Question: Textron Manufacturing Inc. assembles industrial

> The authors of an article published in Harvard Business Review (Laurie Bassei and Daniel McMurrer, “Maximizing Your Return on People,” Harvard Business Review (March 2007), p. 115-123) discuss how the concept of return on investment can be applied to the

> As indicated in the chapter, there are goal congruence problems associated with the use of return on investment (ROI) as an indicator of business unit financial performance. One such problem relates to the bias against accepting new investments because o

> Assume the purchase of new delivery trucks used in a product-delivery service. This equipment is needed to improve delivery service and respond to recent environmental goals embraced by the company. The cost of the new equipment is $1,200,000; the expect

> Easy Clean operates a chain of dry cleaners. It is experimenting with the use of a continuous improvement (i.e., kaizen) budget for operating expenses. Currently, a typical location has operating expenses of $10,000 per month. Plans are in place to achie

> Ready Products Inc. operates two divisions, each with its own manufacturing facility. The accounting system reports the following data for 2022: Ready estimates the useful life of each manufacturing facility to be 15 years. As of the end of 2022, the p

> Read the following article by Marc J. Epstein, Adriana Rejc Buhovac, and Kristi Yuthas: “Implementing Sustainability: The Role of Leadership and Organizational Culture,” Strategic Finance, April 2010, pp. 41–47. The article explains the use of management

> For each of the following cases, determine whether the business unit should be evaluated as a cost center or a profit center and explain why. If you choose cost center, then explain which type of cost center—the discretionary-cost center or the engineere

> Cardio World Inc. (CWI) is a sporting goods retailer that specializes in bicycles, running shoes, and related clothing. The firm has become successful by careful attention to trends in cycling, running, and changes in the technology and fashion of sport

> Levine Company is a manufacturer of very inexpensive cell phones and television sets. The company uses recycled parts and a highly structured manufacturing process to keep costs low so that it can sell at very low prices. The company uses lean accounting

> Braxton Hospital and Health Care Services (BHHS) in Braxton, Mississippi, is a part of the Pillford University Health System. BHHS is a 450-bed community teaching hospital with the following mission: “In six years, Braxton Hospital and Health Care Servic

> Suburban General Hospital owns and operates several community hospitals in North Carolina. One of its hospitals, Cordona Community Hospital, is a not-for-profit institution that has not met its financial targets in the past several years because of decre

> MetroBank is a fast-growing bank that serves the region around Jacksonville, Florida. The bank provides commercial and individual banking services, including investment and mortgage banking services. The firm’s strategy is to continue to grow by acquirin

> Hamilton-Jones, a large consulting firm in Los Angeles, has experienced rapid growth over the last 5 years. To better serve its clients and to better manage its practice, the firm decided 2 years ago to organize into five strategic business units, each o

> Pittsburgh-Walsh Company Inc. (PWC) manufactures lighting fixtures and electronic timing devices. The lighting fixtures division assembles units for the upscale and mid-range markets. The trend in recent years as the economy has been expanding is for sal

> Grey Manufacturing Company expects sales to total 13,000 units in the first quarter, 12,000 units in the second quarter, and 15,000 units in the third quarter of the current fiscal year. Company policy is to have on hand at the end of each quarter an amo

> RNB is a bank holding company for a statewide group of retail consumer-oriented banks. RNB was formed in the early 1960s by investors who believed in a high level of consumer services. The number of banks owned by the holding company expanded rapidly. Th

> Stratford Corporation is a diversified company whose products are marketed both domestically and internationally. Its major product lines are pharmaceutical products, sports equipment, and household appliances. At a recent meeting, Stratfordâ€

> Whitehouse Gardens Inc. is a chain of home supply and gardening product stores. Last year, Whitehouse adopted the balanced scorecard (BSC) for evaluation of store and store manager performance. The BSC has helped Whitehouse to identify the critical succe

> Fashionisto Inc. is an upscale clothing store in New York City and London. Each store has two main departments, Men’s Apparel and Women’s Apparel. Marie Phelps, Fashionisto’s CFO, wants to use strateg

> Kenneth Merchant and Tatiana Sandino summarize clearly some of the potential limitations of profit center evaluation in the article “Four Options for Measuring Value Creation,” Journal of Accountancy, August 2009, pp. 34–37 (available here: www.journalof

