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?
> 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
> 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 D
> 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
> 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
> Steadman Company is considering an investment in a new machine for an independent five-year project. The machine’s cost is $500,000 with no salvage value at the end of five years. Net cash inflows from the project are expected to be $14
> a. Project A costs $5,000 and will generate annual after-tax net cash inflows of $1,800 for 5 years. What is the payback period (in years, rounded to 2 decimal places) for this investment under the assumption that the cash inflows occur evenly throughout
> J. Morgan of SparkPlug Inc. has been approached to take over a production facility from B.R. Machine Company. The acquisition will cost $1,500,000, and the after-tax net cash inflows are expected to be $275,000 per year for 12 years. SparkPlug currently
> MaxiCare Corporation, a not-for-profit organization, specializes in health care for senior citizens. Management is considering whether to expand operations by opening a new chain of care centers in the inner city of large metropolitan areas. For a new fa
> 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
> Griffey & Son operates a plant in Cincinnati and is considering opening a new facility in Seattle. The initial outlay will be $3,500,000 and should produce after-tax net cash inflows of $600,000 per year for 15 years. Due to the effects of the ocean air
> a. It is said that the Indian who sold Manhattan for $24 was a sharp salesman. If he had put his $24 away at 6% compounded semiannually, it would now be worth more than $9 billion, and he could buy most of the now-improved land back! Assume that this sel
> Lou Lewis, the president of Lewisville Company, has asked you to give him an analysis of the best use of a warehouse the company owns. Note: The company has a 40% effective tax rate. a. Lewisville Company is currently leasing the warehouse to another com
> Rockyford Company must replace some machinery that has zero book value and a current market value of $1,800. One possibility is to invest in new machinery costing $40,000. This new machinery would produce estimated annual pretax cash operating savings of
> Please refer to footnote 14 and the data referenced in the footnote. Required: 1. Follow the directions given in footnote 21 to calculate the NPV of the referenced investment project. 2. Repeat the procedure using a discount rate (WACC) of 10% and the f
> eEgg is considering the purchase of a new distributed network computer system to help handle its warehouse inventories. The system costs $60,000 to purchase and install and $30,000 to operate each year. The system is estimated to be useful for 4 years. M
> Below is information regarding the capital structure of Micro Advantage Inc. On the basis of this information, you are asked to respond to the following three questions: Required: 1. Micro Advantage issued a $5,000,000 par value, 20-year bond a year ago
> Assume that you are about to sell property (a vacant parcel of real estate) you own but otherwise have no use for. The net-of-sales-commission selling price for the property is $500,000. You are willing to finance this transaction over a 20-year period a
> Freedom Corporation acquired a fixed asset for $100,000. Its estimated life at time of purchase was 4 years, with no estimated salvage value. Assume a discount rate of 8% and an income tax rate of 40%. Required: 1. What is the incremental present value
> This exercise parallels the machine purchase decision for the Mendoza Company discussed in the body of the chapter. Assume that Mendoza is exploring whether to enter a complementary line of business. The existing business line generates annual cash reven
> Brief Exercises 7-15 and 7-16 require the following information: What percentage of S2’s costs is allocated to P1 and to P2 under the direct method?
> Each of the following situations is independent: a. Make or Buy Terry Inc. manufactures machine parts for aircraft engines. CEO Bucky Walters is considering an offer from a subcontractor to provide 2,000 units of product OP89 for $120,000. If Terry does
> Sandalwood Company produces various lines of high-end carpeting in its Asheville, North Carolina, plant. This question pertains to two different grades of carpet in its Symphony line: commercial and residential. The former sells for $16 per square yard,
> Cantel Company produces cleaning compounds for both commercial and household customers. Some of these products are produced as part of a joint manufacturing process. For example, GR37, a coarse cleaning powder meant for commercial sale, costs $1.60 a pou
> Barbour Corporation, located in Buffalo, New York, is a retailer of high-tech products and is known for its excellent quality and innovation. Recently, the firm conducted a relevant cost analysis of one of its product lines that has only two products, T-
> Vista Company manufactures electronic equipment. In 2021, it purchased from an outside supplier the special switches used in each of its products. The supplier charged Vista $2 per switch. As an alternative, Vista’s CEO considered purch
> Earth Baby, Inc. (EBI) recently celebrated its tenth anniversary. The company produces organic baby products for health-conscious parents. These products include food, clothing, and toys. Earth Baby has recently introduced a new line of premium organic b
> Sharman Athletic Gear, Inc. (SAG) is considering a special order for 15,000 baseball caps with the logo of East Texas University (ETU) to be purchased by the ETU alumni association. The ETU alumni association is planning to use the caps as gifts and to s
> Alton Inc. is working at full production capacity producing 20,000 units of a unique product. Manufacturing costs per unit for the product are as follows: Direct materials ………………………….. $ 9 Direct labor ………………………………….. 8 Manufacturing overhead ………………. 10
> Grant Industries, a manufacturer of electronic parts, has recently received an invitation to bid on a special order for 20,000 units of one of its most popular products. Grant currently manufactures 40,000 units of this product in its Loveland, Ohio, pla
> Consumers (including businesses and local governments) interested in using solar power generally have an option to purchase or lease the solar panels. To adequately address the questions below, you will have to first do some research on the Internet. Ple
> There is no spoilage, the beginning WIP Inventory is 6,000 units, and the ending WIP Inventory is 4,000 units for the second department in a two-department process. What is the number of units transferred in to the second department if good output of the
> Midwest Industries produces and distributes industrial chemicals in its Belco Division, which is located in Michigan’s upper peninsula. Belco’s earnings increased sharply in 2022, and bonuses were paid to the management staff for the first time in three
> Bob Bingham is the controller of Atlantis Laboratories, a manufacturer and distributor of generic prescription pharmaceuticals. He is currently preparing the annual budget and reviewing the current business plan. The firm’s business unit managers prepare
> Refer to text Exhibit 10.19 (the ABB for KWS). As the management accountant for KWS, you have been asked to evaluate the possibility of implementing a continuous-improvement (i.e., kaizen) budgeting system. Assume that budgeted cost-driver usage data in
> Two years ago, in conjunction with revitalization efforts regarding the downtown area of Metro City, you and your partner purchased a local eatery. Though moribund at the time, you were able (through your hard work and dedicated efforts) to resurrect the
> You are given the following budgeted and actual data for the Grey Company for each of the months January through June of the current year. In December of the prior year, sales were forecasted as follows: January, 100 units; February, 95 units; March, 100
> The company for which you work recently implemented time-driven activity-based costing (TDABC) in conjunction with its enterprise resource planning (ERP) system. Management is pleased with the revised product and customer cost information that the TDABC
> OFC Company (Exercise 10-41) has decided to implement a continuous-improvement program to enhance operational efficiency. After a careful study, management and employees agree that the firm will be able to reduce cost rates for batch-level activities by
