Questions and Answers of Cost Management Strategic

What is a balanced scorecard? What is its primary objective?
Are all direct costs variable? Explain.
Are all fixed costs indirect? Explain.
Define cost driver.
What is the difference between variable and fixed costs?
What are conversion costs? What are prime costs?
The Walden Manufacturing Corp. has office support salaries of $4,000, factory supplies of $1,000, indirect labor of $6,000, direct materials of $16,000, advertising expense of $2,500, office expense
What is life-cycle costing? Why is it used?
What is productivity? What does it measure?
What is operational productivity? Financial productivity?
What is partial productivity? Total productivity?
What are the types of sales variances?
Refer to the information for Brooks Plumbing Products Inc. (BPP) in Problem 20-53.Data from Problem 20-53Brooks Plumbing Products Inc. (BPP) manufactures plumbing fixtures and other home improvement
Brooks Plumbing Products Inc. (BPP) manufactures plumbing fixtures and other home improvement products that are sold in Home Depot and Walmart as well as hardware stores. BPP has a solid reputation
Refer to the information in Problem 20-51 for the Davidson Yachts Company.Required1. What is the valuation of Davidson Yachts Company using the book value of equity method?2. What is the valuation of
Davidson Yachts is a small company founded by two businesspeople who are friends and avid sailors. At present, they are interested in expanding the business and have asked you to review its financial
Many people ask, €œAre executives worth their very high pay?€ As noted in the chapter, this is a difficult question to answer because the benefits an effective executive brings
McCoy Brands Inc. (MBI) is a retailer of consumer products. The company made two acquisitions in previous years to diversify its product lines. In 2017, MBI acquired a consumer electronics firm
Use the concepts in Problem 20-44 to complete the following requirements.Measure
Kristin Helmud is the general manager of Highland Inn, a local mid-priced hotel with 100 rooms. Her job objectives include providing resourceful and friendly service to the hotel’s guests,
Kate’s Candy Co. makes chewy chocolate candies at a plant in Winston-Salem, North Carolina. Steve Bishop, the production manager at this facility, installed a packaging machine last year at a cost
Using the information in Exercise 20-40 for Yum! Brands, determine the valuation of the company at the end of 2016 using each of the following three methods (round answers to the nearest whole
Consider the following balance sheet and income statement for Yum! Brands Inc. (the company that operates Kentucky Fried Chicken and Pizza Hut), in condensed form, including some information from the
Consider the following balance sheet and income statement for Metro Eagle Outfitters, in condensed form, including some information from the cash flow statement:RequiredCalculate the following
Refer to the information in Exercise 20-36.Data from Exercise 20-36Williams Company is a manufacturer of auto parts having the following financial statements for 2018–2019.RequiredDevelop a
Williams Company is a manufacturer of auto parts having the following financial statements for 2018€“2019.Required Calculate and interpret the financial ratios for Williams for both
Ben Johnson is the manager of the jewelry department of a large chain of department stores. The department store has succeeded on the basis of customer service and quality of merchandise. As a
The use of ratios and trends to assess the performance of a company is called:a. Business analysis.b. Financial analysis.c. Business valuation.d. Market valuation.
From a tax avoidance viewpoint, the best type of compensation is:a. Salary: current deduction for firm and currently taxed to employee.b. Deferred bonus: deferred tax for company, deferred deduction
Which of the following is not one of the three key objectives of management compensation?a. To motivate managers to work hard.b. To reduce the taxes of the firm and the employee.c. To provide an
Refer to Problem 19-44 for reported financial statement data for Nimrod Inc.Statement of IncomeMost Recent Year (000s)Net sales....................................................$2,000Cost of goods
Blackwood Industries manufactures die machinery. To meet its expansion needs, it recently (2017) acquired one of its suppliers, Delta Steel. To maintain Delta€™s separate identity,
Consolidated Industries is a diversified manufacturer with business units organized as divisions, including the Reigis Steel Division. Consolidated monitors its divisions on the basis of both unit
What is the return on investment (ROI) of corporate wellness programs? What are the nonfinancial returns on such investments? The following article addresses the concept of return on investment for
The authors of a recent article have shown how the concept of return on investment can be applied to the management of human resources. The authors note: “Globalization has left only one true path
The Boston Consulting Group identified the world’s 50 most innovative companies. The rankings are based on a survey of senior executives, as well as financial metrics such as total shareholder
Heather Smith Cosmetics (HSC) manufactures a variety of products and is organized into three divisions (investment centers): soap products, skin lotions, and hair products. Information about the most
Liz Raiborn Inc. has the following financial results for the years 2019 through 2021 for its three regional divisions:RequiredCalculate return on sales (ROS), asset turnover (AT), and return on
Alex Chunn Inc. has the following financial data for 2019 for its three regional divisions:RequiredPrepare an Excel spreadsheet that will calculate return on sales (ROS) for each division for 2019.
