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managerial accounting 8th
Managerial Accounting Creating Value In A Dynamic Business Environment Mass Market Paperback Jan 01 2013 Hilton Platt 10th Edition David Platt Ronald W Hilton - Solutions
A quantitative analysis enables a decision maker to put a “price” on the sum total of the qualitative c haracteristics in a decision situation. Explain this statement, and give an example.
Explain what is meant by the term decision model.
Distinguish between qualitative and quantitative decision analyses.
Describe the managerial accountant’s role in the decision-making process.
List the seven steps in the decision-making process.
Explain the role of import duties, or tariffs, in affecting the transfer-pricing policies of multinational companies.
Why might income-tax laws affect the transfer-pricing policies of multinational companies?
Explain the significance of excess capacity in the transferring division when transfer prices are set using the general transfer-pricing rule.
Describe four methods by which transfer prices may be set.
Identify and explain the managerial accountant’s primary objective in choosing a transfer-pricing policy.
Discuss the importance of nonfinancial information in measuring investment-center performance.
List three nonfinancial measures that could be used to evaluate a division of an insurance company.
How does inflation affect investment-center performance measures?
Describe an alternative to using ROI or residual income to measure investment-center performance.
How do organizations use pay for performance to motivate managers?
Explain why it is important in performance evaluation to distinguish between investment centers and their managers.
Why do some companies use gross book value instead of net book value to measure a division’s invested capital?
Distinguish between the following measures of invested capital, and briefly explain when each should be used:( a ) total assets, ( b ) total productive assets, and ( c ) total assets less current liabilities.
Define the term economic value added. How does it differ from residual income?
Why is there typically a rise in ROI or residual income across time in a division? What undesirable behavioral implications could this phenomenon have?
What is the chief disadvantage of ROI as an investmentcenter performance measure? How does the residualincome measure eliminate this disadvantage?
Create an example showing how residual income is calculated. What information is used in computing residual income that is not used in computing ROI?
Explain how the manager of the Automobile Division of an insurance company could improve her division’s ROI.
Write the formula for ROI, showing sales margin and capital turnover as its components.
Define and give three examples of an investment center.
Describe the managerial approach known as management by objectives or MBO.
Define goal congruence, and explain why it is important to an organization’s success.
What is the managerial accountant’s primary objective in designing a responsibility-accounting system?
Explain how an improvement in employee retention(a learning and growth measure) could flow through each of the balanced scorecard perspectives to result in improved financial performance.
Using the measures selected in question 12-24, explain the difference between lead and lag measures.
Using the Internet, identify the organizational strategy for a company of your choosing and suggest two performance measures in each of the four balanced scorecard categories.
Give an example of a gain sharing plan that could be implemented by an airline.
What is meant by aggregate productivity, and what are its limitations?
List four examples of customer acceptance measures.
Define the term manufacturing cycle efficiency.
List seven areas in which nonfinancial, operational performance measures are receiving increased emphasis in today’s manufacturing environment.
What is meant by customer profitability analysis? Give an example of an activity that might be performed more commonly for one customer than for another.
Can a common cost for one segment be a traceable cost for another segment? Explain your answer.
List and explain three key features of the segmented income statement shown in Exhibit 12–7 .
Why is it important in responsibility accounting to distinguish between segments and segment managers?
Why do some managers and accountants choose not to allocate common costs in segmented reports?
Explain what is meant by a segmented income statement.
Referring to Exhibit 12–5 , why are marketing costs distributed to the Waikiki Sands Hotel’s departments o n the basis of budgeted sales dollars?
Define the term cost allocation base. What would be a sensible allocation base for assigning advertising costs to the various components of a large theme park?
Explain how and why cost allocation might be used to assign the costs of a mainframe computer system u sed for research purposes in a university.
Give an example of a common resource in an organization. List some of the opportunity costs associated w ith using the resource. Why might allocation of the cost of the common resource to its users be useful?
Define and give examples of the following terms: cost pool, cost object, and cost allocation (or distribution ).
“Performance reports based on controllability are impossible. Nobody really controls anything in an organization!” Do you agree or disagree? Explain your answer.