> This problem is an extension to the Bally Company COQ reporting example, reflected in Exhibit 17.10. At year 0, the management team for the company was presented with its first COQ report for the company. Top management was justifiably concerned both abo

> Assume that Allied Manufacturing Co. produces sheet metal, with a target thickness of 0.750 inch. Below are the observed thicknesses of output each day over the past 30 working days. Because the company has only recently begun operations and is eager to

> Drago Company produces a line of brass-based products, one of which is a flow control valve (for regulating the flow of water). The production of this valve requires the use of specialized equipment by highly trained employees. Recently, the company has

> Can lean principles be applied to so-called knowledge work? This issue is addressed in the following article: D. R. Staats and D. M. Upton, “Lean Knowledge Work,” Harvard Business Review, October 2011, pp. 101–110 (available at https://hbr.org/2011/10/le

> As indicated in the text, various tools from operations management and statistics are used to help support Six Sigma goals and process improvements in a lean environment. One such tool is a control chart—a key element used to assess statistical process c

> Ajax Manufacturing produces a single product, which takes 8.0 pounds of direct material per unit produced. The company’s policy is to maintain an end-of-quarter inventory of materials equal to 25 percent of the following quarter’s material requirements f

> Carrie Lee, the president of Lee Enterprises, was concerned about the results of her company’s new quality control efforts. “Maybe the emphasis we’ve placed on upgrading our quality control system wil

> Upon graduation, you and a friend established a computer-consultancy business. Your business has generally been successful, but you and your colleague wish to expand the business significantly over the next 3 years. You have always assumed that the servi

> Use the data in Problem 17-70 to respond to the requirements that follow. Required: 1. If you haven’t done so already (in conjunction with Problem 17-70), prepare in Excel a COQ report for 2022 and 2023. Show subtotals each year for ea

> Acme Materials Company manufactures and sells synthetic coatings that can withstand high temperatures. Its primary customers are aviation manufacturers and maintenance companies. The following table contains financial information pertaining to COQ in 202

> Each year, Worrix Corporation manufactures and sells 3,000 premium-quality multimedia projectors at $12,000 per unit. At the current production level, the firm’s manufacturing costs include variable costs of $2,500 per unit and annual fixed costs of $6,0

> Lightening Bulk Company is a moving company specializing in transporting large items worldwide. The firm has an 85% on-time delivery rate. Thirteen percent of the items are misplaced and the remaining 2% are lost in shipping. On average, the firm incurs

> This question pertains to the use of nonfinancial performance indicators as part of a comprehensive management accounting and control system. You are asked to think critically about the value and challenges of using such data for performance evaluation p

> You have recently been hired as the management accountant for Delta Technologies Inc. The company produces a broad line of subassemblies that are used in the production of flat-screen TVs and other electronic equipment. Competitive pressures, principally

> Obtain a copy of the following article: John H. Fleming, Curt Coffman, and James K. Harter, “Manage Your Human Sigma,” Harvard Business Review, July–August 2005, pp. 107–114 (available at https://hbr.org/2005/07/manage-your-human-sigma). The authors of t

> Enterprises is a manufacturer of consumer electronics products. The industry is very competitive, and RJM has seen its profits fall in recent years, including an operating loss of $18,585 last year. RJM was able to turn that around this year by aggressiv

> Resco, a local retail establishment, expects to make inventory purchases as follows for the first quarter of the year: January, $5,500; February, $6,500; and March, $8,000. Prior experience shows that 25 percent of a given month’s purchases are paid in t

> Green Grow Inc. manufactures riding lawn mowers that it sells to the large discount stores such as Walmart, Lowe’s, and Home Depot. The mowers are marketed as a “value” product, with good quality at a very good price. The company’s two products are the Q

> Clippers Inc. (CI) manufactures two types of garden clippers. A light-duty model, called the “half-inch,” is intended for clipping branches and stems up to one-half-inch thick. The “one-inchâ&#1

> Tall Pines Brewery (TPB) makes two specialty beers in its microbrewery: Golden Ale and Dark Ale. Both beers sell for the same price per case in the U.S. market and in the export market. The latter market is primarily European countries. Both beers also h

