Questions and Answers of Management Accounting Information

What potential barriers to effective communication might apply to employees working in a busy Starbucks café? What could a store manager do to minimize those barriers?
Besides asking employees for their opinions through attitude surveys, what else could managers at Starbucks do to ensure that employees have as positive attitudes as possible?
Discuss the four main workplace discipline problems related to controlling employee performance.
What problems do you see here, especially as it relates to control?
When General Motors (GM) decided to start a bug bounty program—paying hackers to find computer bugs in the company’s information systems—they purposely tried to avoid other companies’
It is not surprising that employers are keen on knowing what their employees are up to. In some cases, they can be a little too keen. In 2015, British Airways was accused of illegally monitoring the
What is ‘capital budgeting’.
This case study shows a typical situation in which management accounting can be helpful. Read the case study now but only attempt the discussion points after you have finished studying the
The US government has strict accounting rules for those involved in defence contracts. This extract outlines the process and then sets out the rules for applying Standard Costing.Administratively a
This extract describes the accounting support available from a commercial provider to help house builders with costing.IDS Scheer North America, the leading provider of business process excellence
How are variable overhead cost variances calculated.
How are fixed overhead cost variances calculated?
How are sales margin variances calculated.
As part of the annual Group business planning process, challenging financial, operational and sustainable development targets are set to form a Group Scorecard. Performance during the year is then
The bonuses for 2004 have been paid in the basis of the level of satisfaction of the performance targets. The table below shows the principal performance targets used for 2004.Discussion points 1 Why
The UK government provides some of its services through Exective Agencies which are managed like private businesses but have to meet targets set by the Secretary of State and Ministers of State. The
Define ‘feed forward control’.
Define a ‘non-controllable cost’.
What is the ‘six sigma’ approach to performance measurement.
What have researchers found about the benefits of using a Balanced Scorecard.
What have researchers described as the factors required for a successful performance management system.
This extract describes Kerry Foods, an Irish company producing a range of foodstuffs.The best performance came from the food ingredients division, which made a profit of A257m, up 17.5%, with
This extract describes changes in the UK company Bunzl, which announced at the start of 2005 that it would sell Filtrona, a business making cigarette filters, and concentrate on its outsourcing
The following information is extracted from the annual report of Wolseley plc.Finance objectives (extract)To deliver an incremental return on gross capital employed at least 4%in excess of the
What is a division.
What are the advantages of divisionalisation.
What are the disadvantages of divisionalisation.
Why is profit not a suitable measure of divisional performance.
Explain, in terms of divisional performance evaluation, the difference between using ‘profit’ and ‘profitability’.
Define, and explain the use of, return on investment as a measure of divisional performance.
Define, and explain the use of, residual income, as a measure of divisional performance.
Explain the circumstances in which return on investment is preferable as a measure of divisional performance.
Explain the circumstances in which residual income is preferable as a measure of divisional performance.
Explain what is meant by a ‘transfer price’.
Explain the methods of transfer pricing.
Explain what is meant by ‘economic value added’.
Explain why companies regard economic value added as a useful tool for assessing managerial performance.
What have researchers found about the use of EVA.
What have researchers found about the use of EVA bonus schemes.
The following table sets out information in respect of Division X and Division Y.The cost of borrowing new finance is 10% per annum.Required Explain what view the managers of each division might
Comfy Chairs Co manufactures a standard office chair in Division A. The standard chair is improved in Division B with extra cushioning and easy-run castors. The manager of Division A has offered
Write a short essay (250 words) on the similarities and differences between Economic Value Added and Residual Income.
Department A is required to transfer 50% of its output to Department B at cost. Department B adds value to the product and then sells to outside customers. Manager A complains that the performance of
Musical Productions Ltd, a client of your firm, has two divisions. The Compact Disc division (‘CD’) assembles and markets portable compact disc players. The Portable Stereo division (‘PS’)
You are the accountant of Hill Ltd (‘Hill), an electrical retailer having a chain of shops. Hill has recently acquired two other similar businesses. The sales director has come to you with a
The Company is also making significant changes in manufacturing which will continue to increase margins through efficiency improvements, range changes and capital investment. Production activity is
Legislation to sweep away a culture of late payment in business has been a failure, according to research that shows it has triggered no improvement in the time it takes companies to pay their bills.
