Founded in the UK in 2007, Brew Dog produces a variety of craft beers and has a reputation for provocative marketing. Brew Dog has grown rapidly and in 2017 had 1,500 workers world wide and a $12 million profit. Brew Dog promotes itself by opening Brew Dog bars located throughout the UK and also now in the U.S. Also, it has an “Equity for Punks” program, a crowdfunding effort which allows Brew Dog fans to become investors in the company; 85,000 new investors have joined the company through this program. Realizing that the craft beer business is getting more and more crowded, Brew Dog tries to distinguish itself with edgy advertising. The craft beer industry has grown rapidly in the recent decades. There are a number of small breweries, and many have successfully established themselves with a unique brand that has earned a devoted following for that brewery. However, the growth in industry sales has begun to slow in the recent few years, with a very modest increase in industry sales of only 1.5% in 2017. Thinking ahead, Brew Dog has decided to further distinguish itself by starting the “Brew Dog Network,” a streaming service for smartphones priced at $4.99 per month. The Network provides hundreds of hours of videos designed to appeal to Brew Dog’s customers. Required 1. What type of strategy does Brew Dog appear to be using? a. Cost leadership based on rapid expansion b. Differentiation based on superior product c. Diversification based on rapid growth d. Differentiation based on customer satisfaction e. Product leadership based on innovation 2. Explain briefly your choice for strategy in part 1. 3. Do you think your answer in part 1 is the best strategy for Brew Dog? What would be a better strategy, if any? Explain briefly.
> Brian Canning Co., which sells canned corn, uses an operation costing system. Cans of corn are classified as either sweet or regular, depending on the type of corn used. Both types of corn go through the separating and cleaning operations, but only regul
> Aero Systems is a manufacturer of airplane parts and engines for a variety of military and commercial aircraft. All of Aero System’s government contracts are priced on a cost-plus basis, while nongovernment jobs are not. It has two production departments
> Haughton Company uses a job costing system for its production costs and a predetermined factory overhead rate based on direct labor costs to apply factory overhead to all jobs. During the month of July, the firm processed three jobs: X13, X14, and X15, o
> Decker Screw Manufacturing Company produces special screws made to customer specifications. During June, the following data pertained to these costs: Decker had no beginning Work-in-Process Inventory for June. Of the jobs begun in June, Job 2906 was
> The Meyers CPA firm has the following overhead budget for the year: The firm estimates total direct labor cost for the year to be $1,700,000. The firm uses direct labor cost as the cost driver to apply overhead to clients. During January, the firm work
> Mooresville Corporation manufactures reproductions of eighteenth-century, classical-style furniture. It uses a job costing system that applies factory overhead on the basis of direct labor hours. Budgeted factory overhead for the year was $1,261,500, and
> Peppers Lockdown produces keys for homes and cars. As planning for next year’s production, he decided to implement a High-Low system to forecast future costs. With total production of 2,500,000 keys at a total cost in 2021 of $10,000, total production of
> The following information is for Punta Company for July: a. Factory overhead costs were applied to jobs at the predetermined rate of $42.50 per labor hour. Job S incurred 6,175 labor hours; Job T used 4,275 labor hours. b. Job S was shipped to customers
> Norton Industries, a manufacturer of cable for the heavy construction industry, closes its books and prepares financial statements at the end of each month. The statement of cost of goods sold for April follows: Additional Information âˆ
> Consider the following information for Fair Wind Yachts, Inc., a manufacturer of sailboat rigging, blocks, and cordage. Advertising Expenses ……………â
> Consider the following information for Huntersville Inc. for the fiscal year ended December 31: Depreciation expense—administrative office …………â€
> The following data pertain to Babor Company for the year ended December 31: Sales in the current year were $625,000. Required: Prepare a schedule of cost of goods manufactured and an income statement for the current year for Babor Company similar to
> Cornelius Company produces women’s clothing. During the year, the company incurred the following costs: Factory rent ……………â€
> Case A: Food Fare is a small chain of restaurants that has developed a loyal customer base by providing fast-food items with more choices (e.g., how the hamburger should be cooked, self-serve toppings) and a more comfortable atmosphere. The menu has a sm
> Assume that you are a consultant for a start-up internet retailer, Bikes.com, which provides a variety of bicycle parts and accessories in a convenient and effective customer service approach. The firm operates from an office building and nearby warehous
> Sheldon Radio manufactures yacht radios, navigational equipment, and depthsounding and related equipment from a small plant near New Bern, North Carolina. One of Sheldon’s most popular products, making up 40 percent of its revenues and 35 percent of its
> The Balanced Scorecard for a small food ingredients company is shown below. The information is based on an actual company, and detailed information about its operations and strategy is confidential. You may assume that the firm’s produc
