Questions and Answers of Financial And Management Accounting

Ratchet Now makes a ratchet set that is compact for ease of use and storage. It predicts it will sell 100,000 units in Quarter 1,125,000 units in Quarter 2,140,000 units in Quarter 3, and 150,000
Harvest Beverages makes a full line of carbonated seltzer water in various flavors. Every can of seltzer is comprised of a can to put the liquid in, flavoring, and the carbonated water. The company
What does the term autonomy mean in reference to organizations?
Based on the production budget, Ratchet Now has a good idea of what it needs to manufacture. It now wants to develop its raw materials budget. It uses 1.5 pounds of steel for each ratchet set at a
Once Only produces various kinds of weed killers for commercial lawn applications. The company needs to watch its cash carefully in order to make sure that it can survive the busy summer months when
What is a “best-guess” revenue forecast and profit scenario?
Ratchet Now would also like to develop a labor budget. It takes 0.25 hours to make one set of ratchets. Labor costs the company $16 per hour. Using this information and the information from Exercise
What does the term “expected value” mean, and how do managers use it in scenario planning?
Things are looking good for Ratchet Now. Next, it wants to prepare its overhead budget. Variable overhead cost per ratchet set is $0.50, and the fixed overhead costs are estimated to be $25,000 per
What is a budget and why is one completed? How are pro forma statements used in the budgeting process?
Now that you have completed these tables, Ratchet Now is ready to do its ending inventory and cost of goods sold budget using the information you have developed in Exercises 5 through 8. Opening
Davros, Inc., makes tea kettles for kitchen and department store sales. Tony Davros, the president of the company, has decided it is time for him to begin budgeting as his business is growing by
What is scenario planning, and why do managers use it?
Clear Channels makes portable radios that can be used during storms. The radios do not require an outside source of power because the battery is charged with a crank. They are a highly prized item in
What is disaster planning, and why do managers use it?
What is an entity-level balanced scorecard, and how can managers use it to coordinate activities in a functional firm?
It takes two pounds of plastic and one receiving/charging unit to make each Clear Channels radio. The plastic costs $0.75 per pound (it is very high-quality ), and the receiving/charging unit costs
What is a planning gap?
What is pseudo-participation, and how does it differ from normal participation?
It takes 30 minutes (one half hour) to make one Clear Channels unit. Labor is paid $20 per hour as the work requires high technical skill. Using this information plus that developed in Exercise 10,
Clear Channels is really making progress! Now it wants to develop its overhead budget. Variable overhead per unit is $2.50. Fixed overhead is $150,000 per quarter. With this information plus that
What is the difference between slack and ratcheting effects? Who is in charge of each of these potentially problematic events?
With the data developed in Exercise 10 through 13, you now have all of the information needed to complete a finished goods budget and a cost of goods sold budget for Clear Channels. Opening finished
The term backflush costing is unique to JIT inventory management methods. What exactly does the term mean? How does backflush costing differ from other accounting approaches to product costing?
Doubtfire Press produces children’s books for national distribution through mainstream distributors such as Baker and Taylor. It has recently decided to implement activity-based analysis and ABB to
Betsy Homemaker makes and distributes a line of aprons for both commercial and residential use. The standard products consist of white full-length aprons used for restaurants and multipatterned bib
What is ABM? How does it differ from ABC? Which one is simpler to use? Why?
Dunn’s Manufacturing uses ABB. A recent study was done of the activities of the company ’s one purchasing manager who is paid $75,000 per year for her efforts. The following is the list of
Janice Dewey is the head of the accounts receivable department for a home nursing service called Helping Hands. The process can become quite complex as many of the payments the company receives come
Define and give an example of how a company can use ABB.
Shall well Diaper Service uses ABB. A recent study of the activities of the company ’s one call center representative who makes $45,000 a year for his efforts produced the following list of
Blue Ray is a local cable company that installs cable television, internet, and telephone systems for customers in a three-county area. Jack Ryder, the head of operations, has recently learned about
What is the primary focus of TOC? How does this focus shape how managers approach work?
