Name two types of organizational design and explain how they differ.
> Tasty Beverage Co. produces soft drinks, specializing in fruit drinks. They produce 5,000 cans of product per batch. Setup cost for each batch is $50 and each drink costs $0.10 to produce. What is the total cost per batch? How much would it cost to fill
> Refer to Exhibit 14.8 and the accompanying discussion in the text. Demonstrate that the materials usage variance for PVC during October 2022 was $2,400F. Exhibit 14.8:
> Chapman Inc. sells a single product, Zud, which has a budgeted selling price of $24 per unit and a budgeted variable cost of $12 per unit. Budgeted fixed costs for the year amount to $45,000. Actual sales volume for the year (47,000 units) fell 3,000 uni
> Davidson Corp. produces a single product: fireproof safety deposit boxes for home use. The budget going into the current year anticipated a selling price of $55 per unit. Because of competitive pressures, the company had to cut selling prices by 10% duri
> The Ace Company sells a single product at a budgeted selling price per unit of $20. Budgeted fixed manufacturing costs for the coming period are $10,000, while budgeted fixed marketing expenses for the period are $24,000. Budgeted variable costs per unit
> Edwards and Bell market a single line of home computers, dubbed the XL-98. The master budget for the coming year contained the following items: sales revenue, $400,000; variable costs, $250,000; fixed costs, $100,000. Actual results for the year were as
> The Baldwin Company, in its master budget for 2022, predicted total sales of $160,000, variable costs of $48,000, and fixed costs of $52,000 ($24,000 manufacturing and $28,000 nonmanufacturing). Actual sales revenue for 2022 turned out to be $180,000. Ac
> Why do prices at theme parks in Orlando, Florida, remain high despite seasonal and economic cyclical ups and downs? What type of strategic pricing is used by these theme parks?
> If customer demand is 200,000 units per month, and available manufacturing capacity is 6,000 hours per week, what is the Takt time for this firm?
> Name three professional cost management organizations and explain their roles and objectives.
> What does the term cost management mean? Who in the typical firm or organization is responsible for cost management?
> Give three examples of firms you believe would not be significant users of cost management information and explain why.
> Give four examples of firms you believe would be significant users of cost management information and explain why.
> For the following multiple choice questions, select the best available answer. 28. SWOT analysis is a useful tool for a. evaluating the performance of an organization. b. identifying the organization’s critical success factors. c. developing the organiz
> 26. Management accounting, as defined by the IMA, uses the expertise of the management accountant to a. Improve quality and reduce cost b. Implement a strategy of cost leadership or differentiation c. Implement a tactic of customer value and shareholder
> 21. Direct materials are 22. Which of the following costs would be included in manufacturing overhead for a computer manufacturer? a. The cost of the USB port hardware b. The wages paid to hardware assemblers c. The cost of the circuit boards d. Deprec
> What are the two types of bonus pools for bonus incentive plans? How do they differ, and how does each achieve (or not achieve) the three objectives of management compensation?
> Identify and explain the six financial ratios used to evaluate liquidity as part of the firm’s business analysis.
> List the three bases for bonus incentive plans; explain how they differ and how each achieves (or does not achieve) the three objectives of management compensation.
> If Toyota Motor Company receives an order on May 1, begins production on May 19, and ships the order on May 20 immediately following production, then what is the manufacturing cycle efficiency (MCE) ratio?
> From a tax planning standpoint, what form of compensation is least desirable for the manager? For the firm?
> From a financial reporting standpoint, what form of compensation is most desirable for the firm?
> Explain how management compensation can provide an incentive to unethical behavior. What methods can be used to reduce the chance of unethical activities resulting from compensation plans?
> Explain how a manager’s risk aversion can affect decision making and how compensation plans should be designed to deal with risk aversion.
> Explain the three types of management compensation.
> How does the firm’s management compensation plan change over the life cycle of the firm’s products?
> Why do you think it is important for a management accountant to be able to complete an evaluation of the firm that is separate from an evaluation of individual managers?
> What type of management compensation is the fastest growing part of total compensation? Why do you think this is the case?
> Explain the different business valuation methods. Which method do you think is superior? Why?
> Develop arguments to support your view as to whether executive pay in the United States is too high.
> If a customer order is placed on May 1, the company expects to begin processing it on May 10, and the order is shipped on May 20, the manufacturing cycle time is then how many days long?
> Brief Exercises 7-15 and 7-16 require the following information: What percentage of S1’s costs is allocated to P1 and to P2 under the direct method?
> List the four types of bonus payment options and explain how they differ. How does each achieve (or not achieve) the three objectives of management compensation?
> Identify and explain the three objectives of management compensation.
> What is meant by the term arm’s length standard, and for what is it used?
> What are the three methods most commonly used in international taxation to determine a transfer price acceptable to tax authorities? Explain each method briefly.
> How does the concept of economic value added, EVA®, compare, as a measure of financial performance, to return on investment (ROI) and residual income (RI)?
> What are the advantages and limitations of residual income (RI) as a performance measure?
> What are the components of return on investment (ROI), and how is each component interpreted and used?
> What are the advantages and limitations of return on investment (ROI) as a performance measure?
> What are the measurement issues to consider when using return on investment (ROI)?
> What is return on investment (ROI), and how is it calculated?
> Comdex Inc. manufactures parts for the telecom industry. One of its products that currently sells for $160 is now facing a new competitor that offers the same product for $140. The parts currently cost Comdex $130. Comdex believes it must reduce its pric
> What does expropriation mean, and what is the role of transfer pricing in this regard?
