Management Accounting 5th Edition Anthony A Atkinson, Robert S Kaplan - Solutions

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What problems do you think Mr. Cohn will encounter in attempting to expand this effort to the rest of the hospital? What should be done about those problems?
What is the difference between programming and budgeting? How do the two activities relate to each other?
What are the elements of the managerial context for the operating budget?
What is a revenue-first policy? Why should an organization have one?
How might a hospital use budget drivers to build its budget? How should it incorporate its payer mix into the budget?
What are the five steps that organizations follow in preparing their operating budget?
Prepare actual balance sheets, operating statements, and statements of cash flows for October through March, and pro forma statements for April through September. Be sure you reconcile equity, accounts receivable, and inventory for each month, beginning in November.Also, for each account, use the
What problems, if any, does the organization have? Please be as specific as you can, clearly identifying the causes of any problems you identify. What options are available to address these problems?
What advice would you give Mr. McCall?
What is the purpose of a flexible budget? How does it contrast with a fixed budget? When is it most appropriately used?
What is variance analysis? How does it relate to a flexible budget?When is it most appropriate to use this technique? Give some examples of what it might measure.
What are the key characteristics of a good reporting process?
What are some of the major categories of nonfinancial information?Give an example in each category of an item that might be measured.
What is a spidergram? For what is it used?
Explain the reasons for the $30,000 difference between budgeted and actual revenue, using appropriate revenue variances.
Prepare a flexible budget for the nursing home’s expenses. Use this budget and the revenue variances to reconcile the difference between budgeted and actual income figures.
What additional information would you like to have to explain the difference between the budgeted and actual income figures?
Be sure you understand how exhibits 11B.3 and 11B.4 were prepared.Do you agree with Mr. Loch’s analyses so far?
Besides changes in the number of visits and the reimbursement rate per visit, what are the other possible reasons why actual results diverged from budget?
Calculate the variance associated with each of the reasons you gave in question
How, if at all, might this information be used in managing the clinic? How might it be used by the clinic’s administration? By the chief of medicine? By the director of nursing?
What are three important characteristics of a good responsibility accounting system?
Describe the responsibility accounting context. Why is it important?
What are Kotter’s eight steps to change?
What are Kotter and Schlesinger’s six methods for dealing with resistance to change?
Where is the best place to begin a change effort?
Classify the activities of Dr. Wells into the categories of strategy formulation, motivation, conflict management, authority and influence, cultural maintenance, management control, and patient management.How, if at all, does this assist you in understanding the problems faced by the MPP?
Was the management control structure (that is, the responsibility centers) of the MPP well designed? If not, how would you have changed it?
What is your assessment of the management control process of the MPP? How, if at all, would you have changed it?
What might Dr. Wells have done differently to achieve a smoother process of change in the department?
Atlantic University has eight schools, 350 faculty members, and 20,000 students. Ananalysis of the university 's cost structure yielded the following annual cost estimates.The university-sustaining cost level is $20,000,000, which includes basic buildingcosts and administrative salaries such as
The Holiday Hotel provides a recreation center for the use of its guests and employees.The center also sells memberships to people in the local community. The center hassquash and racket ball court facilities, showering facilities, and a room with various typesof exercise equipment. The courts
Trans Western Airlines is considering a proposal to initiate air service betweenPhoenix, Arizona, and Las Vegas, Nevada. The route would be designed primarily toserve the recreation and tourist travelers who frequently travel between the two cities. Byoffering low-cost tourist fares, the airline
Brantford Bat Company (BBC) manufactures popular baseball bats that are prized by professionaland amateur players. The current flexible cost of manufacturing the bat is $ 1 2per unit. The cost of operating the lathe that produces the bat is about $600,000 per year.This cost includes maintenance and
Hewtex Electronics manufactures two products, tape recorders and electronic calculators, and sells them nationally to wholesalers and retailers. The Hewtex management is very pleased with the company's performance for the current fiscal year. Projected sales through December 31, 1998, suggest that
