper Products Division produces paper diapers, napkins, and paper towels. The divisional manager has decided that quality costs can be minimized by distributing quality costs evenly among the four quality categories and reducing them to no more than 5 percent of sales. He has just received the
Iona Company, a large printing company, is in its fourth year of a five-year, quality improvement program. The program began in 2007 with an internal study that revealed the quality costs being incurred. In that year, a five-year plan. was developed to lower quality costs to 10 percent of sales by
At the beginning of 2008, Limon Company, an international telecommunications company, embarked on an environmental improvement program. The company set a goal to have all its facilities ISO 14001 registered by 2011. (There are 30 facilities worldwide.) To communicate the environmental progress
The following items are listed in an environmental financial statement (issued as part of an environmental progress report):Required:1. Classify each item in the statement as prevention, detection, internal failure, or external failure. In classifying the items listed in the environmental benefits
The following environmental cost reports for 2009, 2010, and 2011 (year end December 31) are for the Communications Products Division of Kartel, a telecommunications company. In 2009, Kartel committed itself to a continuous environmental improvement program, which was implemented throughout the
What is lean manufacturing?LO1
What are the five principles of lean thinking?LO1
Identify two types of value streams and explain how they differ.LO1
How are value streams identified and created?LO1
Explain how lean manufacturing is able to produce small batches (low-volume products) of differing products (high variety).LO1
What role does a demand-pull system have on lean manufacturing?LO1
Identify eight forms and sources of waste.LO1
What is a focused value stream?LO1
What is the purpose of assigning facility costs to value streams, using a fixed price?LO1
Why are units shipped used to calculate the value-stream product cost?LO1
When will the average unit cost be useful for value streams?LO1
Explain why changes in value-stream profitability may be better information than individual product cost for certain decisions.LO1
Define total productive efficiency.LO1
Explain the difference between technical and allocative efficiency.LO1
What is productivity measurement?LO1
Explain the difference between partial and total measures of productivity.LO1
What is an operational productivity measure? A financial measure?LO1
Discuss the advantages and disadvantages of partial measures of productivity.LO1
What are the two dimensions of the activity-based management model? How do they differ?LO1
What is driver analysis? What role does it play in process value analysis?LO1
What is activity analysis? Why is this approach compatible with the goal of continu- ous improvement?LO1
What are value-added activities? Value-added costs?LO1
What are non-value-added activities? Non-value-added costs? Give an example of each.LO1
Identify and define four different ways to manage activities so that costs can be reduced.LO1
What is a kaizen standard? Describe the kaizen and maintenance subcycles.LO1
Explain how benchmarking can be used to improve activity performance.LO1
Explain how activity flexible budgeting differs from unit-based flexible budgeting.LO1
In implementing an ABM system, what are some of the planning considerations?LO1
Explain why a detailed task description is needed for ABM and not for ABC.LO1
What are some of the reasons that ABM implementation may lose the support of higher management?LO1
Explain how lack of integration of an ABM system may cause its failure.LO1
Describe a financial-based responsibility accounting system.LO1
Blackburn Manufacturing has the following data for one of its production departments:Required:1. Calculate MCE. Comment on its significance.2. What is the theoretical cycle time? Calculate MCE using actual and theoretical cycle times.3. What if waste is reduced by one-half? What is the new MCE? New
Consider the following list of scorecard measures:Required:Classify each measure according to the following: perspective, financial or nonfinancial, subjective or objective, and external or internal. When the perspective is process, identify which type of process: innovation, operations, or
The theoretical cycle time for a product is 72 minutes per unit. The budgeted conversion costs for the manufacturing cell dedicated to the product are $6,480,000 per year. The total labor minutes available are 1,440,000. During the year, the cell was able to produce 0.5 unit of the product per