> What is meant by the term investment center? How is the financial performance of investment centers measured?
> What is the role of cost allocation in strategic performance measurement?
> What are some important behavioral and implementation issues in strategic performance measurement? How does the management accountant deal with these issues?
> Because full costing is accepted for financial reporting purposes and variable costing is not, why should we be concerned about the difference between them? What is the difference, and why is it important?
> What are four types of SBUs, and what are the goals of each?
> Explain the difference between informal and formal control systems. What type of control system is strategic performance measurement?
> Does an effective performance evaluation focus on individual or team performance?
> What is strategic performance measurement, and why is it important for effective management?
> The firm in Brief Exercise 13-20 ignores competitive prices because it has a differentiated product. It uses life-cycle cost–based pricing with a 10 percent markup. What is the firm’s price?
> Explain the difference between the engineered-cost and discretionary-cost approaches to evaluating support departments.
> What is the role of risk preference in performance evaluation?
> Which type of cost center has a planning focus, and which type has an evaluation focus?
> Can the marketing department be both a revenue center and a cost center? Explain.
> How do centralized and decentralized firms differ? What are the advantages of each?
> In what situations is a cost center most appropriate? A profit center? A revenue center?
> Can strategic performance measurement be used for service firms and not-for-profit organizations? How?
> What are the differences among performance evaluation, management control, and operational control?
> Of the four categories in a typical COQ report, which category of quality cost is the most damaging to the organization? Why is this the case?
> What functions does a cost of quality (COQ) report play in a quality improvement program?
> The firm in Brief Exercise 13-20 ignores competitive prices because it has a differentiated product. It uses full manufacturing cost–based pricing with a 40 percent markup. What is the firm’s price?
> Taguchi argues that being within specification limits is not enough to be competitive in today’s global economy. Explain his argument.
> There are two basic approaches to setting quality standards (expectations). Discuss the difference between goalpost conformance and absolute quality conformance.
> What is meant by Six Sigma? What five steps are usually associated with Six Sigma applications?
> Describe the major elements of a comprehensive framework for managing and controlling quality, such as the framework presented in text Exhibit 17.3.
> In what respect are traditional accounting systems deficient for the goal of managing and controlling quality?
> Define quality. For management accounting and control purposes, define the two primary components of quality.
> Name and briefly describe three methods that companies can use to either identify or correct quality problems.
> From a design standpoint, what are some desirable characteristics of a COQ reporting system? That is, if you were to design such a system from scratch, what would be the key attributes of the system?
> Provide a brief explanation of the conceptual relationship between improvements in quality and improvements in financial performance.
> Why do manufacturing personnel prefer operational productivity measures to financial productivity measures?
> The market price for a product has been $50 per unit, but competitive pressures have reduced the market price to $45. The firm manufactures 10,000 of these products per year at a manufacturing cost of $38 per unit (including $22 fixed cost and $16 variab
> “Partial productivity measures should be calculated only for high-value-added activities.” Do you agree, and why or why not?
> “A total productivity measure encompasses all partial productivity measures.” Do you agree, and why or why not?
> “A financial productivity measure contains more information than an operational productivity measure does.” Do you agree, and why or why not?
> What is partial productivity? Total productivity?
> What is operational productivity? Financial productivity?
> List benchmarks or criteria often used in assessing productivity, and discuss their advantages and disadvantages.
> “An improvement in earnings growth can be achieved at the expense of market share (i.e., an unfavorable market share variance).” Do you agree, and why or why not?
> What are the relationships between a market size variance, a market share variance, a sales quantity variance, and a sales volume variance?
> Discuss why improving productivity is important for a firm that competes on a cost leadership strategy.
> “A favorable sales quantity variance indicates that the marketing manager has done a good job.” Do you agree? Can you give an example in which a market size variance or market share variance is opposite to that of the sales quantity variance?
> Given the following attributes of an investment project with a five-year life: investment outlay, year 0, $5,000; after-tax cash inflows, year 1, $800; year 2, $900; year 3, $1,500; year 4, $1,800; and year 5, $3,200. (a) Use the built-in NPV function o
> Distinguish between a market size variance and a market share variance.
> What are the relationships among a selling price variance, a sales mix variance, a sales quantity variance, and a sales volume variance?
> “As long as a firm sells more units than the units specified in the master budget, it will not have an unfavorable sales volume variance.” Do you agree? Why or why not?
> What is the difference between a sales quantity variance and a sales volume variance?
> Distinguish between a selling price variance and a sales volume variance.
> What are the types of sales variances?
> List important measures in assessing marketing effectiveness.
> Which of the following statements is true? a. The lower the partial productivity ratio, the greater the productivity. b. Productivity improves when partial productivity increases. c. Prices of inputs are incorporated in the partial operational product
> “A productivity measure such as machine-hour productivity is more important in a JIT environment than in a non-JIT environment.” Do you agree, and why or why not?
> What is productivity? What does it measure?
> Create an Excel spreadsheet for Brief Exercise 12-20 and demonstrate that the PV of the depreciation deductions, when the income tax rate is 40%, is $3,218 (rounded to the nearest dollar). Given an after-tax discount rate of 12%, what tax rate (rounded t
> Why do some firms choose to use a two-variance analysis instead of a three-variance or a four-variance analysis of the total overhead cost variance for the period?
> What are the justifications for using practical capacity as the denominator volume when calculating the fixed overhead application rate?
> Would the choice of denominator level affect the amount of the fixed factory overhead budget variance? Fixed overhead production volume variance? Explain.
