Questions and Answers of Horngrens Cost Accounting

How can managers use capital budgeting to achieve strategic goals?
What is a management control system, and how should it be designed?
What are the benefits and costs of decentralization?
What are transfer prices, and what criteria do managers use to evaluate them?
What are alternative ways of calculating transfer prices?
Under what market conditions do market-based transfer prices promote goal congruence?
What problems can arise when full cost plus a markup is used as the transfer price?
Within a range of feasible transfer prices, what are alternative ways for firms to arrive at the eventual hybrid price?
What is the general guideline for determining a minimum transfer price?
How do income tax considerations affect transfer pricing in multinationals?
What financial and nonfinancial performance measures do companies use in their balanced scorecards?
What are the relative merits of return on investment (ROI), residual income (RI), and economic value added (EVA) as performance measures for subunit managers?
Over what time frame should companies measure performance, and what are the alternative choices for calculating the components of each performance measure?
What targets should companies use, and when should they give feedback to managers regarding their performance relative to these targets?
How can companies compare the performance of divisions operating in different countries?
Why are managers compensated based on a mix of salary and incentives?
What are the four levers of control, and why does a company need to implement them?
Describe EVA.
Jimenez Corporation manufactures and sells two types of decorative lamps, Knox and Ayer. The following data are available for the year 2017.Calculate the revenues budget (label it Schedule 1) and the
Jimenez Corporation manufactures and sells two types of decorative lamps, Knox and Ayer. It expects to manufacture 20,000 Knox lamps and 10,000 Ayer lamps in 2017.The following data are available for
Jimenez Corporation manufactures and sells two types of decorative lamps, Knox and Ayer. The following data are available for the year 2017. Machine setup-hours is the only driver of manufacturing
Jimenez Corporation manufactures and sells two types of decorative lamps, Knox and Ayer. The following data are available for the year 2017.Calculate (1) the budgeted unit costs of ending
Jimenez Corporation manufactures and sells two types of decorative lamps, Knox and Ayer. The following data are available for the year 2017. The numbers below represent the calculations from the
Consider the Stylistic Furniture example described earlier. Suppose that to maintain its sales quantities, Stylistic needs to decrease selling prices to $582 per Casual table and $776 per Deluxe
What is the master budget, and why is it useful?
When should a company prepare budgets? What are the advantages of preparing budgets?
What is the operating budget and what are its components?
How can managers plan for changes in the assumptions underlying the budget and manage risk?
How do companies use responsibility centers?
Why are human factors crucial in budgeting?
What are the special challenges involved in budgeting at multinational companies?
What are static budgets and static-budget variances?
How can managers develop a flexible budget, and why is it useful to do so?
How are flexible-budget and sales-volume variances calculated?
What is a standard cost and what are its purposes?
Why should a company calculate price and efficiency variables?
How do managers use variances?
What is benchmarking and why is it useful?
Jamie Draperies manufactures curtains. To complete a curtain, Jamie requires the following inputs:During the second quarter, Jamie Draperies made 1,500 curtains and used 14,000 square yards of fabric
Consider Zenefit Corporation again. With the same information for 2017 as provided in Try It 7-1, calculate Zenefit’s flexible-budget and sales-volume variances for (a)revenues,(b) variable
Consider Zenefit Corporation. With the same information for 2017 as provided in Try It 7-1, calculate Zenefit’s flexible budget for(a) revenues,(b) variable costs,(c) fixed costs, and(d) operating
Zenefit Corporation sold laser pointers for $$11$ each in 2017. Its budgeted selling price was $$12$ per unit. Other information related to its performance is given below:Calculate Zenefit’s
How do managers plan variable overhead costs and fixed overhead costs?
How are budgeted variable overhead and fixed overhead cost rates calculated?
What variances can be calculated for variable overhead costs?
What variances can be calculated for fixed overhead costs?
What is the most detailed way for a company to reconcile actual overhead incurred with the amount allocated during a period?
What is the relationship between the sales volume variance and the production-volume variance?
How can variance analysis be used in an activity-based costing system?
How are overhead variances useful in nonmanufacturing settings?
How does variable costing differ from absorption costing?
How does income differ under variable and absorption costing?
Why might managers build up finished-goods inventory if they use absorption costing?
How does throughput costing differ from variable costing and absorption costing?
What are the various capacity levels a company can use to compute the budgeted fixed manufacturing cost rate?
What are the major factors managers consider in choosing the capacity level to compute the budgeted fixed manufacturing cost rate?
What issues must managers take into account when planning capacity levels and for assigning capacity costs?
SharpPitch, Inc., manufactures karaoke machines for several well-known companies.The machines differ significantly in their complexity and their manufacturing batch sizes. The following costs were
Automotive Products (AP) designs and produces automotive parts. In 2017, actual variable manufacturing overhead is $$308,600.$ AP’s simple costing system allocates variable manufacturing overhead
CKM is an architectural firm that designs and builds buildings.It prices each job on a cost plus 20% basis. Overhead costs in 2017 are $4,011,780. CKM’s simple costing system allocates overhead
ABC, retail product-line profitability. Henderson Supermarkets (HS) operates at capacity and decides to apply ABC analysis to three product lines: baked goods, milk and fruit juice, and frozen foods.
Legion Bank (LB) is examining the profitability of its Star Account, a combined savings and checking account. Depositors receive a 6% annual interest rate on their average deposit. LB earns an
Shades & Hues (S&H) is a designer of high-quality curtains and bedsheets. Each design is made in small batches. Each spring, S&H comes out with new designs for the curtains and for the
Activity-based costing, activity-based management, merchandising. Main Street Books and Café (MSBC) is a large city bookstore that sells books and music CDs and has a café. MSBC operates at
Where does the management accounting function fit into an organization’s structure?
What are the ethical responsibilities of management accountants?
Pepsi Corporation uses trucks to transport bottles from the warehouse to different retail outlets. Gasoline costs are $0.15 per mile driven. Insurance costs are $6,000 per year. Calculate the total
Diana Corporation provides the following information for 2017:Calculate the total manufacturing costs incurred in 2017. Beginning inventory of direct materials, 1/1/2017 Purchases of direct materials
Diana Corporation provides the following information for 2017:Calculate(a) Cost of goods manufactured in 2017 and(b) Cost of goods sold in 2017 Beginning work-in-process inventory, 1/1/2017 Total
How is financial accounting different from management accounting?
How do management accountants support strategic decisions?
What are the three key features of cost accounting and cost management?
How do companies add value, and what are the dimensions of performance that customers are expecting of companies?
How do managers make decisions to implement strategy?
What guidelines do management accountants use?
What are the building-block concepts of a costing system?
How do you distinguish job costing from process costing?
What is the main challenge of implementing job-costing systems?
How do you implement a normal-costing system?
Your manager asks you to bring the following incomplete accounts of Endeavor Printing, Inc., up to date through January 31, 2017. Consider the data that appear in the T-accounts as well as the
How do you distinguish actual costing from normal costing?
How are transactions recorded in a manufacturing job-costing system?
How should managers dispose of under- or overallocated manufacturing overhead costs at the end of the accounting year?
What is the role of information technology in job costing?
What are some variations of normal costing?
Amherst Metal Works produces two types of metal lamps. Amherst manufactures 20,000 basic lamps and 5,000 designer lamps. Its simple costing system uses a single indirect-cost pool and allocates costs
Amherst Metal Works produces two types of metal lamps. Amherst manufactures 20,000 basic lamps and 5,000 designer lamps. Its activity-based costing system uses two indirect-cost pools. One cost pool
Family Supermarkets (FS) has decided to increase the size of its Memphis store. It wants information about the profitability of individual product lines: soft drinks, fresh produce, and packaged
When does product undercosting or overcosting occur?
How do managers refine a costing system?
What is the difference between the design of a simple costing system and an activity-based costing (ABC) system?
What is a cost hierarchy?
How do managers cost products or services using ABC systems?
What should managers consider when deciding to implement ABC systems?
How can ABC systems be used to manage better?
When can department costing systems be used instead of ABC systems?
Donna Corporation manufactures custom cabinets for kitchens. It uses a normalcosting system with two direct-cost categories—direct materials and direct manufacturing labor—and one indirect-cost
Donna Corporation manufactures custom cabinets for kitchens. It uses a normalcosting system with two direct-cost categories—direct materials and direct manufacturing labor—and one indirect-cost
Donna Corporation manufactures custom cabinets for kitchens. It uses a normalcosting system with two direct-cost categories—direct materials and direct manufacturing labor—and one indirect-cost
Describe the five-step decision-making process.

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