A manufacturing plant has the theoretical capability to produce 162,000 laptops per quarter but currently produces 60,750 units. The conversion cost per quarter is S Ai$7,290,000. There are 40,500 production hours available within the plant per quarter. :In addition to the processing minutes per
Refer to Exercise 13-9. Assume that the company identifies poor plant layout as the root cause of wait time and move time.Required:1. Express an improvement strategy as a series of if-then statements that will reduce the conversion cost per laptop.2. Assume that you set an MCE target of 75 percent,
ee a Exercise 13-13. Suppose that Mandy communicates the following weights to cr Perspective: Financial, 40%; Customer, 20%; Process, 20%; Learning & growth, 20%Financial objectives: Profits, 50%; Revenues, 25%; Costs, 25%Customer objectives: Customer satisfaction, 60%; Market share, 40%Process
At the end of 2009, Activo Company implemented a low-cost strategy to improve its competitive position. Its objective was to become the low-cost producer in its industry.A Balanced Scorecard was developed to guide the company toward this objective. To lower costs, Activo undertook a number of
Refer to the data in Problem 13-16.Express Activo’s strategy as a series of if-then statements. What does this tell you about Balanced Scorecard measures?Prepare a strategy map that illustrates the relationships among the likely strategic objectives.LO1
The following strategic objectives have been derived from a strategy that seeks to improve asset utilization by more careful development and use of its human assets and internal processes:The heart of the strategy is developing the company’s human resources. Management is convinced that
A manufacturing cell has the theoretical capability to produce 375,000 carburetors per quarter. The conversion cost per quarter is $3,750,000. There are 125,000 production hours available within the cell per quarter.Required:1. Compute the theoretical velocity (per hour) and the theoretical cycle
Morrison, Inc., has a JIT system in place. Each manufacturing cell is dedicated to the production of a single product or major subassembly. One cell, dedicated to the production of small four wheelers, has four operations: machining, finishing, assembly, and qualifying (testing). The machining
At the beginning of the last quarter of 2009, Youngston, Inc., a consumer products firm, hired Maria Carrillo to take over one of its divisions. The division manufactured small home appliances and was struggling to survive in a very competitive market. Maria immediately requested a projected income
Search the Internet to find a complete description of a company that has implemented the Balanced Scorecard. Possible sources include the following: Palladium Executive Strategy (http://www.thepalladiumgroup.com), SAP (http://www.sap.com), and http://www.bettermanagement.com. Once you have a
What is the difference between quality of design and quality of conformance?LO1
Why are quality costs the costs of doing things wrong?LO1
What is the difference between the zero-defects philosophy and the robust quality philosophy?LO1
Describe the Taguchi quality loss function, and relate it to robust quality.LO1
Identify and discuss the four kinds of quality costs.LO1
Explain why external failure costs can be more devastating to a firm than internal failure costs.LO1
Many quality experts maintain that quality is free. Do you agree or disagree? Why or why not?LO1
What is the purpose of interim quality standards?LO1
Describe the three types of quality performance reporting. How can managers use each report to help evaluate their quality improvement programs?LO1
Discuss the different kinds of incentives that can be used to motivate employees to become involved in quality improvement programs. Explain gainsharing.LO1
Explain why it is important for a manager to assess the relative distribution of quality costs among the four categories.LO1
Discuss the benefits of quality cost reports that simply list the quality costs for each category.LO1
Explain why the Accounting Department should be responsible for producing quality cost reports.LO1
What is ISO 9000? Why do so many companies want this certification?LO1
What is ecoefficiency?LO1
What are the four objectives associated with ecoefficiency?LO1
Describe the four opportunities for improving ecoefficiency.LO1
What is an environmental cost?LO1
What are the four categories of environmental costs? Define each category.LO1
What is the difference between a realized external failure cost (environmental) and an unrealized external failure (societal) cost?LO1
What does full environmental costing mean? Full private costing?LO1
What information is communicated by the unit environmental cost of a product?LO1
Describe an activity-based responsibility accounting system. How does it differ from financial-based responsibility accounting?LO1
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