> Johnson Plastics Inc. produces cases for CDs. The accounting manager has performed a regression analysis to determine future production costs. The regression estimate is $5,000, with an r-squared of .9, a t-value of 2.5 and a standard error of $400. With
> Martial Arts of Cincinnati (MAC) provides Karate training and practice services in 3 locations in Cincinnati, Ohio. MAC is known for its quality of training and has grown rapidly in recent years due to its solid reputation and the growth in the interest
> The trend of economic nationalism (e.g., Brexit) that is affecting many countries around the world promotes keeping manufacturing jobs in the local country. As management accountants, we are concerned about how this trend will affect companies, particul
> The Baldrige National Quality Program was established by the U.S. Congress in 1987 to promote quality awareness and to enhance the competitiveness of U.S. businesses. The program is under the National Institute of Standards and Technology (NIST), a nonre
> Consider the following companies, each of which is your consulting client: 1. Performance Bicycles, a company that supplies bicycles, parts, and bicycling equipment and clothing from its website 2. The Oxford Omni, a downtown hotel that primarily serves
> The following are critical success factors for Dell Inc. • Product manufacturing time • Customer perception of order-taking convenience and accuracy • Revenue growth • Selling expense to sales ratio • Number of new manufacturing processes developed • Ord
> Required: Based on your analysis of Tartan Corporation in Problems 2-51 through 2-54, create a strategy map for the company. Problem 2-51: Tartan Corporation has been manufacturing high-quality home lighting systems for more than 80 years. The company&a
> Required: Develop a balanced scorecard with three or more groups of CSFs for Tartan Corporation based on Problem 2-51. Explain your choice of groups and identify four to five CSFs in each group. Make sure that your CSFs are quantitative and can be measur
> Required: Develop a value chain of six to eight items for Tartan Corporation based on Problem 2 51. Why would the value chain be useful to a firm like Tartan? Problem 2-51: Tartan Corporation has been manufacturing high-quality home lighting systems for
> Required: Develop a SWOT analysis for Tartan Corporation based on Problem 2-51. The analysis should include two to three items in each category: strengths, weaknesses, opportunities, and threats. Problem 2-51: Tartan Corporation has been manufacturing h
> Tartan Corporation has been manufacturing high-quality home lighting systems for more than 80 years. The company’s first products in the 1920s—the classic line—were high-quality floor lamps and table
> Smith Glass Co. produces industrial glass. Smith forecasts data using the High-Low method and has compiled the following data from prior results: Looking solely at the data in the table, which two years should Smith select for the high-low method of an
> Required: Develop a balanced scorecard with three or more groups of CSFs for Fowler’s Farm based on Problem 2-47. Explain your choice of groups and identify four to five CSFs in each group. Make sure that your CSFs are quantitative and can be measured.
> Required: Develop a value chain of six to nine activities for Fowler’s Farm based on Problem 2-47. Problem 2-47: Fowler’s Farm is a 1,000-acre dairy and tobacco farm located in southern Virginia. Jack Fowler, the owner, has been farming since 1982. He i
> Required Develop a SWOT analysis for Fowler’s Farm based on Problem 2-47. The analysis should include two to three items in each category: strengths, weaknesses, opportunities, and threats. Problem 2-47: Fowler’s Farm is a 1,000-acre dairy and tobacco
> Fowler’s Farm is a 1,000-acre dairy and tobacco farm located in southern Virginia. Jack Fowler, the owner, has been farming since 1982. He initially purchased 235 acres and has made the following purchases since then: 300 acres in 1985, 150 acres in 1988
> Consumers, employers, and governments at all levels are very concerned about the rising costs of health care. As a result, health care systems nationwide are experiencing an ongoing demand to improve the efficiency of their operations. The health care in
> The term global supply chain is often used to describe the complex set of interrelated activities and relationships that global companies use to source their needed material, labor, and equipment; to produce the product and service; and to deliver that p
> This chapter introduced the Balanced Scorecard (BSC) and showed applications in organizations that were using the BSC for planning and for strategy implementation. Another important use for the BSC is to evaluate mid-level and higher level managers who a
> The great news for those concerned about climate change and sustainability is that the cost of renewable energy (“green power”) is fast coming down. The result is that many companies, particularly larger companies, are making significant long-term invest
> The trend of economic nationalism (e.g., Brexit and tariffs) that is affecting many countries around the world promotes keeping manufacturing jobs in the domestic country. As management accountants, we are concerned about how this trend will affect compa
> As noted in the chapter, the demand for sustainability reporting has grown, and this growth has created a demand for sustainability assurance, the ability to add verification and credibility to the assurance reports. One organization focused on the verif
> Grant Healthcare produces latex gloves for hospitals. Grant is forecasting costs for future production. The dependent variable is labor expense. List some possible independent variables for a regression analysis of financial data.
