Questions and Answers of Management Accounting

Hiddleston plc is a well-known company that manufactures apparel and watches for both men and women. It has huge retail stores in many major cities across the country. It has separate divisions for
City Appliance Ltd operates an appliance service business with a fleet of trucks dispatched by radio in response to calls from customers. The company’s profit margin has dropped steadily over the
Dave Pens plc is a subsidiary of a writing instruments company. Dave Pens plc manufactures ballpoint pens, calligraphy pens, gel pens and highlighters. The current selling price per unit of all four
Alpha and Beta are divisions within the same company. The managers of both divisions are evaluated based on their own division’s return on investment (ROI). Assume the following information
Zach Automobiles Ltd manufactures and sells two models of car, Yen-Oh-1000, an economy car, and Zen-Fi, a luxury car. Yen-Oh-1000 is a five-door hatchback with front-wheel drive. Zach Automobiles Ltd
Ticklite Technologies is a large multinational conglomerate. The company manufactures and sells computers and computer-related gadgets, such as desktops, laptops, gaming consoles, graphics cards and
Hi-Tech Legacy Ltd manufactures and sells tablet computers. Over the last few years, the company has been manufacturing and selling tablets with handwriting pen input. The tablets are called
Eyre Watches Ltd is a watch manufacturing company that has been in this business for the past 15 years. It started its children’s watch division 11 years ago. Information regarding the company’s
Serenity Solutions Ltd is a multinational conglomerate. Some of the subsidiaries of Serenity Solutions Ltd are Serenity Glassware Ltd, Serenity Healthcare Ltd, Serenity Personal Care Ltd, Serenity
Why is market share an important indicator to monitor?
What aspects of a competitor’s costs should be analysed in a strategic assessment?
What sources are useful for strategic intelligence gathering?
What is the difference between a prospector and a defender company?
Studio 1510 is a high-end salon located at the heart of the city centre. It is owned by a couple of highly talented stylists. The salon mostly focuses on hairstyling services and offers only limited
What is the difference between a cost leader and a product differentiator?
FlexiBus provides a passenger bus service between two major cities in Spain: Barcelona and Zaragoza. The buses run frequently and travel the distance between the two cities in three hours. Apart from
What are the three steps/dimensions that combine financial and strategic analysis as proposed by Tomkins and Carr (1996)?
Hi Label is a large retailer that sells designer wedding clothing. It is part of a global chain of stores owned by many individual shareholders, each of them having small shareholdings, and a couple
What are the implications of the ‘strategy as collision’ model?
Water Blu is a water park situated in Bristol, UK. It is owned by Dohlar plc and is one of the world’s largest water parks. Water Blu attracts millions of visitors each year. The park provides an
Gerrit Motors is an original equipment manufacturer (OEM) that produces auto parts and equipment for large automobile manufacturing companies. Gerrit has been in this business for the past 15
Atlantico Hotel Ltd is a medium-sized privately-owned hotel situated in the central business district of Liverpool. It is located at the main entrance of a major business park. The hotel offers
How can a balanced scorecard aid organizational learning?
Orion Art Centre is located in the heart of Cambridge, UK. It provides a platform for a diverse creative community. Orion hosts film festivals, exhibitions and live music events. It also has 10
Which views of strategy would you expect to provoke the most resistance from ‘traditional’ management accountants?
Dress Palate is the UK’s leading fashion retailer. It sells women’s clothing, handbags and fashion jewellery. It also sells clothing for men and children. Dress Palate currently has over 200
Flex Fitness is a 10,000-square-foot health and fitness studio located just outside of Amsterdam. It was established in 2012. Adam Vonn, the owner of the studio, has prior experience in the fitness
Machado Foods Plc is a Brazil based corporation. It processes and markets beef, pork, poultry, canned vegetables and frozen vegetables. Machado has a total of five food processing facilities, out of
John Gove owns Cramar Pack n Wrap, a wholesaler of disposable food packaging products. Cramar deals in disposable food packaging made of aluminium and plastic. Its products include trays and bags
Aone Diagnostic Equipment is a listed company that manufactures sophisticated diagnostic machines to aid medical professionals. The company has three production divisions: Ultrasound, MRI and
Porto Maceo is a small island nation with beaches and several recreational activities such as entertainment parks, jungle safaris and museums. It is thronged by thousands of tourists all year. Porto
TransEquip Solutions Company has operations in the UK and the US and is listed in both countries. It is engaged in the manufacturing and supply of transport equipment. The company has recently missed
We-Linc is a social media and networking platform designed and managed by We-Linc Ltd. The platform helps users to connect with people who have similar interests or backgrounds. It also enables users
'Improving our schools is a central part of our agenda that sees education as the key to greater prosperity and social inclusion.' These words, which she had spoken only a few hours ago in the House
Haley Platt had just been appointed CEO of the North Region of the Bank Services Corporation (BSC). The company provides cheque-processing services for European banks. The banks send cheques
What are the three groups of costs associated with the economic order quantity (EOQ) model?