Using the Shewhart charting methods described in Figure 2.4 in Chapter 2, analyze the performance of a check-clearing process. The standard time to clear a check is six seconds. The allowed variation
Johnny Roberts, owner of Bunson Marine, has his workforce keep time sheets so he knows where their time is going and also to help guide his billing. A recent graduate of the local MBA ex tension
What do the terms throughput, operating expense, and inventory mean under TOC? How do these definitions line up with traditional accounting terminology? How do they differ from traditional accounting
Using the Shewhart charting methods described in Figure 2.4 in Chapter 2, analyze the performance of the following invoice processing activity. The standard time to validate an invoice for payment is
Sally Wields has been asked to do an assessment of how the time of her scheduling department is being used and to assign costs to each. She has been asked to do an activity analysis for the
How would you describe JIT management methods? How do these relate to lean management?
For the following list of activities, find the APQC category that most closely matches the activity and put its number alongside the activity. Use a table like the one provided below. Activity
The term kanban has special meaning inside JIT management. Exactly what does this term mean? How do kanbans help manage a process?
For the following list of activities, find the APQC category that most closely matches the activity and put its number alongside the activity. Use a table like the one provided below. Activity
Can JIT or cellular approaches be used in service settings? Why or why not?
Looking at the material in the appendix, what are the primary differences you see between Process 5 (Produce and deliver for manufacturing-oriented organizations) and Process 6 (Produce and deliver
Happy Days Greeting Card Company recently completed a best in- class benchmarking activity for its accounts payable operations. It benchmarked against Johnson & Johnson, a leader in this
Blue Moon Limousine Service runs an hourly shuttle from the local airport to the waterfront district in downtown. Its drivers are expected to learn their route and then be able to meet the
What are the key features of lean accounting performance metrics? How do these features impact the value of the resulting measurements for decision making?
John Wells is vice president of manufacturing for White Goods, Inc., a maker of household appliances. John has been studying the performance of one of his order fulfillment departments for the small
Sitwell Services cleans offices. It runs several cleaning crews that are given standard times for cleaning certain spaces. Given the experience of the crew, these standards can allow for more or less
Give some examples of wasteful activities in a process flow that lean management might target for elimination.
Samuelson’s Car Repair is very focused on customer service. Over the last few years, it has developed a range of performance measurements it uses for various parts of the organization. These
Taylor’s Rental rents a variety of products to customers for home use. The following is the flow associated with one of the products offered by Taylor’s.REQUIRED:a. Add up all the time these
What are the six primary activity symbols used by the ASME charting approach? What do they mean? How are they used to detail the steps in a process?
Hi-Value Secretarial Services provides a broad range of secretarial support services, including temporary office workers, to businesses in the tristate area. In order to monitor the effectiveness of
Munson’s Machine Shop makes a variety of small metal parts on its machines. They are inventoried for later sale.REQUIRED:a. Categorize the activities above using the ASME categories.b. Add up all
What are the primary differences between functional and process-based organizations? How do these differences impact how the organization is managed?
In this problem, you are simply going to add process codes from the APQC Framework found on pages 429-433 to the activities performed in each of the Mktg, Gen & Admin Dept worksheets. (You can
Miles Industries makes a number of different molds used by other manufacturing companies to produce plastic products. The molds are made using special numerically controlled equipment that can be
Nancy Godden is the owner of a small florist shop. Orders are taken via electronic sources for three national services that contract with local flower shops to make and deliver the actual flower
What is a process? Can you think of several processes that take place in your university?
The objective of this exercise is to attach costs for the Marketing, General, and Administrative Departments to specific activities performed by these departments. The data worksheets you will need
DC Watts, Inc., makes power cords for a variety of electronic products. Lately, it has been having significant problems with the quality of its output. It also appears that making a batch of power
Bruce Calloway of Buy Rite Shopping Service has decided it may be time to improve the flow of his back office. He collects the following list of activities that take place during the customer
What does the term process management mean? What are the six key concepts that define a process management approach? How does the definition of a process impact how management approaches its work?
For the following list of measures, please note whether they are cost- related (C), productivity- related (P), quality- related (Q), or delivery- related (D). Measurement Category Measurement
Identify the key types of variances looked at in the product domain. How are they calculated?