Explain how to get positive behavioral effects from a responsibility-accounting system.
What is the key feature of activity-based responsibility accounting? Briefly explain.
Explain the relationship between performance reports and flexible budgeting.
Under what circumstances would it be appropriate to change the Waikiki Sands Hotel from a profit center t o an investment center?
Define and give examples of the following terms: cost center, revenue center, profit center, and investment center.
Why is goal congruence important to an organization’s success? How does a responsibility-accounting system foster goal congruence?
Vancouver Scholastic Supply Company uses a standard-costing system. The firm estimates t hat it will operate its manufacturing facilities at 600,000 machine hours for the year. The estimate for total budgeted overhead is $1,500,000. The standard variable-overhead rate is estimated to be $2 per
Ice Box Gourmet, Inc., produces containers of frozen food. During April, The company p roduced 725 cases of food and incurred the following actual costs.Variable overhead
Albuquerque Wood Crafts, Inc., is a manufacturer of furniture for specialty shops throughout the southwest and has an annual sales volume of $24 million. The company has four major product lines: bookcases, magazine racks, end tables, and bar stools. Each line is managed by a production manager.
Western A uto Parts Company manufactures replacement parts for automobile repair. The company recently installed a flexible manufacturing system (FMS), which has significantly changed the production process. The installation of the new FMS was not anticipated when the current year’s budget and
For e ach of the following independent Cases A and B, fill in the missing information. The company budgets and applies production-overhead costs on the basis of direct-labor hours. (U denotes unfavorable variance; F denotes favorable variance. ) Case A Case B $7.50 per hour ? per hour ? per hour ?
EduSoft Corporation’s president, Mark Fletcher, was looking forward to seeing the p erformance reports for October because he knew the company’s sales for the month had exceeded budget by a considerable margin. EduSoft, a distributor of educational software packages, had been growing steadily
Vermont Sky T ours is a small sightseeing tour company based in Burlington, Vermont. The firm specializes in aerial tours of the New England countryside during September and October, when the fall color is at its peak. Until recently, the company had no accounting department. Routine bookkeeping
LakeMaster Company manufactures outboard motors that are sold throughout the U nited States and Canada. The company uses a comprehensive budgeting process and compares actual results to budgeted amounts on a monthly basis. Each month, LakeMaster’s accounting department prepares a variance
Valley View Hospital has an outpatient clinic. Jeffrey Harper, the hospital’s chief administrator, is v ery concerned about cost control and has asked that performance reports be prepared that compare budgeted and actual amounts for medical assistants, clinic supplies, and lab tests. Past
Midwest V entilation, Inc., produces industrial ventilation fans. The company plans to manufacture 72,000 fans evenly over the next quarter at the following costs: direct material, $2,880,000; direct labor, $720,000;variable production overhead, $900,000; and fixed production overhead, $1,800,000.
