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managerial accounting creating
Managerial Accounting Creating Value In A Dynamic Business Environment 6th Edition Ronald W Hilton - Solutions
Refer to Review Question 10-11. Why does an analogous question not arise in the context of the direct labor variances?Data From Review Question 10-11:-Explain why the quantity purchased (PQ) is used in computing the direct-material price variance, but the actual quantity consumed (AQ) is used in
List eight criticisms of standard costing in an advanced manufacturing environment.
During April, Dryden Company's material purchases amounted to 6,500 pounds at a price of \($7.40\) per pound. Actual costs incurred in the production of 2,000 units were as follows:The standards for one unit of Dryden Company's product are as follows:Required: Compute the direct-material price and
Canandaigua Container Company manufactures recyclable soft-drink cans. A unit of production is a case of 12 dozen cans. The following standards have been set by the production-engineering staff and the controller.Actual material purchases amounted to 240,000 kilograms at \($.62\) per kilogram.
Refer to the data in the preceding exercise. Use diagrams to determine the direct-material and direct-labor variances. Indicate whether each variance is favorable or unfavorable.Data From Preceding Exercise:-Canandaigua Container Company manufactures recyclable soft-drink cans. A unit of production
Managerial accounting procedures developed for the manufacturing industry often are applied in non- manufacturing settings also. Ontario Bank and Trust Company's total output of financial services during the year just ended was valued at \($11\) million. The total cost of the firm's inputs,
Data Screen Corporation is a highly automated manufacturing firm. The vice president of finance has decided that traditional standards are inappropriate for performance measures in an automated environment.Labor is insignificant in terms of the total cost of production and tends to be fixed,
Hiawatha Hydrant Company manufactures fire hydrants in Oswego, New York. The following information pertains to operations during May.Required: Compute the following operational measures: (1) manufacturing cycle efficiency; (2)manufacturing cycle time; (3) velocity. Processing time (average per
Think carefully about the overall mission and goals of your college or university.Required:1. How does the task of building a balanced scorecard for an educational institution differ from that for a profit-seeking enterprise?2. Design a simple balanced scorecard for your institution, with a minimum
Refer to the data in Exercise 10-31, regarding Canandaigua Container Company. Prepare journal entries to: 1. Record the purchase of direct material on account.2. Add direct-material and direct-labor cost to Work-in-Process Inventory.3. Record the direct-material and direct-labor variances.4. Close
Refer to your answer for Exercise 10-41. Set up T-accounts, and post the journal entries to the general ledger.Data From Exercise 10-41:-Refer to the data in Exercise 10-31, regarding Canandaigua Container Company. Prepare journal entries to: 1. Record the purchase of direct material on account.2.
During March Manhattan Fabrics Corporation manufactured 1 .000 units of a special multilayer fabric with the trade name Stylex. The following information from the Stylex production department also per tains to March.The standard prime costs for one unit of Stylex are as follows:Required: Compute
Valport Valve Company manufactured 15,600 units during March of a control valve used by milk processors in its Shreveport plant. Records indicated the following:The control valve has the following standard prime costs. Direct labor Direct material purchased. Direct material used 80,200 hr. at
The director of cost management for Peoria Instrument Corporation compares each month's actual results with a monthly plan. The standard direct-labor rates for the year just ended and the standard hours allowed, given the actual output in April, are shown in the following schedule.A new union
What is meant by the term operational budgets? List three operational budgets that would be prepared by a hospital.
Explain the concept of zero-base budgeting.
Choose a city or state in the United States (or a Canadian city or province), and use the Internet to explore the annual budget of the governmental unit you selected. For example, you could check out the budget for Los Angeles at www.losangeles.com . Alternatively, take a look at the U.S. federal
Village Hardware is a retail hardware store. Information about the store's operations follows.• November 20x4 sales amounted to \($400,000\) .• Sales are budgeted at \($440,000\) for December 20x4 and \($400,000\) for January 20x5.• Collections are expected to be 60 percent in the month of
Three Rivers Dental Associates is a large dental practice in Pittsburgh. The firm's controller is preparing the budget for the next year. The controller projects a total of 48,000 office visits, to be evenly distributed throughout the year. Eighty percent of the visits will be half-hour
Andrew and Fulton, Inc. uses 840 tons of a chemical bonding agent each year. Monthly demand fluctuates between 55 and 85 tons. The lead time for each order is one month, and the economic order quantity is 130 tons.Required:1. Determine the safety stock appropriate for the chemical bonding agent.2.