The Holiday Hotel provides a recreation center for the use of its guests and employees.The center also sells memberships to people in the local community. The center has squash and racket ball court facilities, showering facilities, and a room with various types of exercise equipment. The courts
Brantford Bat Company (BBC) manufactures popular baseball bats that are prized by professional and amateur players. The current flexible cost of manufacturing the bat is $ 1 2 per unit. The cost of operating the lathe that produces the bat is about $600,000 per year.This cost includes maintenance
Trans Western Airlines is considering a proposal to initiate air service between Phoenix, Arizona, and Las Vegas, Nevada. The route would be designed primarily to serve the recreation and tourist travelers who frequently travel between the two cities. By offering low-cost tourist fares, the airline
Hewtex Electronics manufactures two products, tape recorders and electronic calculators, and sells them nationally to wholesalers and retailers. The Hewtex management is very pleased with the company 's performance for the current fiscal year. Projected sales through December 3 1 , 1 998, suggest
"I can't believe it. We just went through a study showing how my department could save money by using the central maintenance department. But the first month using this department shows that my costs are up more than 20 percent." Don Thompson, the general manager of the Delta Division of Ramo
"I get overcharged by the Printing Department each month," declared Bud Perles, the manager of the Greene C_ompany's Advertising Department. "Even though my usage is down during the month, the total amount I have to pay keeps going up. The work done by our Printing Department is certainly high
Fort Erie Consumer Products manufactured a wide range of consumer products. To support all aspects of its acquisition, manufacturing, distribution, and marketing operations, the company maintained, a graphics department. This department, ,called the Corporate Graphics Department, employed graphics
Arlington Acoustics manufactures a line of quality speakers. The main production departments are Shipping, Assembly, and Fabrication. These departments are provided with services from centrally maintained facilities: computer; heating and air-conditioning, and power.The company is organized on a
Atlantic University has eight schools, 350 faculty members, and 20,000 students. An analysis of the university 's cost structure yielded the following annual cost estimates.The university-sustaining cost level is $20,000,000, which includes basic building costs and administrative salaries such as
The Darwin Co. has two main products, S and T, each of which is produced in a separate division. In order to.produce S and T, the Darwin Co. has two service departments, A and B, which supply intermediate goods and services both to the S and T divisions and to themselves. For the sake of
What is the defining feature of a long-term, or capital, asset?
What are the attributes of long-term assets? Why do organizations use capital budgeting to evaluate the acquisition of long-term assets?
What is the fundamental evaluation issue in dealing with a long-term asset?
What is an investment?
What does return mean?
What does time value of money mean?
Is it always true that money now is worth more than the same amount of money received a year from now?
What is future value of a dollar amount?
What is the role of future value in capital budgeting?
What is the compounding effect of interest?
What is present value of a dollar amount?
What is the significance and role of time zero in capital budgeting?
What is discounting?
Give an example of an annuity.
What is the most widely used approach to computing the cost of capital for evaluating new investments?
What is the discount rate?
What does payback period mean?
How is accounting rate of return defined?
What are inflows and outflows in capital budgeting?
Why are incremental cash flows important in capital budgeting?
Why do planners compute the present value of a sum that will be received in the future?
How is the idea of net present value used in capital budgeting?
What is internal rate of return?
How would you explain the idea of internal rate of return using nonfinancial terms?
How is profitability index defined?
How is economic value added computed?
What two major effects of taxes must be incorporated in capital budgeting decisions?
What is the difference between what-if analysis and sensitivity analysis?
What are the high low method and the expected value method of dealing with uncertainty of cash flows in capital budgeting?
What are two examples of possible strategic benefits provided by long-term assets?
Why are postimplementation audits useful?
How would you describe capital budgeting to someone who is intelligent but knows nothing about the time value of money or the concept of a required return on an investment?
Suppose you work for a bank and are proposing a system that customers can access from their home computers to do their banking. Only about one-half of the estimated cost of this system can be recovered by decreased clerical time required in the banks. However, you believe that the balance of the
Suppose you can earn a 6-month return of $2.5 \%$ on invested cash. Which is a better deal: $\$ 1,000$ at the end of 1 year or $\$ 495$ at the end of 6 months and another $\$ 495$ at the end of 12 months?