The CFO Magazine in the USA publishes information to help chief finance officers(finance directors) in companies. The following information is extracted from its annual Working Capital Survey.For
Define working capital.
Define current assets and give three examples.
Define current liabilities and give three examples.
Explain how the stockholding period is calculated.
Explain how the debtors’ collection period is calculated.
Explain how the creditors’ payment period is calculated.
Explain what is meant by the accrual of liabilities.
Describe the working capital cycle.
Explain how the current ratio is calculated.
Explain how the liquid ratio is calculated.
Explain how the working capital cycle is calculated.
Explain the meaning of over trading.
What are the costs of ordering inventory.
How is the economic order quantity calculated.
What is the just-in-time approach to purchasing inventory.
Describe the main contents of a business plan for presenting to a bank providing finance for a small business.
What have researchers found about the frequency of review of working capital in small businesses.
What have researchers found about the length of the working capital cycle in practice.
What have researchers found about the idea that different types of business have different types of working capital.
What are bankers looking for when they evaluate working capital.
What kinds of organisation are likely to use JIT production.
Company A is a wholesaler selling grocery goods to retail stores on credit. Company B is a manufacturing company selling its products to other manufacturers for use in their products.*Assume cost of
The following statement was made in the finance director’s report of a company making retail sales:The increase in cash has resulted from improved trading, the benefits of a working capital
Dallas (UK) Ltd is a wholly owned subsidiary of a US parent and has been set up as a new manufacturing facility in the UK. The projected capital costs and sources of funds are as follows:Costs
AB Ltd manufactures units for drills. All units are identical. The following working capital requirements are budgeted:Notes:1 Each month is assumed to consist of four working weeks.2 Wages are paid
The purchasing manager of a manufacturing business knows that its total production requirement for raw materials will be 7,200 units per month. Each unit has a price of £10. The cost of holding
This news item shows how strategic management is helped by surveys that evaluate relative competition.Research and Markets (http://www.researchandmarkets.com/reports/c11963) has announced the
Supply chain analysis is part of value chain analysis. This news item indicates the types of businesses that feel they need to know more about their supply chains.Six leading consumer products
ACT Doorland was founded in 1957 as a small concern whose core business was the supply and installation of garage doors. Since then it has diversified its interests and expanded to become
How do the managers of a business maintain its competitive position.
What have researchers found about the definition of what strategic management accounting means.
How does target costing help maintain competitive advantage.
What is customer profitability analysis.
How does life-cycle costing help maintain competitive advantage.
How does lean accounting help maintain competitive advantage.
How does value chain analysis help maintain competitive advantage.
How does activity-based management develop out of activity-based costing.
What is e-business.
What is e-commerce.
The Department of Health publishes guidance to those recording the costs of health service activities. This is an extract from the Guidance manual.Costing The principles for costing in the NHS are
This extract from a newspaper article comments on comparisons between the public sector National Health Service and the private sector provision of healthcare, quoting the British United Provident
The Guidance Manual of the NHS, quoted in Real world case 5.1, contains a great deal of detail on how to calculate full absorption costs of activities. This section explains the calculation of the
What is a job-costing system.
How does a cost account in management accounting relate to an expense account in financial accounting.
What types of transactions are recorded as debit entries in ledger accounts for costs.
What types of transactions are recorded as credit entries in ledger accounts for costs.
Why is there no definitive list of ledger account headings for management accounting purposes.
State the debit and credit entries for each of the following types of transaction:(a) Acquisition of inventory of materials.(b) Return of inventory to a supplier.(c) Payment of wages.(d) Payment for
State the debit and credit entries for each of the following types of transaction:(a) transfer of inventory of materials to be used as part of work-in-progress.(b) recognition that labour cost has
State the debit and credit entries for each of the following types of transaction:(a) transfer of completed work-in-progress to finished goods inventory.(b) recognition that finished goods inventory
What is the purpose of the work-in-progress account and what types of entries would you expect to see there.
Why is the use of control accounts essential in both management accounting and financial accounting.

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