> Some economists and financial executives are beginning to consider the possibility of reporting sustainability costs and benefits in a more comprehensive manner. The Nobel prize-winning economist, Joseph Stiglitz, and other economists have suggested that
> This assignment is to complete a reading and to prepare the following discussion questions. The article is authored by Noah P. Barsky and Anthony H. Catanach Jr., “Every Manager Can be and Innovator,” Strategic Finance, August 2011, pp 22-29. The article
> The web site links shown below provide historical information on the exchange rates of currencies used throughout the world. Review the changes in exchange rates for the last few years. http://www.federalreserve.gov/releases/H10/hist/www.xe.com/ucc/ Re
> Required: Consider the comprehensive value chain in Problem 2-67 and complete a value chain for the financing portion of the value chain only. Use a value chain with four to six steps, beginning with the application for a loan by the car buyer and ending
> Generally, the value chains involved in providing a given product or service can be from multiple industries that can be interconnected in complex ways. One example is the auto industry where the primary consumer, the purchaser of an auto, is served by m
> A factory owner in Bangladesh, Tipu Munshi, manufactures clothing for Walmart and other retailers around the world. One of Tipu’s products is a pair of jeans sold to Asda, a Walmart subsidiary in Britain, which sells the jeans for US$22.12. Asda Stores L
> McDonald’s is a global (100 countries) fast-food chain with more than 36,000 restaurants worldwide and global sales of $107 billion in 2018 (includes both company-owned and franchisee sales). McDonald’s is one of the most successful companies, with stock
> Harley-Davidson Inc. (HD) is one of the most recognized brands worldwide. The motorcycle manufacturer has one of the most loyal owner groups of any company. Unfortunately, the firm’s success has come at a price. Harley has a reputation that drives some c
> Comparative advantage is the concept in economics that states that two countries will benefit economically if the relative costs of producing two or more goods differs. The concept of Comparative advantage was developed by the 19th century British econom
> Williams Inc. produces florescent light bulbs for commercial use. The accounting manager is attempting to estimate the total cost for the next quarter using the High-Low method. He has compiled data and found the high and low costs are $10,000 and $6,0
> In 1992, the U.S., Mexico and Canada agreed to enhance trade between the three countries in what is called the North American Free Trade Agreement (NAFTA). The agreement removed tariffs between the countries and had the goal of eliminating the obstacles
> The European Union (EU) is made up of 27 European countries that are bound together by trade and political agreements. The broad goal of the EU is to create an economic and political union that will foster common economic goals and political stability. T
> After two Boeing 737 MAX 8 aircraft crashed in October 2018 and March 2019 causing 346 deaths, the plane was grounded worldwide in March 2019. The 737 Max was first entered into service in 2017, promising better performance and fuel economy. The plane wa
> A recent research study investigated whether or not the ethical judgment of an accountant would be affected by the pattern of unethical behavior – gradual, or at a single point in time. Specifically, the following two versions of a case were presented to
> The Ethisphere Institute (http://ethisphere.com), an organization focused on defining and advancing corporate ethical standards and practices, prepares an annual report which selects the most ethical global companies for that year. Ethisphere receives no
> Occupational fraud is defined by the Association of Certified Fraud Examiners (ACFE) as “the use of one’s occupation for personal enrichment through the deliberate misuse or misapplication of the employing organization’s resources or assets”. This means
> Green Acres, Inc., is a large U.S.-based multinational producer of canned fruits and vegetables. While Green Acres has a reputation of traditionally using only organic suppliers for its fruits and vegetables, it has recently experimented with produce fro
> There are a number of professional organizations throughout the world that represent the interests of the management accountant professional, providing educational materials and other services to the management accountant. A partial list of some of these
> There are several professional certificate programs that are of interest to management accountants. Each certificate is awarded based on the results of a comprehensive exam plus other education and experience requirements. Perhaps the best known is the C
> The pharmaceutical manufacturer Valeant had a business model of cost-cutting, minimizing expenditures on research and delaying clinical trials. The model succeeded, as Valeant became one of the largest pharmaceutical companies in the world, with a market
> Wallace Heating is attempting to estimate its costs of manufacturing heating ducts for the coming year using the High-Low method. The cost driver is number of labor hours. Wallace determines that the high and low costs are $25,830 and $18,414, respective