Shady Shades, Inc. manufactures artistic frames for sunglasses. Talia Demarest, controller, is responsible for preparing the company's master budget. In compiling the budget data for 20x1, Demarest has learned that new automated production equipment will be installed on March 1. This will reduce
School Days Furniture, Inc. manufactures a variety of desks, chairs, tables, and shelf units which are sold to public school systems throughout the midwest. The controller of the company's Desk Division is currently preparing a budget for the third quarter of the year. The following sales forecast
Edgeworth Box Corporation manufactures two types of cardboard boxes used in shipping canned food, fruit, and vegetables. The canned food box (type C) and the perishable food box (type P) have the following material and labor requirements.The following manufacturing-overhead costs are anticipated
Refer to the original data given in Problem 9-48 for Fiber Technology, Inc.Required: Prepare a graphical analysis of the economic order quantity decision for XL-20.Data From Problem 9-48:-Fiber Technology. Inc. manufactures glass fibers used in the communications industry. The company's materials
Dallas Auto Glass is a regional distributor of automobile window glass. The windshields are manufactured in Mexico and shipped to Dallas. Management is expecting an annual demand of 10,800 windshields.The purchase price per windshield is \($415.\) Other costs associated with ordering and
Jay Rexford. president of Photo Artistry Company, was just concluding a budget meeting with his senior staff. It was November of 20x4. and the group was discussing preparation of the firm's master budget for 20x5. "I've decided to go ahead and purchase the industrial robot we've been talking about.
How did Disney change its approach with the production of Lilo and Stitch! "At Disney, String of Weak Cartoons Leads to Cost Cuts: Disney Puts Lilo and Stitch on a Tight Budget," The Wall Street Journal, June 18, 2002, pp. Al, A6, Bruce Orwall. Overview Disney has emphasized meeting release dates
What are the implications of this phenomenon for sales forecasting in the process of preparing Intel's master budget? "Facing Computer Slowdown, Intel Boosts Focus on Consumer Devices," The Wall Street Journal, January 2, 2001, p. A9, Molly Williams. Overview Intel bets that increased demand for
How will rising fuel costs affect the budgeting process for airlines like American and US Airways?Would there be other effects on the airlines' budgets from generally higher oil prices, besides their effect on fuel costs? "U.S. Airlines Consider Impact of Higher Fuel Bill." The Wall Street Journal,
Refer to the data given in the preceding exercise. (Ignore income taxes.)Required:1. Prepare a fully labeled profit-volume graph for the Dallas Armadillos.2. What is the safety margin for the baseball franchise if the team plays a 10-game season and the team owner expects the stadium to be 45
Pacific Rim Publications, Inc. specializes in reference books that keep abreast of political and economic issues in the Pacific Rim countries. The results of the company's operations during the prior year are given in the following table. All units produced during the year were sold. (Ignore income
Refer to the income statement given in the preceding exercise. Prepare a new contribution income statement for the La Jolla Inn in each of the following independent situations. (Ignore income taxes.)1. The hotel's volume of activity increases by 25 percent, and fixed expenses increase by 50
Surreal Sound. Inc. manufactures and sells compact disks. Price and cost data are as follows:In the following requirements, ignore income taxes.Required:1. What is Surreal Sound's break-even point in units?2. What is the company's break-even point in sales dollars?3. How many units would Surreal
Korosa and Delancey, Ltd. is studying the acquisition of two electrical component insertion systems for producing its sole product, the universal gismo. Data relevant to the systems follow.Korosa and Delancey's selling price is \($32\) per unit for the universal gismo, which is subject to a 5
Phoenix-based CompTronics manufactures audio speakers for desktop computers. The following data relate to the period just ended when the company produced and sold 42,000 speaker sets:Management is considering relocating its manufacturing facilities to northern Mexico to reduce costs.Variable costs
The Asian Division of Worldwide Reference Corporation produces a pocket dictionary containing popular phrases in six Asian languages. Annual budget data for the coming year follow. Projected sales are 100,000 books.Required:1. Calculate the break-even point in units and in sales dollars.2. If the
