ISE Managerial Accounting 17th Edition Ray H. Garrison, Eric Noreen, Peter C. Brewer - Solutions

What effect, if any, would you expect poor-quality materials to have on direct labor variances?
“Our workers are all under labor contracts; therefore, our labor rate variance is bound to be zero.” Discuss.
Should standards be used to identify who to blame for problems?
If the materials price variance is favorable but the materials quantity variance is unfavorable, what might this indicate?
The materials price variance can be computed at what two different points in time?Which point is better? Why?
Who is generally responsible for the materials price variance? The materials quantity variance? The labor efficiency variance?
Why are separate price and quantity variances computed?
What is a quantity standard? What is a price standard?
How does a flexible budget based on two cost drivers differ from a flexible budget based on one cost driver?
What does a flexible budget performance report do that a simple comparison of budgeted to actual results does not do?
What is a spending variance and what does it mean?
What is a revenue variance and what does it mean?
If the actual level of activity is greater than the planned level of activity, would you expect the activity variances for variable expenses to be favorable, unfavorable, or a combination of the two?
What is an activity variance and what does it mean?
Why is it difficult to interpret a difference between how much expense was budgeted and how much was actually spent?
What are some of the possible reasons that actual results may differ from what had been budgeted at the beginning of a period?
What is a flexible budget and how does it differ from a static planning budget?
What is a static planning budget?
“The principal purpose of the cash budget is to see how much cash the company will have in the bank at the end of the year.” Do you agree? Explain.
How can budgeting assist a company in planning its workforce staffing levels?
What is a self-imposed budget? What are the major advantages of self-imposed budgets?What caution must be exercised in their use?
Why is it a good idea to create a “Budgeting Assumptions” tab when creating a master budget in Microsoft Excel?
“As a practical matter, planning and control mean exactly the same thing.” Do you agree? Explain.
Why is the sales forecast the starting point in budgeting?
What is a master budget? Briefly describe its contents.
What is a perpetual budget?
Discuss some of the major reasons why companies prepare budgets.
What is a budget? What is budgetary control?
Why is the form of activity-based costing described in this chapter unacceptable for external financial reports?
How can the activity rates (i.e., cost per activity) for the various activities be used to target process improvements?
When activity-based costing is used, why do manufacturing overhead costs often shift from high-volume products to low-volume products?
Why is the first stage of the allocation process in activity-based costing often based on interviews?
What are the two stages of allocation in activity-based costing?
What types of costs should not be assigned to products in an activity-based costing system?
What are unit-level, batch-level, product-level, customer-level, and organization-sustaining activities?
Why are top management support and cross-functional involvement crucial when attempting to implement an activity-based costing system?
Why is direct labor a poor base for allocating overhead in many companies?
In what fundamental ways does activity-based costing differ from traditional costing methods such as job-order costing as described in Chapters 2 and 3?
Should a company allocate its common fixed costs to business segments when computing the break-even point for those segments? Why?
How is it possible for a fixed cost that is traceable to a segment to become a common fixed cost if the segment is divided into further segments?
Why aren’t common fixed costs allocated to segments under the contribution approach?
Explain how the contribution margin differs from the segment margin.
Distinguish between a traceable fixed cost and a common fixed cost. Give several examples of each.
What costs are assigned to a segment under the contribution approach?
What is a segment of an organization? Give several examples of segments.
How does Lean Production reduce or eliminate the difference in reported net operating income between absorption and variable costing?
Under absorption costing, how is it possible to increase net operating income without increasing sales?
If fixed manufacturing overhead costs are released from inventory under absorption costing, what does this tell you about the level of production in relation to the level of unit sales?
If the units produced exceed the units sold, which method would you expect to show the higher net operating income, variable costing or absorption costing? Why?
If the units produced equals the units sold, which method would you expect to show the higher net operating income, variable costing or absorption costing? Why?
What are the arguments in favor of treating fixed manufacturing overhead costs as period costs?