Lackawanna L icorice Company uses a standard cost accounting system and applies production overhead to products on the basis of machine hours. The following information is available for the year just ended:Actual variable overhead: $166,320 Actual total overhead: $467,700 Actual machine hours
Rock Solid Insurance Company uses a flexible overhead budget for its a pplication-processing department.The firm offers five types of policies, with the following standard hours allowed for clerical processing.Automobile
Wilmington Composites, Inc., developed its overhead application rate f rom the annual budget. The budget is based on an expected total output of 720,000 units requiring 3,600,000 machine hours. The company is able to schedule production uniformly throughout the year. The cost driver for overhead
Countrytime Studios is a r e cording studio in Nashville. The studio budgets and applies overhead costs on the basis of production time. Countrytime’s controller anticipates 10,000 hours of production time to be available during the year. The following overhead amounts have been budgeted for the
Manitoba Paper C ompany packages paper for photocopiers. The company has developed standard overhead rates based on a monthly practical capacity of 90,000 direct-labor hours as follows:Standard costs per unit (one box of paper):Variable overhead (2 hours @ $6)
The following data pertain to Alexis E lectronics for the month of April.Static Budget Actual Units sold ........................................................................................... 15,000 13,500 Sales revenue
Refer to the data in Exercise 11–25 for Starlight Glassware Company. Prepare journal e ntries to:• Record the incurrence of actual variable overhead and actual fixed overhead.• Add variable and fixed overhead to Work-in-Process Inventory.• Close underapplied or overapplied overhead into
The controller for Rainbow Children’s Hospital, located in Munich, Germany, estimates t hat the hospital uses 25 kilowatt-hours of electricity per patient-day, and that the electric rate will be €.13 per kilowatthour. The hospital also pays a fixed monthly charge of €2,000 to the electric
You brought your work home one evening, and your nephew spilled his chocolate m ilk shake on the variance report you were preparing. Fortunately, knowing that overhead was applied based on machine hours, you were able to reconstruct the obliterated information from the remaining data. Fill in the
Refer to D Cdesserts.com’s activity-based flexible budget in Exhibit 11–11 . Suppose that the company’s activity in June is described as follows:Process hours
explore the annual budget for the governmental unit you selected. For example, you could check out the annual budget for Los Angeles at www.losangeles.com , or the state of Florida at www.ebudget.state.fl.us .Required:1. Select three items in the budget and explain how these items would be treated
You recently received the f ollowing note from the production supervisor of the company where you serve as controller. “I don’t understand these crazy variable-overhead efficiency variances. My employees are very careful in their use of electricity and production supplies, and we use very
Refer to the data in Exercise 11–25 for Starlight Glassware Company. Draw graphs similar to those in Exhibit 11–7 (variable overhead) and Exhibit 11–9 (fixed overhead) to depict the overhead variances.
Refer to the data in the preceding exercise. Use diagrams similar to those in Exhibits 11–6 and 11–8 to compute (1) the variable-overhead spending and efficiency variances, and (2) the fixed-overhead budget and volume variances.
Starlig h t Glassware Company has the following standards and flexible-budget data.Standard variable-overhead rate ...................................................................... $18.00 per direct-labor hour Standard quantity of direct labor
Outdoor Optics Company produces binoculars of two quality levels: f ield and professional. The field model requires four direct-labor hours, while the professional binoculars require six hours. The firm uses direct-labor hours as the activity level for flexible budgeting.Required:1. How many
Mankato Control Company, which manufactures electrical switches, uses a s tandard-costing system.The standard production overhead costs per switch are based on direct-labor hours and are as follows:Variable overhead (5 direct-labor hours @ $12.00 per hour)
The following data are the actual results for Marvelous Marshmallow Company for August.Actual output ..................................................................................................................... 13,500 cases Actual variable overhead
Give one example of a plausible activity base to use in flexible budgeting for each of the following organizations: an insurance company, an express delivery service, a restaurant, and a state tax-collection agency.
Draw a graph showing both budgeted and applied variable overhead. Explain why the graph appears as it does.
Why are fixed-overhead costs sometimes called capacity-producing costs?
Distinguish between the control purpose and the product-costing purpose of standard costing and flexible budgeting.
What is the conceptual problem of applying fixed production overhead as a product cost?
What types of organizations use flexible budgets?
Draw a graph showing budgeted and applied fixed overhead, and show an unfavorable (or positive) volume variance on the graph.
Describe a common but misleading interpretation of the fixed-overhead volume variance. Why is this interpretation misleading?
What is the correct interpretation of the fixed-overhead volume variance?
What is the fixed-overhead budget variance?
Distinguish between the interpretations of the directlabor and variable-overhead efficiency variances.
What is the interpretation of the variable-overhead efficiency variance?
Jeffries Company’s only variable-overhead cost is electricity. Does an unfavorable variable-overhead spending variance imply that the company paid more than the anticipated rate per kilowatt-hour?
What is the interpretation of the variable-overhead spending variance?
How have advances in manufacturing technology affected overhead application?
Show, using T-accounts, how production overhead is added to Work-in-Process Inventory when standard costing is used.
Distinguish between a columnar and a formula flexible budget.
Why are flexible overhead budgets based on activity measures, such as hours of process time, machine time, or direct-labor hours?
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