Fill in the blanks: Divislon х $1,500,000 $750,000 Sales Operating income Investment (assets) Return on sales 150,000 75,000 600,000 2,500,000 0.5% Asset turnover 1.5 Return on investment 1%
What is return on investment (ROI), and how is it calculated?
Cardio World Inc. (CWI) is a sporting goods retailer that specializes in bicycles, running shoes, and related clothing. The firm has become successful by careful attention to trends in cycling,
The consulting firm A. T. Kearney analyzes and ranks the top offshore outsourcing locations for companies seeking to outsource the finance function. Kearney provides three measures of the
Braxton Hospital and Health Care Services (BHHS) in Braxton, Mississippi, is a part of the Pillford University Health System. BHHS is a 450-bed community teaching hospital with the following mission:
Security Technology Inc. (STI) is a manufacturer of an electronic control system used in the manufacture of certain special-duty auto transmissions used primarily for police and military
Suppose there are three passengers sharing a single cab ride and that passenger A’s usual fare to his destination would be $12, passenger B’s usual fare to her destination would be $18, and
Wical Rental Management Services manages four apartment buildings, each with a different owner. Wical€™s CEO has observed that the apartment buildings with more expensive rental rates tend
Chilton Day School allocates marketing and administrative costs to its three schools based on total annual tuition revenue for the schools. Last year the allocations (000s omitted) were as follows:In
Meargia Plastics is evaluating its plastic bottles division. The accounting manager has come up with the following data for the year: contribution margin of $500,000, controllable fixed costs of
Manuel Inc. produces textiles in many different forms. After recording lower than anticipated profits last year, Manuel has decided to shut down one of its divisions that is not performing well. The
Phelps Glass Inc. has reported the following financial data: net revenues of $10 million, variable costs of $5 million, controllable fixed costs of $2 million, noncontrollable fixed costs of $1
Calabria Healthcare supplies prescription drugs to pharmacies. As the management accountant, you are required to analyze the financial statements for this quarter. You already have analyzed the
Pepper€™s Automotive (see Brief Exercise 18-19) has further analyzed the exhaust system division into three products: exhaust pipes, intake valves, and intake pipes. The income statement is
Pepper’s Automotive produces auto parts for various automotive retailers. Pepper’s is evaluating the exhaust system division of the company and has come up with the following data for the year:
Colleen Stevens is the North Carolina senior account manager for a national medical equipment manufacturer. Colleen has overall responsibility for the Southeast sales division. The division employs
An internationally known food-processing company has acquired a mineral mining company. The decision to acquire the mining company is considered strategic based on the anticipated growing demand for
What are the differences among performance evaluation, management control, and operational control?
This problem is an extension to the Bally Company COQ reporting example, reflected in Exhibit 17.10. At year 0, the management team for the company was presented with its first COQ report for the
Assume that Allied Manufacturing Co. produces sheet metal, with a target thickness of 0.750 inch. Below are the observed thicknesses of output each day over the past 30 working days. Because the
Drago Company produces a line of brass-based products, one of which is a flow control valve (for regulating the flow of water). The production of this valve requires the use of specialized equipment
Can lean principles be applied to so-called knowledge work? This issue is addressed in the following article: D. R. Staats and D. M. Upton, “Lean Knowledge Work,” Harvard Business Review, October
Carrie Lee, the president of Lee Enterprises, was concerned about the results of her company€™s new quality control efforts. €œMaybe the emphasis we€™ve placed on
Use the data in Problem 17-70 to respond to the requirements that follow.Required1. If you haven’t done so already (in conjunction with Problem 17-70), prepare in Excel a cost-of-quality (COQ)
This problem can be solved as a spreadsheet application and should be set up on a spreadsheet if Problem 17-71 is also assigned.) Acme Materials Company manufactures and sells synthetic coatings that
Cope Farm Equipment has recently conducted market research regarding a number of issues, including customer loyalty and customer satisfaction. In regard to the latter, Cope obtained the following
ABC Mfg. is evaluating the desirability of implementing process improvements and is seeking your help in determining whether it should proceed with the proposed improvements. One area of focus is how
Which of the following costs is not properly characterized as an external failure cost under a COQ reporting system?a. Sales returns and allowancesb. Lost contribution due to increased demand on
Which of the following costs is not properly characterized as a prevention cost under a COQ reporting system?a. Quality training costsb. Supplier assurance costsc. Testing and inspection costsd.