What are the arguments in favor of treating fixed manufacturing overhead costs as product costs?
Explain how fixed manufacturing overhead costs are shifted from one period to another under absorption costing.
Are selling and administrative expenses treated as product costs or as period costs under variable costing?
What is the difference between absorption costing and variable costing?
Explain how a shift in the sales mix could result in both a higher break-even point and a lower net operating income.
What is meant by the term sales mix? What assumption is usually made concerning sales mix in CVP analysis?
What is the meaning of margin of safety?
In response to a request from your immediate supervisor, you have prepared a CVP graph portraying the cost and revenue characteristics of your company’s product and operations. Explain how the lines on the graph and the break-even point would change if (a) the selling price per unit decreased,
What is the meaning of break-even point?
What is the meaning of operating leverage?
In all respects, Company A and Company B are identical except that Company A’s costs are mostly variable, whereas Company B’s costs are mostly fixed. When sales increase, which company will tend to realize the greatest increase in profits? Explain.
Often the most direct route to a business decision is an incremental analysis. What is meant by an incremental analysis?
What is the meaning of contribution margin ratio? How is this ratio useful in planning business operations?
Watkins Trophies, Inc., produces thousands of medallions made of bronze, silver, and gold. The medallions are identical except for the materials used in their manufacture.What costing system would you advise the company to use?
What is meant by the term equivalent units of production when the weighted-average method is used?
Assume that a company has two processing departments—Mixing followed by Firing. Explain what costs might be added to the Firing Department’s Work in Process account during a period.
Assume that a company has two processing departments—Mixing followed by Firing. Prepare a journal entry to show a transfer of work in process from the Mixing Department to the Firing Department.
How many Work in Process accounts are maintained in a company that uses process costing?
Why is cost accumulation simpler in a process costing system than it is in a job-order costing system?
In what ways are job-order and process costing similar?
Under what conditions would it be appropriate to use a process costing system?
How do direct labor costs flow through a job-order costing system?
How do you compute the unadjusted cost of goods sold?
How do you compute the cost of goods manufactured?
How do you compute the total manufacturing costs added to production within a schedule of cost of goods manufactured?
How do you compute the raw materials used in production?
What adjustment is made for underapplied overhead on the schedule of cost of goods sold? What adjustment is made for overapplied overhead?
Provide two reasons why overhead might be underapplied in a given year.
What is underapplied overhead? Overapplied overhead? What disposition is made of these amounts at the end of the period?
What account is credited when overhead cost is applied to Work in Process? Would you expect the amount of overhead applied for a period to equal the actual overhead costs of the period? Why or why not?
What is the link that connects the schedule of cost of goods manufactured to the schedule of cost of goods sold?
What is a plantwide overhead rate? Why are multiple overhead rates, rather than a plantwide overhead rate, used in some companies?
What is underapplied overhead? Overapplied overhead?
Would you expect the amount of applied overhead for a period to equal the actual overhead costs of the period? Why or why not?
If a company fully allocates all of its overhead costs to jobs, does this guarantee that a profit will be earned for the period?
What factors should be considered in selecting an allocation base to be used in computing a predetermined overhead rate?
Why do companies use predetermined overhead rates rather than actual manufacturing overhead costs to apply overhead to jobs?
Explain why some production costs must be assigned to products through an allocation process.
What is the purpose of the job cost sheet in a job-order costing system?
Explain the four-step process used to compute a predetermined overhead rate.
How is the unit product cost of a job calculated?
What is normal costing?
What is absorption costing?
What is job-order costing?
Only variable costs can be differential costs. Do you agree? Explain.
Define the following terms: differential cost, sunk cost, and opportunity cost.
What is the contribution margin?
What is the difference between a traditional format income statement and a contribution format income statement?
Does the concept of the relevant range apply to fixed costs? Explain.

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ISE Managerial Accounting 17th Edition Ray H. Garrison, Eric Noreen, Peter C. Brewer - Solutions

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