> Diane’s Designs is a small business run out of its owner’s house. For the past 6 months, the company has been selling two products, a welcome sign and a birdhouse. The owner has been concerned about the companyâ&

> TransPacific Airlines (TPA) budgeted 80 million passenger miles, or 5 percent of the total market for the year just completed, at a contribution margin of 40 cents per mile. The budgeted average price was 52 cents per passenger mile. The operating data f

> Margot’s Ice Cream operates several stores in a major metropolitan city and its suburbs. Its budget and operating data for the current year follow: Required: 1. Compute these variances for the individual flavors and total quantity sol

> Jay Banning, CEO and a major stockholder of Banning Inc., was unhappy with its operating results for the past year. The company manufactures two environmentally friendly, industrial-caliber cleaning machines used primarily in automobile repair shops, gas

> Robinson Company has two products, A and B. Robinson’s budget for August follows: On September l, these operating results for August were reported: Required: 1. For each product, determine the following variances measured in dollars

> Family Medical Care (FMC) is a family medical practice with 6 physicians, a nursing staff of 8 to 10 nurses, and an administrative staff that varies from 4 to 7 personnel. Rajat Patel, the chief physician at FMC, is interested in studying the efficiency

> Janice Interiors installs custom interiors for luxury mobile homes. In its most recent negotiation with the union, the firm proposed to share productivity gains in direct labor equally with the union. In return, the union agreed not to demand wage increa

> Kraft Bakeries introduced in 2022 a new line of frozen apple pie. For 2022, sales by quarter were as follows: 11,000 units, 16,000 units, 15,000 units, and 20,000 units. Because of aggressive marketing and promotion, the company expects that sales for ea

> The following data were obtained from the 2016 financial statements for two U.S. automakers (in millions of dollars): Required: 1. Calculate and interpret total productivity in dollars for the two automakers. 2. Go to the internet for these companies a

> Katrina Design has decided to experiment with two alternative manufacturing approaches, identified as MF and LI, for producing men’s fashions. The firm expects the total demand to be 20,000 suits. Management estimates the required input

> In the fourth quarter of last year, Colditz Company embarked on a major effort to improve productivity. It redesigned products, reengineered manufacturing processes, and offered productivity improvement courses. The effort was completed in the last quart

> Use the data for Ashley Technology Inc. in Problem 16-41 to complete the following requirements. Also assume that fixed manufacturing costs are $50 million in both 2021 and 2022. Required: 1. Compute the total productivity ratios for 2021 and 2022. 2. O

> Use the data for Ashley Technology Inc. in Problem 16-41 to complete the following requirements: Required: 1. Compute the partial financial productivity ratios for direct materials and direct labor for each of the 2 years. 2. On the basis of the partial

> Ashley Technology Inc. manufactures a scrambling device for cellular telephones. The device’s main component is a delicate part, CT140. CT140 is easily damaged and requires careful handling. Once damaged, it must be discarded. The firm

> ACME manufacturing is a low-cost producer of a single, commodity product: RGL-01. Standard overhead cost information for one unit of this product is presented below: Required: 1. Calculate the fixed overhead application rate per machine hour (rounded t

> Glavine & Co. produces a single product, each unit of which requires three direct labor hours (DLHs). Practical capacity (for setting the factory overhead application rate) is 30,000 DLHs, on an annual basis. The information below pertains to the mos

> The Bangor Manufacturing Company produces mechanical toy robots that are typically produced in batches of 250 units. Prior to the current year, the company’s accountants used a standard cost system with a simplified method of assigning manufacturing supp

> May Clothing is a retail men’s clothing store. May's cost is $20 per shirt. The sales price is $40 per shirt. They plan to sell 400,000 shirts each year, which at this level would result in a before tax profit of $2,500,000. What is their degree of opera

> Acme Financial issues letters of credit to importers for overseas purchases. The company charges a nonrefundable application fee of $4,000 and, on approval, an additional service fee of 2.0% of the amount of credit requested. The company’s budget for the

> This assignment involves the use of a traditional (i.e., non-time-driven) ABC system to address the problem of measuring and managing the cost of capacity. As controller for Zen Company, you’ve been asked to provide input regarding the appropriate level

> Zenon Computer competes at the retail level on the basis of customer service. It has invested significant resources in its customer service department. Recently, the company has installed a traditional activity-based costing (ABC) system to provide bette