> In its ranking of firms on the basis of customer service, global marketing information firms such as J.D. Power and media companies such as Forbes magazine and USA Today conduct independent surveys of customer satisfaction to develop a list of the top co
> Each year, Interbrand (a corporate strategy consultant) reports the 100 top brands in the world. The leading brands are determined from a calculation based on an analysis to determine what portion of the firms sales and earnings can be credited to the fi
> Full Frame is a family-owned company that operates five custom framing stores. Each store offers a variety of services -- matting and mounting prints; framing photos, paintings, posters, and prints; and sales of posters and prints. About 85% of the busi
> Enterprise Risk Management Enterprise risk management (ERM) is a management technique that provides a systematic way for companies to identify and manage the wide variety of risks in their business environment. Any one of these risks, if not properly man
> One common measure of a firm’s efforts in innovation is the amount the firm spends on research and development and capital spending (new plant and equipment) relative to other expenditures. Based on 2004 information for U.S. firms in the Standard and Poo
> There are a number of sources of economic and demographic information that can assist the management accountant. The information includes financial information such as interest rates, employment, income, international trade, output of goods and services
> Companies such as BMW, Audi, Mercedes, and Tiffany are thriving these days because they are expanding their luxury brands into more affordable product lines, thus allowing them to offer their premium branded products to a wider audience. An example is Ti
> The following information applies to the O’Donnell Company for March production. There are only two jobs (X and Y) in production in March. a. Purchased direct materials and indirect materials with the following summary of receiving repo
> Dream Makers is a small manufacturer of gold and platinum jewelry. It uses a job costing system that applies overhead on the basis of direct labor hours. Budgeted factory overhead for the year was $455,600, and management budgeted 33,500 direct labor-hou
> Work-in-Process Inventory for Carston Inc. at the beginning of the year was a single job, Job T114: The company’s budgeted costs for the year are as follows: The company’s actual costs incurred during the year are
> Brief Exercises 7-17 through 7-20 require the following information about a joint production process for three products, with a total joint production cost of $100,000. There are no separable processing costs for any of the three products. Assume the s
> Ryan Corporation manufactures auto steering systems. Prime cost and machine time estimates for one unit of the product for the year follow: Direct materials …………â€
> Rose Bach was recently hired as controller of Empco Inc., a sheet metal manufacturer. Empco has been in the sheet metal business for many years and is currently investigating ways to modernize its manufacturing process. At the first staff meeting Rose at
> Ennis Inc. (EI; www.ennis.com) is a Texas-based machine-intensive printing company that produces business forms. The resources demanded by a specific job depend on the type and amount of paper used and the composition and the construction of the business
> Drilling Company uses activity-based costing and provides this information: Drilling has just completed 80 units of a component for a customer. Each unit required 100 parts and 3 machine hours. The prime cost is $1,300 per finished unit. All other manu
> McElroy, Inc. produces a single model of a popular cell phone in large quantities. A single cell phone moves through two departments, assembly and testing. The manufacturing costs in the assembly department during March follow: Direct materials …………………
> Logan Products has two production departments—assembly and finishing. These are supported by two service departments—sourcing (purchasing and handling of materials and human resources) and operations (work scheduling,
> Marin Company produces two software products (Cloud-X and Cloud-Y) in two separate departments (A and B). These products are highly regarded network-maintenance programs. Cloud-X is used for small networks and Cloud-Y is used for large networks. Marin is
> Green Grow Inc. (GGI) manufactures lawn fertilizer. Because of the product’s very high quality, GGI often receives special orders from agricultural research groups. For each type of fertilizer sold, each bag is carefully filled to have
> The effects of the Great Recession of 2007–2009 on the construction industry led to a decline in demand for paper products and increased demand for reduced carbon emissions to minimize global warming effects. As a result, significant changes have taken p
> Brief Exercises 7-17 through 7-20 require the following information about a joint production process for three products, with a total joint production cost of $100,000. There are no separable processing costs for any of the three products. Assume that
> Name a firm or organization you know of that you are reasonably sure uses cost management and explain why it does so. Does it use cost leadership or differentiation, and why?