For the following list of measures, please note whether they are cost- related (C), productivity- related (P), quality- related (Q), or delivery- related (D). Measurement Category Measurement
How are balanced scorecards used in the product domain?
Ache-No-More Company makes specialty chairs designed to take stress off of the lower back, reducing the tendency to get backaches from sitting too long. The chairs are very high-end, ranging from
For the following list of quality problems for a lawn mower, note whether it is an internal quality failure (I) or an external quality failure (E). Quality Problem Rework of motor housing Quality
Develop a list of potential measures of a product’s performance, identifying each as financial (F) or nonfinancial (N).
Hop-a-Long Company makes rocking horses for the children’s market. Recently it has been thinking of making a larger horse that would be suspended on springs; the current models sit on the floor and
For the following list of quality problems, note whether it is an internal quality failure (I) or an external quality failure (E). Quality Problem Category Quality Problem Category Warranty repairs
How does the continuous improvement philosophy affect the attainment phase of target costing?
Clear Skin, Inc., makes pump liquid soap dispensers. It currently makes all of the components that go into the pump dispenser on its high-end extrusion machines. A competitor has offered to supply
Using the data from the table in Exercise 5, create a Pareto chart for each of the popcorn products. How do they compare now? Which chart is easier to use? Why?Data From Exercise 5 Feature Caramel
What does the term “tight but attainable” goal mean in the context of setting standards?
Blue Jay Products makes Ever Blue, which is used to fertilize hydrangeas and keep their blossoms blue. The company usually sells through a distribution network for $15 per five-pound bag. Normal
Big Top Pops makes a variety of popcorn products. It recently conducted a customer focus group and obtained the following results for three of its more popular products.REQUIRED:a. Create a RADAR
How are standards developed and used during the production of products?
Wear Well Products makes a line of countertop grills for making hamburgers and related grilled products like panini. The following table contains information about the production of its countertop
Using the data in the table for Exercise 3, create a Pareto chart for each of the jams. How do they compare now? Which chart is easier to use? Why?Data From Exercise 3 Feature Strawberry Raspberry
Name the primary activities to focus on for cost reduction during the attainment phase.
Built Rite produces suitcases. The following are the results of last month’s production.REQUIRED:a. Using the table- based approach pictured in Table 7.7, decompose the variances for the month into
Best Ever Jams makes strawberry, raspberry, and blueberry jams. The following scores reflect the results of a consumer panel that evaluated its jams. Ten is the highest, and zero is the lowest
What role does the cost gap play in the attainment phase of target costing?
Rubens Company makes a number of special-edition glass perfume bottles. Each year, the company comes out with a new set of 12 bottles, which customers can buy either one at a time or as a set. The
The overarching goal is to calculate the profitability of Kinkaid’s finished goods products using ABC charging rates for upstream departments, manufacturing support departments, and ABC-based
Silver Spoons makes silverware and stainless steel eating utensils. It is considering adding a new line, a silver-clad stainless steel line that would give the look and feel of silver but cost
Hercules Fitness makes a line of fitness machines. It recently decided to enter the elliptical trainer market. The company designed a trainer that would cost the customer $995. Hercules’s target
What are the key factors considered during the attainment phase of target costing?
Sarah Drogo, president of Storage, Inc., a company that makes a wide variety of storage boxes for home and office use, is thinking about adding a new line of small plastic storage boxes. This would
In this exercise, you are going to create a capacity report for the Cutting Department at Kinkaid following the steps below.a. Using the worksheet “DB 7-1 Cutting Data Template” provided for you
Sunshine Products makes lawn furniture in various styles. Recently, it decided to launch a new line of reclining lawn chairs for poolside use. The design team put together the following
Blue Goose Kitchenware produces a wide variety of kitchen tools. It has just developed the Handy Opener, which automatically opens jars of various sizes. The target price is $8.95, and Blue Goose
What is a product or service value proposition? How does it affect customer purchase decisions?
What does the term life cycle costing mean? When do we use life cycle costs?
How does activity costing differ from departmental costing methods?
Define the key differences between plant-wide and departmental overhead rates.
What does the term prime cost mean? Conversion cost? How do we use them in costing products?

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