Explain the notion of compounding interest using an example.
Quintin is now 22 years old and has just started a new job. He is trying to decide whether to start investing for retirement now or to wait several years. Verify that investing a fixed amount at a $10 \%$ return per year yields approximately the same total accumulation at age 52 for Quintin under
The "rule of 72 " states that the number of periods $n$ that it will take to double an investment whose rate of return is $r$ percent is approximately $72 / r$. That is, $n r$ is approximately equal to 72 . Verify this approximation for $r=4,6,8$, and 10 .
You have won a lottery with an advertised prize of $\$ 1,000,000$. The prize is to be paid in installments of $\$ 100,000$ per year for the next 10 years. Is this prize really worth $\$ 1,000,000$ ? Explain.
You have been offered two annuities for the same price. Annuity 1 pays $\$ 50,000$ per year at the end of the year for 10 years. Annuity 2 pays $\$ 40,000$ per year at the end of the year for 20 years. If your cost of capital is $10 \%$, which of these two annuities is a better deal? Why?
Your credit card agreement states that interest on any outstanding balance is computed monthly and at the rate of $1.25 \%$ on the outstanding balance. What is the effective annual interest rate on this credit card account?
Would you expect the cost of capital to be higher for an electric utility or a genetics laboratory? Explain.
McDonough Corporation is financed $25 \%$ by debt with a pretax cost of $8 \%, 20 \%$ by preferred shares with a pretax cost of $12 \%, 35 \%$ by common equity with a pretax cost of $16 \%$, and $20 \%$ by retained earnings with an estimated pretax cost of $14 \%$. McDonough
Lebar Company is considering two mutually exclusive investment alternatives. Lebar has a $10 \%$ cost of capital. Following is the cash flow information for the two alternatives:a. Compute the net present value for each alternative and determine which alternative is more desirable using the net
Branson Manufacturing is considering purchasing a piece of equipment costing $\$ 45,000$. The new equipment would create a new cash inflow of $\$ 20,000$ at the end of the year for 5 years. At the end of the 5 years, the equipment would have no salvage value. The company's cost of capital is
Corporation has taxable income of $\$ 300,000$ and an income tax rate of $34 \%$. Simpson is considering selling an asset whose original cost is $\$ 20,000$, with $\$ 12,000$ of it depreciated. How much total aftertax cash will be generated from the sale of the asset for $\$ 18,000$ ?
Suppose you are advising someone who is using capital budgeting to evaluate the purchase of a clothing store. What role might sensitivity analysis play in this evaluation?
Suppose you are using capital budgeting to evaluate two alternative business opportunities. Both require comparable investments and have comparable average cash flows. However, the cash flows of one business appear to be more volatile than those of the other-that is, the cash flows of this
Discuss the advantages and disadvantages of each of the following as approaches to capital budgeting:a. Paybackb. Accounting rate of returnc. Net present valued. Internal rate of returne. Profitability indexf. Economic value added
What is the difference between operating and financial budgets?
What are the similarities and differences between what-if and sensitivity analysis?
Why is it useful to decompose a flexible budget variance into a price variance and an efficiency (quantity) variance?
"If more experienced workers work on the job than planned in developing the labor standards, the labor efficiency variance is likely to be favorable, but the labor rate variance is likely to be unfavorable." Do you agree with this statement? Explain.
What are the three most common methods of setting the budget?
Consider a company that sells prescription drugs. It has salespeople who visit doctors and hospitals to encourage physicians to prescribe its drugs. The company sells to drugstores. Salespeople are evaluated based on the sales in their territories. For each, income is a salary plus a bonus if
Some people say that budgets are great for planning but not for control. What do you think they mean? Do you agree with this sentiment? Explain.

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Management Accounting 5th Edition Anthony A Atkinson, Robert S Kaplan - Solutions

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