Discuss these questions as a group. Is the break-even concept being used appropriately by the politicians?Should the government subsidize Amtrak or the major airlines if they don't break even? "Planes, Trains and Politicians," Business Week, October 7, 2002, Allan Sloan. Overview Amtrak has been
How do an airline's cost structure and its basic business model affect its ability to manage costs and charge competitive rates? "To Redress Industry Blues, Delta Turns to Song," The Wall Street Journal, January 29, 2003, p. A3, Nicole Harris; "Costly Race in the Sky: Same Route, Same Plane, Yet
Using the concept of cost structure, explain the phenomenon mentioned above. "It's Time to Cash In Some Chips, Big Blue," Business Week, June 3, 2002, p. 43, Spencer E. Ante. Overview As the article states, "the high fixed costs of IBM's chip manufacturing mean any revenue slide pummels profits."
What is operating leverage and how does high operating leverage affect a company? "Reliance Group May See Shield from Creditors," The Wall Street Journal, August 15, 2000, Devon Spurgeon, Gregory Zuckerman, and Francine L. Pope. Overview Reliance Group Holdings, Inc., an insurance company, reported
Why would outsourcing result in a "more variable cost structure" for Levi Strauss? "Levi Will Cut 20% of Work Force, Shut Six Plants in Restructuring," The Wall Street Journal, April 9, 2002, Teri Agins. Overview Levi Strauss turn to outsourcing its production, which the company's CEO says
Explain the impact of an increase in the level of activity (or cost driver) on (a) total fixed cost and (b) fixed cost per unit of activity.
Indicate which of the following descriptions is most likely to describe each cost listed below. Description Engineered cost Committed cost Discretionary cost Costs Annual cost of maintaining an interstate highway Cost of ingredients in a breakfast cereal Cost of advertising for a credit card
Distinguish between simple regression and multiple regression.
What impact have advances in manufacturing technology had on the problem of cost estimation?
Brazilia Bus Tours has incurred the following bus maintenance costs during the recent tourist season. (The real is Brazil's national monetary unit. On the day this exercise was written, the real was equivalent in value to .3426 U.S. dollar.)Required:1. Use the high-low method to estimate the
Visit the website of one of the following companies, or a different company of your choosing.Required: Read about the company's products and operations. Then list five manufacturing costs that the company would incur and explain what type of cost behavior you believe would be appropriate for each
Refer to the data in the preceding exercise.Required:1. Draw a scatter diagram and graph the company's energy cost behavior using the visual-fit method.2. Predict the energy cost for a month in which 78,000 pints of applesauce are produced.3. What peculiarity is apparent from the scatter diagram?
Recent monthly costs of providing on-board flight service incurred by New England Airlines are shown in the following table.Required:1. Use least-squares regression to estimate the cost behavior of the airline's on-board flight service.Express the cost behavior in equation form.2. Calculate and
Jefferson County Airport handles several daily commuter flights and many private flights. The county budget officer has compiled the following data regarding airport costs and activity over the past year.Required:1. Draw a scatter diagram of the airport costs shown above.2. Compute the
You have been hired recently as a part-time cost analyst for your college's admissions office. Your first task is to estimate the relationship between the cost of operating the admissions office and the number of applications received. After painstakingly collecting six months worth of data, you
As a group, discuss whether direct labor is a fixed or a variable cost. What are the pros and cons of management treating direct labor as a variable cost? Are there ethical issues to be considered here? "The Software Says You're Just Average," Business Week, February 25, 2002, p. 126, Michelle
What are the benefits of having the cost analysts and design engineers work side by side with the toy maker's manufacturing teams? "Taking Cues from GE, Mattel's CEO Wants Toy Maker to Grow Up," The Wall Street Journal, November 14, 2001. Overview Mattel has "moved some of its product-development
Briefly describe the JIT approach to production and inventory management.