> Lowman Gourmet Products produces a wide variety of gourmet coffees (sold in pounds of roasted beans), jams, jellies, and condiments such as spicy mustard sauce. The firm has a reputation as a high-quality source of these products. Lowman sells the produc
> An organization’s service and administrative costs can be substantial, and some or all of these costs usually are allocated to cost objects. Thus, the allocation of service and administrative costs can have a significant impact on product cost and pricin
> In the chapter, we illustrated the use of the life-cycle concept for both the cost and sales life cycles of a company’s product lines. It can also be useful to extend the cost life cycle to the service department. In Chapter 7, we were interested in the
> Johnson Electronics manufactures a power supply used in a variety of electronics products, including printers, modems, and routers. The demand for the part is 8,400 units per week. The production of the power supply requires six different manufacturing o
> Waymouth Manufacturing operates a contract manufacturing plant located in Dublin, Ireland. The plant provides a variety of electronics products and components to consumer goods manufacturers around the world. Cycle time is a critical success factor for W
> Rick’s is a popular restaurant for fine dining. The owner and chef, Rick Goetz, is pleased with his success and is now considering expanding his existing restaurant or perhaps opening a second restaurant. Before making his decision, Ric
> Take-a-Break Travel Company offers spring break travel packages to college students. Two of its packages, a 7-day, 6-night trip to Cancun and a 5-day, 4-night trip to Jamaica, have the following characteristics: The Cancun trip sells for $1,750, and th
> Bowman Specialists Inc. (BSI) manufactures specialized equipment for polishing optical lenses. There are two models – one (A-25) principally used for fine eyewear and the other (A-10) for lenses used in binoculars, cameras, and similar
> MaxiDrive manufactures a wide variety of parts for recreational boating, including a gear and driveshaft part for high-powered outboard boat engines. Original equipment manufacturers such as Mercury and Honda purchase the components for use in large, pow
> Gunnell Inc. is considering two mutually exclusive 10-year investments. The initial cash outlays and expected net after-tax cash flows are shown below. Required: 1. Using Excel, calculate the NPV and IRR of each project. Assume Gunnell Inc. uses a disc
> Brief Exercises 7-17 through 7-20 require the following information about a joint production process for three products, with a total joint production cost of $100,000. There are no separable processing costs for any of the three products. What percent
> VacuTech manufactures sophisticated instruments for testing microcircuits. Each instrument sells for $3,500; variable manufacturing cost per unit (all cash) equals $2,450. An essential component of the company’s manufacturing process is a sealed vacuum c
> A computer chip manufacturer spent $2,500,000 to develop a special-purpose molding machine. The machine has been used for one year and is expected to be obsolete after an additional 3 years. The company uses straight-line (SLN) depreciation for this mach
> Assume a situation in which a company has an existing asset, A, that has a current net book value (original cost less accumulated depreciation to date) of $300,000. This asset has a useful life of 3 additional years. Its estimated disposal (sales) value
> Assume that it is January 1, 2022, and that the Mendoza Company is considering the replacement of a machine that has been used for the past 3 years in a special project for the company. This project is expected to continue for an additional 5 years (i.e.
> Gravina Company is planning to spend $6,000 for a machine that it will depreciate on a straight-line basis over 10 years with no salvage value. The machine will generate additional cash revenues of $1,200 a year. Gravina will incur no additional costs ex
> Dorothy & George Company is planning to acquire a new machine at a total cost of $30,600. The machine’s estimated life is 6 years and its estimated salvage value is $600. The company estimates that annual cash savings from using this machine will be $8,0