Risk-taking is vital to successful decision making. The risk universe for the telecommunications and networking service providers is changing dramatically. In order to maintain a sustainable growth
Listed below are a number of costs that are incurred in connection with a company’s quality control system.(a) Product testing(b) Product recalls(c) Rework labour and overhead(d) Quality circles(e)
What is the potential impact of just-in-time (JIT) purchasing on the EOQ?
What trade-offs in costs are involved in computing the EOQ?
The management at Megafilters Ltd has been discussing the possible implementation of a just-in-time (JIT) production system at its Sheffield plant, where oil and air filters are manufactured. The
Define lead time and safety inventory.
Snedden Products manufactures athletic equipment, including footballs. The footballs are manufactured in several steps, which are listed below:1. Leather and other materials are received at a
Kaufheim AG of Dresden, Germany, distributes medical supplies throughout Germany. Selected information relating to a quick-developing X-ray film carried by the company is given below:Management is
In a just-in-time system, what is meant by the pull approach to the flow of goods, as compared to the push approach used in conventional systems?
Flint Company uses 9,000 units of part AK-4 each year. To gain better control over its inventory, the company is anxious to determine the economic order quantity (EOQ) for this part.Required1. The
How does the plant layout differ in a company using JIT as compared to a company that uses a more conventional approach to manufacturing? What benefits accrue from a JIT layout?
Identify the benefits that can result from reducing the set-up time for a product.
How does a workforce in a JIT facility differ from the workforce in a conventional facility?
Happy Savers Mart is planning to establish a store in a town where people enjoy drinking green tea. The company estimates that the annual sale of green tea will be 20,000 packs. (Each pack consists
‘Maybe the emphasis we’ve placed on upgrading our quality control system will pay off in the long run, but it doesn’t seem to be helping us much right now,’ said Renee Penretti, managing
In response to intensive foreign competition, the management of Florex Company has attempted over the past year to improve the quality of its products. A statistical process control system has been
Is there a difference between a virtual company and a dotcom company?
Division A and Division B are two manufacturing facilities producing the same product. Division A follows the conventional inventory management approach, whereas Division B follows the just-in-time
What are three benefits and three costs of installing an ERP system?
Myron Metal Works uses a small casting in one of its finished products. The castings are purchased from a foundry located in another state. In total, Myron Metal Works purchases 54,000 castings per
Traditionally, manufacturing companies have maintained large amounts of raw materials inventory, work in progress inventory and finished goods inventory to act as buffers so that operations can
What are the major benefits of a JIT system?
Krumbelo Corporation is a leading chocolate manufacturing company. There are several stages involved in the manufacture of chocolates. The steps are:(1) Harvesting cocoa beans,(2) Fermenting the
Stinson plc is a multinational consumable goods company. Stinson owns many well-known brands. The company manufactures and sells food and beverages, home care products and personal care products. The
K-Moss Bags and Shoes is a leading manufacturer of handbags, shoes and belts. The festive season is around the corner, and the demand for these products is going to be higher than usual. Leather is
Explain how the plan–do–check–act (PDCA) cycle applies the scientific method to problem solving.
Emezed Motors Ltd is a renowned automotive manufacturing company. In the current year, Emezed Motors has made modifications to all of its cars to keep up with technological advancements. Emezed
Slide Corporation manufactures combustion engines for cars. The company’s goal is to manufacture defect free combustion engines. The management of Slide Corporation has decided to implement a
Roost Home Care is a well-established one-stop shop for all home services. Some services provided by Roost Home Care are home cleaning, gardening, pest control, carpentry, plumbing, waste management,
Rhyil Corporation has started operations in the current year (Year 1). The company manufactures and sells fridge freezers. Rhyil Corporation is a subsidiary of a well-known electrical appliances
Why is process re-engineering a more radical approach to improvement than total quality management (TQM)?
How can process re-engineering undermine employee morale?
Does activity-based costing always precede activity-based management (ABM)?
What are the problems associated with the application of ABM to service areas?
Listed below are a number of terms that relate to just-in-time, total quality management, process re-engineering and theory of constraints:Choose the term or terms above that most appropriately
Why does the theory of constraints emphasize managing constraints?
Dandelion plc is a start-up that manufactures Product X and Product Y. The products go through five stages of processing before the product is ready for sale. The first and second stages require
In what way does throughput accounting misrepresent the theory of constraints?
How do you decide whether a component is strategic or non-strategic?
Koncordel plc is an information technology company. The company provides a portfolio of information technology services. The services provided by Koncordel include software development, software
Why does supply management emphasize cost rather than price?
Suggest some problems that may be encountered in a major outsourcing contract.
Why are product costs sometimes called inventoriable costs? Describe the flow of such costs in a manufacturing company from the point of incurrence until they finally become expenses in the statement
Choose a company that you already know and/or can find cost information about on the internet.Required1. Why is cost classification important for decision making, planning and control of companies.2.
Various costs associated with the operation of a factory are given below:1. Electricity used in operating machines2. Rent on a factory building3. Cloth used in drapery production4. Production
Listed below are a number of costs typically found in organizations.1. Property taxes, factory2. Boxes used for packaging detergent3. Salespersons’ commissions4. Supervisor’s salary, factory5.
Tracy Beckham began dabbling in pottery several years ago as a hobby. Her work is quite creative, and it has been so popular with friends and others that she has decided to quit her job with an
Selected account balances for the year ended 31 December are provided below for Superior Company:Inventory balances at the beginning and end of the year were as follows:The total manufacturing costs
Refer to the data in E3–1.Data from E3-1The Lakeshore Hotel’s guest-days of occupancy and custodial supplies expense over the last seven months were:Guest-days is a measure of the overall
Refer to the data in E3–3.Data from E3-3The following data relating to units shipped and total shipping expense have been assembled by Archer Company, a manufacturer of large, custom-built
Oki Products Ltd has observed the following processing costs at various levels of activity over the last 15 months:Required1. Prepare a scattergraph by plotting the above data on a graph. Plot cost
Below are a number of cost behaviour patterns that might be found in a company’s cost structure. The vertical axis on each graph represents total cost, and the horizontal axis on each graph
The Swiss company Precision produces different types of watches. The monthly production costs and output from a production line for sports watches are as follows:Required1. (a) Draw a scatter diagram
You are provided with the following information for a European company:Required1. Use the high-low method to determine a linear function for total costs per annum (at Year 1 prices) from the above
Jordan Company (JC) provides skilled labour to the building trade. They have recently been asked by a builder to bid for a bathroom fitting contract for a new development of 700 identical apartments.
Dolphin Radiators & Cooling Systems Ltd of Sharjah, United Arab Emirates, is a supplier to the global automobile industry. The company specializes in radiators and brake linings. The company has a
Valentina Gonzales from Spain started her own catering company ten years ago. The busines idea of the company is to organize parties for private people and businesses where it serves food and
Why are actual overhead costs not traced to jobs as are direct materials and direct labour costs?
The Polaris Company uses a job-order costing system. The following data relate to October, the first month of the company's fiscal year.(a) Raw materials purchased on account, ￡210,000.(b) Raw
Refer to the data for the Ferre Publishing Company in E4-8. Assume that the company allocates service department costs by the direct method, rather than by the step method.Data From E4-8The Ferre
Bieler & Cie of Altdorf, Switzerland, makes furniture using the latest automated technology. The company uses a job-order costing system and applies manufacturing overhead cost to products on the
Stoke Potteryworks makes a variety of pottery products that it sells to retailers. The company uses a joborder costing system in which predetermined overhead rates are used to apply manufacturing
'Blast it!' said David Wilson, CEO of Teledex Company. 'We've just lost the bid on the Koopers job by ￡2,000. It seems we're either too high to get the job or too low to make any money on half the
Enumerate two reasons why overhead might be underapplied in a given year.

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