> See the following: K. P. Coyne, S. T. Coyne, and E. J. Coyne Jr., “When You’ve Got to Cut Costs Now: A Practical Guide to Reducing Overhead by 10%, 20%, or (wince) 30%,” Harvard Business Review, May 2010, pp. 74–82 (available at http://my.gartner.com/htm

> Edney Company employs a standard cost system for product costing. The per-unit standard cost of its product is: Raw materials ……………………………………………………………………..…. $14.50 Direct labor (2 direct labor hours × $8.00 per hour) …………………… 16.00 Manufacturing overhea

> Butrico Manufacturing Corporation uses a standard cost system, records materials price variances when direct materials are purchased, and prorates all variances at year-end. Variances associated with direct materials are prorated based on the balances of

> Obtain from your library (or instructor or course pack, as appropriate) a copy of the following article: K. Snead, D. Stott, and A. Garcia, “The Causes of Misapplied Capacity Related Manufacturing Costs and Corresponding Reporting Implications: A Concept

> Obtain and read the following article: Robert S. Kaplan and David P. Norton, “Mastering the Management System,” Harvard Business Review, January 2008, pp. 63–77 (available at ftp://public.dhe.ibm.com/software/data/swlibrary/cognos/pdfs/whitepapers/wp_mas

> Any given cost information system is a function of a number of design choices. For product costing purposes, one such design choice relates to how overhead, particularly fixed manufacturing overhead, application rates are determined. As controller for yo

> At a recent board meeting of the Grayson Manufacturing Company, several individuals in attendance expressed concern that they could not understand how the choice of an activity level for determining overhead application rates for the company could affect

> Franklin Cards sells greeting cards for $2 each, and plans to sell 100,000 cards every quarter. The management accountant has determined they must sell 80,000 cards to break even every quarter. What is the margin of safety (MOS), in both units and sales

> New Millennium Technologies uses a standard cost system. It budgeted 50,000 machine hours to manufacture 100,000 units in 2022. The budgeted total fixed factory overhead was $9,000,000. The company manufactured and sold 80,000 units in 2022 and would rep

> At its Sutter City plant, Yuba Machine Company manufactures nut shellers, which it sells to nut processors throughout the world. Since its inception, the family-owned business has used actual factory overhead costs in costing factory output. On December

> This is a story about manufacturing performance at one plant of a large company. It begins with Kristen Reynolds, a relatively new plant manager, coming to visit Bryan Simpkins, the plant’s head of manufacturing. Kristen and Bryan work for ITR Incorporat

> As part of its comprehensive planning and control system, Mopar Company uses a master budget and subsequent variance analysis. You are given the following information that pertains to the company’s only product, XL-10, for the month of

> In a Wall Street Journal article, the author Notes that various retailers in the United States (e.g., Meijer, Gap, and Office Depot) are turning to consulting firms, such as Accenture, to develop engineered labor standards for cashiers and other retail w

> Phoenix Management helps rental property owners find renters and charges the owners one-half of the first month’s rent for this service. For August 2022, Phoenix expects to find renters for 100 apartments with an average first month&aci

> Dash Company adopted a standard costing system several years ago. The standard costs for the prime costs (i.e., direct materials and direct labor) of its single product are: Material (8 kilograms × $5.00 per kilogram) ……………………. $ 40.00 Labor (6 hours ×

> Mark-Wright Inc. (MWI) is a specialty frozen food processor located in the midwestern states. Since its founding in 1982, MWI has enjoyed a loyal local clientele willing to pay premium prices for the high-quality frozen foods prepared from special recipe

> Tastyfreeze Company is a small producer of fruit-flavored frozen desserts. For many years, its products have had strong regional sales because of brand recognition; however, other companies have begun marketing similar products in the area, and price com

> Acme Manufacturing produces corrugated board containers that the nearby wine industry uses to package wine in bulk. Acme buys kraft paper by the ton, converts it to heavy-duty paperboard on its corrugator, and then cuts and glues it into folding boxes. T

> ABC Audio sells headphones and would like to earn an after-tax profit of $400 every week. Each set of headphones incurs variable cost of $5 and sells for $10. Rent and other fixed costs are $200 per week; the income tax rate is 20%. How many headphones m

> