Questions and Answers of Management Accounting 4th edition

Refer question 15.23 above. Outline how Ceila might improve the investment decision making model within the hospitality and conference facilities division to cater for strategic investments.Question
FreshTucker Limited allows divisional managers to make capital investment decisions up to $10 million. However, divisional managers are required to send to head office detailsof each decision taken,
Government supervisors in a remote area of Queensland are considering the purchase of a small used plane to save on travel costs. The plane will cost $400 000 and can be old in five years for
When we covered cost–volume–profit (CVP) analysis in chapter 4, we calculated the amount of pre-tax profit needed to achieve a given level of after-tax profit. We could calculate a pre-tax rate
At recent management meeting the following statement was made by the Chief Operating Officer: ‘this project is strategic for the firm and therefore non-discretionary’. Briefly comment on this
Due to a newly released safety regulation, Red Rock Chocolates will have to replace the fire safety equipment throughout its production facilities. How should Red Rock management assess this asset
A community health clinic operates as a not-for-profit entity. Typical capital expenditure decisions involve acquiring equipment that will perform medical tests beyond those currently possible at the
State the three categories of capital investments and briefly explain the best capital investment evaluation tools suitable for each.
Informal networks (such as the use of idea brokers and specific management groups) are one way of overcoming a lack of collaboration and innovation.RequiredDrawing on any of the five strategy and
Unilever is a large Dutch–British consumer product manufacturer with sites around the world including Australia and New Zealand. Unilever’s product range comprises well-known consumer product
Marissa Nafsik founded Mana Consulting (MANA) in 2010. The company has grown from a oneperson operation to a rather diverse consulting company specialising in management consulting, technology
Maddy is the divisional manager of the internet technologies division of IT World Ltd. The following information is currently available with respect to her role.• The internet technologies division
In their 2014 annual report, airline Virgin Australia commented on the strategic direction of the company.26After completing the Game Change Program, the Group commenced Virgin Vision 2017, a
What factors would force an organisation such as an airline to review its strategic direction?
Explain the meaning of span of control, span of accountability and span of attention.
Outline the meaning of responsibility accounting.
Differentiate between belief systems and boundary systems.
Using examples, explain the meaning of informal controls.
Distinguish between diagnostic and interactive use of specific control system tools.
What role does management accounting and control information pay in monitoring the success of the new strategic direction taken by an entity?
What role does management accounting and control information play in developing new strategic directions?
Briefly explain the link(s) between strategy and managerial control systems.
Define strategy and differentiate between corporate-level strategy and business-unit level strategy.
Snowbird Snowboards converts regular snowboards to enhance safety capabilities for children. The statement of profit or loss for last year, in which 500 snowboards were produced and sold, appears
Johnson and Sons Ltd produces organic orange juice from oranges it grows. Unfortunately, it has been a bad year for oranges because of severe frosts. Johnson has only 10 000 litres of juice. It
Each of the costs below is incurred by Fairgood & Hernandez, a small CPA firm. RequiredIdentify whether each of the following costs most likely relates to an (i) organisation sustaining
Outback Cattle Company raises cattle and sells beef products. Following is a list of costs for the operation.RequiredIdentify whether each cost is most likely a (J) joint cost or a (S) separable
The management of SouthPak Company has asked for your assistance in deciding whether to continue manufacturing a part or to buy it from an outside supplier. The part, called AlphaB, is a component of
Give an example of joint products in a service industry and describe the main products and by-products.
What kind of constraints would arise in an accounting entity during tax season? How could any constraints be relaxed?
An organisation is currently operating at capacity. Should it accept a request for a special order based on variable cost plus 40 per cent? Explain.
Business publications frequently provide subscriptions to students at a substantial discount. Why do you suppose such offers are made?
With reference to Keener Doors in comprehensive example 2, provide answers to each of the following questions regarding the use of ABC information for activity-based management.(a) Why did the
Chief accountant San Kean Indi at Lewinsky and Dikolli Architects has begun a pilot project exploring the use of time-driven-activity-based-costing (TDABC). Indi became aware of the attributes of
Elite Daycare provides two different services, full-time childcare for pre-schoolers, and after-school care for older children. The director would like to estimate an annual cost per child in each of
Prahran Daycare (PD) offers childcare services to the local community. For many years it simply offered services for preschoolers. In this environment, managing the costs and services seemed
Using examples, distinguish between value-added and non-value added activities.
Outline the benefits of time-driven ABC.
What use might management make of ABC cost data output in universities, local governments and other such organisations?
What makes organisations such as local governments and universities suitable for ABC use?
Does it matter if the ABC-generated cost data are somewhat subjective?
Describe the ABC cost hierarchies.
Explain how conventional and ABC cost systems differ.
Continuing from exercise 5.23, the financial controller of Data Processors recently attended an accounting conference which discussed the benefits of adopting kaizen budgeting within an activitybased
Trang Nguyen owns Trang’s Stained Glass in Sydney. The business produces and sells three different types of stained glass windows: small, medium and large. Trang has two full-time employees who
Refer to question 3.41 above.Required(a) Draw a diagram of the costing system currently used by Hawk and Eagle Co.(b) Draw a diagram to show the proposed changes to the costing system under each of
Which type of entities would be suited to the use of a standard cost system?
Auditors must plan and perform an audit to obtain reasonable assurance about whether the financial statements are free of material misstatements, which may be caused by either error or fraud. Errors
Data Processors Ltd performs credit card services for banks. The entity uses an activity based costing (ABC) system. Following is information for the past year:Required(a) Using standard values for
Fasteners Company has several divisions, and has just built a new plant with a capacity of 20 000 units of a new product. A standard costing system has been introduced to aid in evaluating
Consider the following information for Morgan’s Cheese and Butter Division.Additional information:Budgeted market size for cheese and butter .............................. 65 000 000 kgActual
The following data represent the flexible budget for Mountain Mist Brewery, a boutique brewery that manufactures and sells boutique ales.Note that, overall, the increase in the final price of beer
Glen’s Landscaping Supplies uses a standard costing system to allocate overhead costs. The accountant estimated 8500 hours as the volume to develop standard overhead rates. Budgeted costs were $19
The Neon Manufacturing Company is a joint venture between Australian and Chinese firms with an assembly plant located in Beijing. The company’s managers expected to produce 20 000 units of product
Sunset Solar installs solar panels throughout Australia. The accountants estimated the market size to be 2 million solar panels with Sunset Solar hoping to achieve 5 per cent market share. The static
Recently the Victorian Government introduced a solar rebate of $2500 for eligible home owners. How might such an initiative impact on the budget variances for a business that installs solar panels
Briefly explain why actions by the material purchasing manager can cause unfavourable labour efficiency variances for the production manager.
A favourable variance is always good news and an unfavourable variance is always bad news. Discuss.
Discuss the ‘bookkeeping’ role of standard costing and its performance role.
How might the production volume variance encourage excess production?
Why is the efficiency variance more useful for control purposes than the price variance?
Identify four revenue drivers.
Discuss the three variances that help explain the sales volume variance.
Sherry North is the supply manager for West Industries, a manufacturer of garden furniture for a major department store in Australia. As part of her bonus plan, Sherry must meet the materials budget
The accountant for Moon Industries has taken unexpected leave and has not completed the end-of period budget analysis. The following incomplete budget analysis was found on her desk.Required(a)
Helium Industries manufactures glitter balloons used as party accessories. The balloons are bagged in packages of 100 and sold for $20 per pack. The company incurs fixed manufacturing overhead of $25
Black Industries has a static budget based on production and sales of 24 000 units. Sales revenue is expected to be $96 000, variable costs $36 000 and fixed costs $32 000. Actual production and
Paper Bright Industries uses flexible budgeting to assess budgeted expectations against actual performance. Last month, Paper Bright produced 120 000 units and incurred direct materials cost of $150
Franklin Industries’ CEO was talking with the CFO about the appropriate standard cost to use for the new product being launched in the coming year. The CEO argued that standard cost based on ideal
Software Galore sells gaming software that is downloaded to the customer’s device on purchase. The owner, Fred, was talking with a friend who sang the praises of flexible budgeting in his
Variance analysis is only useful for organisations using a standard costing system. Discuss.
Should management be excited if all variances for the period are favourable?
Should management be upset if all variances for the period are unfavourable?
Why might the role of the accountant be referred to as one of a ‘detective’ in relation to variance analysis?
Explain what a favourable variance and an unfavourable variance mean in relation to revenue and costs.
Discuss the different types of budget variances that can be calculated.
Which item has the same value for both the static budget and the flexible budget?
Discuss the behavioural issues that need to be considered when establishing a standard cost.
Discuss the different methods that an organisation can use to determine standard costs.
How can the use of absorption costing lead managers to make dysfunctional decisions for the entity?
Why do the accounting standards require absorption costing for financial reporting?
Explain how the breakeven point would be affected under both absorption and variable costing.
The volume of manufacturing in a period has an effect on income calculated using absorption costing but has no effect on income calculated using variable costing. Explain.
Explain how income could fall even though the unit sales level rises.
Explain the similarities and differences among absorption and variable costing.
Initially Techtra bid for any type of electronic assembly work that became available (mostly subcontract work from other entities experiencing temporary capacity problems). But over the years the
Refer to the information provided in problem 8.23.Required(a) Prepare a process cost report using the FIFO method.(b) Explain how a standard cost report would differ from the FIFO report you just
Humphrey Manufacturing produces car parts and batteries. All direct materials are added at the beginning of production, and conversion costs are incurred evenly throughout production. The following
Refer to the information presented in exercise 8.17.RequiredPrepare a process cost report under the FIFO method for December.Exercise 8.17.Fox and Sons is a toy maker that produces Flying Flingbats,
Refer to the information in exercise 8.17.RequiredUsing the FIFO method, prepare a schedule calculating the cost per equivalent unit for December.Exercise 8.17.Fox and Sons is a toy maker that
Refer to the information in exercise 8.17.RequiredPrepare a process cost report under the weighted average method for December.Exercise 8.17.Fox and Sons is a toy maker that produces Flying
Fox and Sons is a toy maker that produces Flying Flingbats, a soft foam rubber boomerang. All direct materials are added at the beginning of production, and conversion costs are incurred evenly
Fine Fans mass-produces small electric fans in Hawley Beach for home use. All direct materials are added at the beginning of production, and conversion costs are incurred evenly throughout
Langley uses a job costing system. At the beginning of June, two orders were in process as follows:There was no inventory in finished goods on 1 June. During June, orders numbered 106 to 120 were put
Jasper Company uses a job costing system. Overhead is allocated based on 120 per cent of direct labour cost. Last month’s transactions in the work in process account are shown here:Only one job,
One Glass Brewery estimates the following activity for the coming year:Expected production ............................................ 10 000 unitsExpected direct labour hours
To what extent do the costs used to value inventories for external financial reporting support internal management decisions on issues such as whether to accept a special, one-off order or whether to
List three examples of job cost records you would receive if you were building a new home.
Describe an inventoriable product cost.
(a) With reference to Merino Designs in self-study problem 2, demonstrate the meaning of the structural cost drivers’ scope, technology and experience.(b) Classify Merino Designs’ likely strategy

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