List eight key features of a just-in-time inventory and production management system.
What is meant by TQC? Explain the importance of TQC in a JIT system.
List five features of JIT purchasing.
Define the following terms: CMS, JIT, AMHS, FMS, and CIM.
Briefly describe the key differences in plant layout between Aerotech's Phoenix and Bakersfield facilities.
How is a firm's cost structure likely to change if an FMS is installed?
Explain what is meant by off-line quality control, cellular manufacturing, and activity-based management.
List four techniques for reducing or eliminating nonvalue-added costs.
Give an example of activity sharing.
Evaluate the following statement: "A company should stop selling products to a customer that has been identified as unprofitable."
How can trend analysis of customer-related costs be helpful to management in a customer-profitability analysis?
What is meant by the following terms: continuous improvement, price down/cost down concept, target costing, target price, target cost, target profit, value engineering, and kaizen costing?
Which of the following terms is most consistent with the old saying, "Slow and steady wins the race": flexible manufacturing, advanced manufacturing system, product innovation, target costing, kaizen costing, or investment in high technology? Explain.
What is meant by employee empowerment, benchmarking, best practices, and reengineering?
Explain how the concepts of continuous improvement and the theory of constraints are related.
Elimination of production bottleneck activities is an example of what management concept?
What behavioral problems can you think of that a company such as Aerotech might encounter in modifying its managerial-accounting system to fit today's manufacturing environment?
The following costs were incurred in each of two automobile-parts factories in June.Required: For every cost listed above, indicate whether it is more likely to be treated as a direct cost or an indirect cost in each of the following. Explain your choice for each cost item in each manufacturing
Since you have always wanted to be an industrial baron, invent your own product and describe at least live steps used in its production.Required: Design a plant layout using the latest in advanced manufacturing technology to manufacture your product. Explain how your plant will eliminate
Suppose you have just started a business to manufacture your newest invention, the photon gismo. Let's say you believe that after a few years on the market, photon gismos will sell for about \($130\). This allows for the introduction of similar devices by your competitors. Furthermore, let's say
Analysis shows that Zodiac Corporation incurred the following five-year gross margin and cost histories in serving customer number 128.Required:1. Prepare a trend analysis (in terms of percentage of gross margin) for these two customer-related costs.2. What different conclusions might management
Use the Internet to visit FedEx's website ( www.fedex.com ).Required: Read about the express delivery services provided by the company. Then discuss how FedEx could use customer profitability analysis.
The customer-profitability analysis for Aerotech Corporation, which is displayed in Exhibit 6-7. ranks customers by operating income. An alternative, often-used approach is to rank customers by sales revenue.Required: 1. List the customer numbers in the left-hand column of Exhibit 6-7 by sales
The continual search for the most effective method of accomplishing a task through comparison of existing methods and performance levels with those of other organizations or with other subunits within the same organization is called benchmarking. Sometimes organizations benchmark their operations
ElectroMobile Company (EMC) manufactures electric golf carts, electric all-terrain vehicles, and electric senior-citizen mobility scooters. Each of the three products has two or three models. Because of the somewhat erratic product demand and the lead-time needed for the setup for a model
Borealis. Inc. manufactures special heavy bolts used in spacecraft. The production process consists of the following operations: ( 1 ) metal rods are cut to the proper length in a cutting machine; (2) a heading machine flattens the end of the cut rod to form a head; (3) a slotting machine cuts a
Refer to the information given in the preceding problem for Borealis, Inc.Required: Identify the non-value-added costs that might be present in Borealis' traditional plant layout and production process. Write a memo to the company president pointing these costs out and advocating an FMS.Data From
