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business
cost management strategic
Cost Management Accounting And Control 2nd Edition Don R. Hansen, Maryanne Mowen - Solutions
What are loose constraints? Binding constraints? LO5
What is the purpose of linear programming? LO5
What is an objective function? LO5
What is a feasible solution? A feasible set of solutions? LO5
Explain the procedures for graphically solving a lin¬ ear programming problem. What solution method is used when the problem includes more than two or three products? LO5
Define and discuss the three measures of organiza¬ tional performance used by the theory of constraints. LO5
Explain how lowering inventory produces better products, lower prices, and better responsiveness to customer needs. LO5
What are the five steps that TOC uses to improve or¬ ganizational performance? LO5
What is a drum-buffer-rope system? LO5
Assuming there are two or more binding constraints, how can a manager identify which one should be elevated first? LO5
What is the primary measure of success in the operating cycle of a business?LO2How is this affected by business policies concerning prices and credit sales? LO3
What is a sales discount? How can sales discounts be recorded? LO8
What are sales returns? Why do sales returns occur? LO6
What are sales allowances? How do sales allowances differ from sales discounts? LO2
What kind of account is allowance for uncollectible accounts? What does itrepresent? LO8
Why is the allowance procedure preferred over the direct write-off procedurefor uncollectible accounts? LO7
How do the periodic and perpetual inventory accounting systems differ from each other? LO6
Why are adjustments made to the gross purchase price of goods acquired for resale? LO9
Describe the difference between F.O.B. shipping point and F.O.B. destination. LO5
Describe the difference between support departments and producing departments. LO1
Explain five reasons why support costs may be assigned to producing departments. LO2
Calculate charging rates, and distinguish between single and dual charging rates. LO3
Allocate support center costs to producing departments using the direct method, the sequential method, and the reciprocal method. LO4
Calculate departmental overhead rates. LO5
Explain how allocating support service costs can be helpful in pricing decisions. LO5
Why must support service costs be assigned to prod¬ ucts for purposes of inventory valuation? LO5
Explain how allocation of support service costs is useful for planning and control. LO5
Explain how allocating support service costs will en¬ courage service departments to operate more efficiently. LO5
Why is it important to identify and use causal factors to allocate support service costs? LO5
Identify some possible causal factors for the follow¬ ing support departments: LO5a. Cafeteriab. Custodial servicesc. Laundryd. Receiving, shipping, and storese. Maintenancef. Personnel g. Accounting
Explain why it is better to allocate budgeted support service costs rather than actual support service costs. LO5
Explain why variable bases should not be used to al¬ locate fixed costs. LO5
Explain the difference between the direct method and the sequential method. LO5
The reciprocal method of allocation is more accurate than either the direct or sequential methods. Do you agree? Explain. LO5
Why is it desirable to allocate variable costs and fixed costs separately? LO5
Identify the characteristics of the joint production process. LO1
Allocate joint product costs according to the benefits-received approaches and the relative market value approaches. LO2
Describe methods of accounting for by-products. LO3
Explain why joint cost allocations may be misleading in management deci¬ sion making. LO4
Discuss why joint production is seldom found in service industries. LO5
What is a joint cost? LO3
What is the joint costing problem? LO3
What is a by-product? LO3
Give two purposes for which joint costs are allocated to individual products. LO3
The sales-value-at-split-off method is neutral and therefore should be used to allocate joint costs to products. Do you agree or disagree with this state¬ ment? Why? LO3
Explain how joint cost allocation may be misleading in managerial decision making. LO3
Name three methods of allocating joint product costs. LO3
How do joint costs differ from other common costs? LO3
Should joint costs be considered in a sell-or-process- further decision? Explain. LO3
If sales value methods are used to allocate joint prod¬ uct costs, then those costs cannot be used in pricing decisions. Comment. LO3
What two general methods can be used to account for by-products? LO3
Explain why traditional cost systems may produce distorted costs. LO1
Explain how an activity-based cost system can produce more accurate product costs. LO2
