Cost Accounting Planning And Control 6th Edition Matz, Usry - Solutions

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Why are standard costs considered helpful in setting prices?14 Select the correct answer for each of the following statements.
Discuss profit maximization, relating total revenues with total costs.
Explain the dual transfer pricing approach in intracompany transfer pricing. 10 Discuss the statement, "Price setting is truly an art."II What methods are available that might assist and perniit the
Name and discuss the four basic methods of pricing intracompany transfers.
How is the return on capital employed computed ? 4 Rate of return on capital employed is a common measure of management's' performance. The rate can be expressed as the product of two factors: the
What items are generally included in the term "capital employed" ?
Select the correct answer for each of the following statements.(a) In selecting the purchase of one of two machines to replace an old machine, the management of Ashworth Company should consider
After a capital expenditure has been made, what should the company'sanalysts do in the matter of reporting the results of these decisions?
Define sensitivity analysis.
Define cost of capital.
List the advantages and disadvantages of the following evaluation methods:a. The payback (or payout) period methodb. The average annual return on investment methodc. The present value methodd. The
Discuss the differences in the computations of the present value and the dis- counted cash flow methods.
Modern capital expenditure evaluation uses the present value concept.How can this concept be stated?
How do the two average annual return on investment methods discussed in this chapter differ?
Define the payback (or payout) period method.
Differentiate between economic life and physical life of a project.
Why are effective planning and control of capital expenditures important?2. How can capital expenditure projects be classified ?
For each of the following statements, select the correct answer.(a) As part of the data presented in support of a proposal to increase theproduction of clock-radios, the sales manager of Wittman
Differential cost studies deal not only with alternatives that mean increased business but also with decreased business or even shutdown conditions. Explain.
When differentially-costed products are marketed, close watch must be kept on their sales trend. Why?
What type of questions could be answered for management from the dif- ferential cost analysis illustrated in the chapter on pages 798-803 ?
How does the flexible budget assist in the preparation of differential cost analyses?
Discuss explicitly the difference between an analysis based on historical cost data and one based on differential cost procedures. In what respect are they alike? Why is differential cost analysis of
Why is the variable cost so important in differential cost studies? Which cost is more important in break-even analysis? Why?
Distinguish between marginal cost and marginal costing (or direct costing).
Suggest a broad definition of the term "differential cost." What other terms are often used and by whom?
Differential costs have also been termed alternative costs. In what connections are such alternative costs desirable ?
Differential costs do not correspond to any possible accounting category.Explain.
Select the correct answer for each of the following statements.(a) An accountant would typically have the following in mind when re- ferring to the margin of safety: (1) the excess of budgeted or
Use the P/V analysis graph at the right to select the correct answers from the sentences given in (a) and (b).
A break-even chart, as illustrated below, is a useful technique for showing relationships between costs, volume, and profits.(a) Identify the numbered components of the break-even chart.(b) Discuss
Cost-volume-profit relationships provide management with a simplified framework for organizing its thinking on a number of problems. Discuss.
Why is a cost-volume-profit analysis by products valuable to management?18. Illustrate how the contribution of each product to the recovery of fixed expenses and to the total profit of the company
A price reduction is always accompanied by a proportionate volume in- crease. Discuss.
Why is a graphic form of presentation preferable to a tabular form?
What is meant by a contribution margin income figure?
How does the break-even point move when changes occur in (a) variable expenses? (b) fixed expenses?
What can cause a change in profits?
What is meant by the term "cost-volume-profit relationship"? Why is this relationship important in business management?
Discuss the weaknesses inherent in the preparation and uses of break-even point analyses.
The following quotation taken from a company's dividend notice shows aneff"ort on the part of the company to promulgate facts on the subject ofbreak-even points:
(a) What is meant by margin ofsafety ? (b) How is such a figure determined ?
The break-even chart and the unit profit graph intend to show the sameinformation but seem to differ. How?
The break-even chart is an excellent planning device. Discuss.
State the formulas commonly used to determine the break-even point in dollars; in units.
(a) Why must the conventional income statement be restated for computation of the break-even point ? (b) What type of statement is constructed ?
What is the relationship of budgets and standards to break-even analysis?
How can the break-even point be computed ?
Define break-even point.
For what reasons did the Robinson-Patman Act lead to the establishment of marketing cost procedures in business?
Explain briefly the difference between the profit and the contribution margin approach in marketing cost analysis.
When and to what extent is the inclusion of marketing and administrative expenses in inventory values justifiable?
(a) On what basis would you propose to analyze sales expenses in order to enable management to judge the effectiveness of this function?(b) What cost data should be given to salespersons and for what
A firm employing its own transport service delivers its products up to a distance of 130 miles from home in quantities varying from 1 to 20 cwt. On the return trip empties are collected from certain
What are the objectives of profit analysis by sales territories in income statements?(AICPA adapted)