Genova Company classifies its costs of quality into four categories. The costs of quality (COQ) as a percentage of cost of goods sold for the last three years are as follows:Required1. Use a
In an article by P. C. Brewer and F. A. Kennedy (“Putting Accountants on a ‘Lean Diet,’ ” Strategic Finance, February 2013, pp. 27–34, accessible at
Which of the following is a primary motivation for using a value-stream income statement?a. To measure the financial benefits of a firm’s progress in implementing lean manufacturingb. To identify
A cause-and-effect (i.e, “fish-bone” or “Ishikawa”) diagram is most helpful for which of the following?a. Estimating nonlinear cost functionsb. Diagnostic purposes (i.e., guiding corrective
Part of the process of managing and controlling quality consists of detecting poor quality and then taking appropriate corrective action. Which of the following is not a mechanism that management
Which of the following is not a characteristic of nonfinancial performance quality indicators?a. They relate to physical processes and therefore focus attention on precise problem areas in need of
Total customer-response time (CRT) can be defined as which of the following?a. The difference between when a customer’s order is set up and when the order is finishedb. The elapsed time between
Which of the following costs is not a desirable characteristic of a COQ reporting system?a. Exclusion of opportunity costs in the COQ reportb. Comparison of quality costs to some baseline amount for
Which of the following statements regarding cost-of-quality (COQ) reporting is correct?a. Total cost of quality (COQ) consists of conformance costs plus nonconformance costs.b. Total cost of quality
A Taguchi quality loss function (QLF)a. is used to define the tolerance range in the goalpost quality approach to setting quality standards.b. predicts decreasing quality-related costs as deviations
Which of the following is a distinguishing characteristic of using absolute quality conformance for setting quality expectations?a. The ability to incorporate Taguchi quality loss functionsb. The use
Which of the following is a distinguishing characteristic of using goalpost conformance for setting quality expectations?a. The use of Six Sigma performance standardsb. The use of the DMAIC (define,
“Total perceived quality” (i.e., total customer satisfaction with a product or service) can be defined as the difference betweena. “design specifications” and “customer expectations.”b.
Which of the following would not be a desirable outcome from an organization’s investments in quality?a. An increase in the sales return rateb. A decrease in warranty and service-related costsc.
Which of the following would not typically be associated with improved quality of a manufacturer’s output?a. Reduced manufacturing costb. Higher levels of inventory holdingsc. Faster throughput
For a typical order, assume the following times (in hours): storage time (in between processes), 5.0; inspection time, 1.0; move time (from process to process), 2.0; and manufacturing (processing)
On average, the manufacturing (processing) time spent per order is approximately 4 days. In addition, a typical order spends 4 days moving from process to process, 3 days in storage, and 2 days in
A customer places an order on January 1, 2019. Ten days later, that order is received by the manufacturing department. Fifteen days later, the order is put into production. Processing (manufacturing)
A customer’s order is delivered (received by the customer) on December 1, 2019. This order was placed with the company on September 1, 2019, and received by the manufacturing department on
In 2020, a manufacturing company instituted a total quality management (TQM) program producing the comparative report shown below:On the basis of this report, which one of the following statements is
In terms of setting quality standards (expectations), there are two basic approaches. Discuss the difference between goalpost conformance and absolute quality conformance.
TransPacific Airlines (TPA) budgeted 80 million passenger miles, or 5% of the total market for the year just completed, at a contribution margin of 40 cents per mile. The budgeted average price was
Janice Interiors installs custom interiors for luxury mobile homes. In its most recent negotiation with the union, the firm proposed to share productivity gains in direct labor equally with the
The following data were obtained from the 2016 financial statements for two U.S. automakers (in millions of dollars):Required1. Calculate and interpret total productivity in dollars for the two
Use the data for Ashley Technology Inc. in Problem 16-41 to complete the following requirements. Also assume that fixed manufacturing costs are $50 million in both 2018 and 2019.Data from Problem
Use the data for Ashley Technology Inc. in Problem 16-41 to complete the following requirements:Data from Problem 16-41Ashley Technology Inc. manufactures a scrambling device for cellular telephones.
Ashley Technology Inc. manufactures a scrambling device for cellular telephones. The device€™s main component is a delicate part, CT140. CT140 is easily damaged and requires careful
Our examples in the chapter have focused on manufacturing, where the output is units of product and the inputs are manufacturing activities or costs. The concept of productivity can be applied in a
The U.S. Bureau of Labor Statistics (https://data.bls.gov/timeseries/PRS85006092) provides quarterly data for labor productivity in business, nonfarm business, and manufacturing industries. The
Software Solution (SOS) helps subscribers solve software problems. All transactions are made over the telephone. For the year 2018, 10 engineers, most of whom are recent graduates, handled 100,000
What are the types of sales variances?
ACME manufacturing is a low-cost producer of a single, commodity product: RGL-01. Standard overhead cost information for one unit of this product is presented below:Standard number of machine hours

Showing 1 - 100 of 246