Provide a detailed description of how activities are identified and classified so that homogeneous cost pools can be formed. LO3
Describe an activity-based relational database. LO4
Describe how costs are assigned to activities. LO5
Explain how a plantwide overhead rate, using a unit-based cost driver, can produce distorted prod¬ uct costs. In your answer, identify two major factors that impair the ability of plantwide rates to assign cost accurately. LO2
What are nonunit-related overhead activities? Non¬ unit-based cost drivers? Give some examples. LO2
What is an overhead consumption ratio? LO2
Explain how departmental overhead rates can pro¬ duce product costs that are more distorted than those computed using a plantwide rate. LO2
What is meant by product diversity? LO2
Overhead costs are the source of product cost dis¬ tortions. Do you agree? Explain. LO2
What is activity-based product costing? LO2
What is a homogeneous cost pool? LO2
What is the first-stage procedure in assigning over¬ head costs to products when using an activity-based system? LO2
What is the second-stage procedure in assigning overhead costs to products when using an activity- based system? LO2
What is an activity? A homogeneous set of activities? LO2
What are unit-level activities? Batch-level activities? Product-level activities? Facility-level activities? LO2
Explain how low-volume products can be under¬ costed and high-volume products overcosted if only unit-based cost drivers are used to assign overhead costs. LO2
Explain how undercosting low-volume products and overcosting high-volume products can affect the competitive position of a firm. LO2
Explain how homogeneous sets of activities are pro¬ duced. Why are they produced? LO2
What is an activity-based data base? LO2
How is an activity relational table constructed? A product relational table? In providing your answer, explain how attributes are selected. LO2
Explain what strategic cost management is and how it can be used to help a firm create a competitive advantage. LO1
Explain what life cycle cost management is and how it can be used to maximize profits over a product's life cycle. LO2
Describe the basic features of JIT purchasing and manufacturing. LO3
Describe the effect JIT has on cost traceability and product costing. LO4
"The most important strategic elements for a firm are its long-term growth and survival." Do you agree? Explain the role of strategic cost management in achieving long-term growth and survival. LO3
What is customer value? How is customer value re¬ lated to a cost leadership strategy? To a differentia¬ tion strategy? LO3
Explain what internal and external linkages are. LO3
What are organizational and operation activities? Organizational cost drivers? Operational cost drivers? LO3
What is the difference between a structural cost driver and an executional cost driver? Provide ex¬ amples of each. LO3
What is value-chain analysis? What role does it play in strategic cost analysis? LO3
What does it mean to exploit external and internal linkages? LO3
What is the difference between a producer-oriented definition of product life cycle and a customer- oriented definition? LO3
What are the three viewpoints of product life cycle? How do they differ? LO3
What are the four stages of the marketing life cycle? LO3
What are life cycle costs? How do these costs relate to the production life cycle? LO3
Explain how the life cycle viewpoints are interrelated. LO3
Explain why price sensitivity increases as a product moves from the introduction to maturity stages. LO3
Describe a revenue enhancement strategy during the maturity stage of a product's life cycle. LO3
"Life cycle cost reduction is best achieved during the development stage of the production life cycle." Do you agree? Explain. LO3
Explain why design strategies should consider pro¬ duction, logistical, and postpurchase activities. LO3
What is target costing? What role does it have in life cycle cost management? LO3
"A JIT system must exploit customer and suppher linkages to be successful." Explain. LO3
Plant layout and efficiency is an important execu¬ tional cost driver for JIT. Explain how this execu¬ tional cost driver is chosen to increase efficiency and decrease cost. LO3
Besides plant layout and efficiency, what other or¬ ganizational cost drivers are used to advantage by JIT systems? LO3
Explain why JIT with dedicated cellular manufac¬ turing increases product costiiig accuracy. LO3
In addition to product costing accuracy, what other effect(s) does JIT have on cost management systems? LO3
How does the length of the time horizon affect the classification of cost as fixed or variable? What is the meaning of short run? Long run? LO3
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