Pacific Rim Enterprises' management recently decided to adopt a just-in-time inventory policy to curb steadily rising costs and free up cash for purposes of investment. The company anticipates that inventory will decrease from \($7,200,000\) to \($1,200,000\) , with the released funds to be
Go shopping for groceries; then visit your bank and complete a relatively routine transaction. (Or, if that is inconvenient, think carefully about the last time you performed these errands.)Required: For each of the errands mentioned above, list the activities you performed as you completed the
Pickwick Paper Company's Richmond plant manufactures paperboard. Its production process involves the following operations.1. Harvested trees arrive by rail in the wood yard and are stored outside.2. Logs are moved by a flume into the plant where they pass through a debarker and are cut up into
ReadersNet.Com sells books and software over the Internet. A recent article in a trade journal has caught the attention of management, given that the company has experienced soaring inventory handling costs.The article noted that similar firms have purchasing, warehousing, and distribution costs
AutoTech, Inc. is an automotive supplier that uses automatic screw machines to manufacture precision parts from steel bars. AutoTech's inventory of raw steel averages \($1,800,000\) with a turnover rate of four times per year. John Mercedes, president of AutoTech, is concerned about the costs of
Northern Lights Company manufactures a variety of small parts for the automotive industry. The company's manufacturing overhead cost budget for the current year is as follows:These budgeted overhead costs total \($768,000\) , and the budgeted amount of direct-labor for the year is 40,000
Michael McKenna, manager of FarmCo's Service Division, dialed the division controller's number on his phone: "Janice, this is Mike McKenna. How's that JIT program doing? Has it saved us any money?I've got to report to the president next week, and I'd like to know how our inventory efforts are
Worldwide Electronics Corporation ( WEC) is a seven-year-old company that developed a process to produce reliable electronic components at a cost below that of the competition. In seeking to expand its overall components business, WEC decided to enter the facsimile equipment business, because there
New South Wales Television Corporation manufactures TV sets in Australia, largely for the domestic market. Management has recently implemented a kaizen costing program, with the goal of reducing the manufacturing cost per television set by 10 percent during 20x5, the first year of the kaizen
The Hospital Instruments Division of MedLife Technology Corporation manufactures a variety of electronic medical equipment. The principal product of the Hospital Instruments Division is a sophisticated instrument for measuring and graphically displaying a variety of medical phenomena, such as heart
Question:-How does flexible manufacturing help in cost management? "Ford: Europe Has a Better Idea," Business Week, April 22, 2002, pp. 84, 85, Christine Tierney and Kathleen Kerwin; "Ford Looks to Cost-Cutter Thursfield," The Wall Street Journal, May 10, 2002, p. A3, Norihiko Shirouzu and Scott
Question:-How do companies use customer-profitability analysis, which is an application of ABM. to cut costs and increase profits? "Germany's Commerzbank Aims to Shun Unprofitable Relationships," The Wall Street Journal, March 28, 2002, p. A15, Erik Portanger; "In Search of the Operator," The Wall
Question:-Do you think it is a sound strategy to demand a 5 percent price cut from suppliers across the board? What are the potential risks in such an approach to cost cutting? "Crunch Time for Parts Makers," Business Week, January 8, 2001, Jeff Green. Overview The U.S. business unit of
Question:-As a group, discuss the cost-cutting approaches cited in the article, and then discuss whether you think these measures make sense. Are such cost-cutting moves in the companies' best interests? "As More and More Companies End Little Perks, Critics Call Moves Petty, Pointless," The Wall
Question:-How did Alcoa Inc. use activity-based costing? "Manufacturing Masters Its ABCs," Business Week, August 7, 2000, Hugh Filman. Overview Activity-based costing, a cost-assessment system, is compared to splitting the bill at a restaurant. "Where traditional accounting divides the bill evenly
Why was Aerotech Corporation's management being misled by the traditional product-costing system? What mistakes were being made?
How can an activity-based costing system alleviate the problems Aerotech was having under its traditional. volume-based product-costing system?
List four objectives of a cost management system.
What is meant by the term non-value-added costs? Give four examples.
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