A company with a national sales force divides the country into sales ter- ritories, which are again divided into districts. The products are nationally advertised and are sold to retail shops.
The advertising poUcy of a company includes exhibition of the plant to customers. Visitors are received and guides are supplied from the production staff. (a) How should this cost be treated in the
A method still commonly used today in analyzing marketing expenses is to relate them to either the total factory costs or the total sales value. This method is merely a relationship and not a
Outline a procedure for determining the marketing costs for a concern manufacturing two products. This organization uses national advertising and assigns salespersons to definite territories for
How are marketing expenses to be classified in order to find the cost of selling jobs or products?
On what bases would you assign the following marketing expenses to a number of different types of commodities sold by a company:(a) Salespersons' salaries (e) Advertising on national scale(b)
What general principles should be observed in planning a system of control for marketing expenses?
Select the correct answer for each of the following statements.(a) A basic cost accounting method in which the fixed factory overhead is added to inventory is (1) absorption costing; (2) direct
Supporters of direct costing have contended that it provides management with more useful accounting information. Critics of direct costing believe that its negative features outweigh its positive
A speaker remarked recently that even though direct costing has attractive merits, there are certain items that should be considered before converting the present system. What hidden dangers are
In the process of determining a proper sales price, what kind of cost figures are Hkely to be most helpful ?
Why is it said that an income statement prepared by the direct costing procedure is more helpful to management than an income statement pre- pared by the absorption costing method?
A manufacturing concern follows the practice of charging the cost of direct materials and direct labor to Work in Process but charges off all indirect costs (factory overhead) directly to Income
Has the Internal Revenue Service approved direct costing for tax purposes ? Explain.
Why should the chart of accounts be expanded when direct costing is used ?
Why does the direct costing theorist state that fixed manufacturing costs are not to be included in inventories?
Distinguish between period costs and product costs.
How does underapplied factory overhead come into existence?
Differentiate between differential costs and direct costing.
Differentiate between direct costs or expenses and direct costing.
Whose task is it to see that the planned gross profit is met?
What important information is revealed by a gross profit analysis on a product basis ?
The gross profit analysis based on budgets and standards makes use of threebasic statements. Name them.
What is the significance of the average gross profit figure of the base orstandard ?
Illustrate how the sales price variance is determined. If the sales pricevariance were to be journalized in the books, how would such a journalentry vary from an entry made for the materials purchase
By what methods can a change in the gross profit figure be analyzed?
Explain the term "product mix" or "sales mix."
What causes changes in the gross profit?
Why is the gross profit figure significant?
Select the correct answer for each of the following statements.(a) Which of these variances is least significant for cost control? (1) labor rate variance; (2) materials quantity variance; (3)
Standard costing procedures are widely used in manufacturing operations and, more recently, have become common in many nonmanufacturing operations.(a) Define standard costs. (b) What are the
The use of standard costs in pricing and budgeting is quite valuable since decisions in the fields of pricing and budgetary planning are made before the costs under consideration are incurred.
According to field studies, overhead variances are generally treated as period costs. Why would this procedure exist?
The determination of periodic net income depends greatly upon the cost assigned to raw materials, work in process, and finished goods inventories. What considerations determine the costing of
Discuss the meaning of variance control and responsibility by various levels of management.
Diff'erences between actual costs and standard costs are found in the variance accounts of which a great number are discussed in the chapter. What considerations might determine the number of
The charging of overhead into work in process may be applied on the basis of standard hours or standard labor dollars allowed for actual production.At times a company might apply overhead on the
The use of standard costs for costing finished goods and sales is considered to have several advantages. What are these advantages?
Some firms incorporate standard costs into their accounts; others maintain them only for statistical comparisons without incorporation into the doubleentry system of cost records. Discuss.
Select the correct answer for each of the following statements.(a) The product cost determined in a standard cost accounting system is a(1) direct cost; (2) fixed cost; (3) joint cost; (4) expected
The isolation of a yield variance results in yield variances not only formaterials but also for labor and factory overhead. Why?
A cost standard in a process industry is often based on an assumed yieldrate. Any difference in actual yield from standard yield will produceayield variance. Express this variance in formula form.
Yield is often expressed as the percentage actually obtained of the amounttheoretically possible. The yield figure is a useful managerial control ofmaterials consumption. Explain.
How does the calculation of a mix variance differ from that of a quantityvariance ?
In a paper mill, materials specification standards are set up for variousgrades of pulp and secondary furnish (waste paper) for each grade and kindof paper produced. Yet at regular intervals the cost

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Cost Accounting Planning And Control 6th Edition Matz, Usry - Solutions

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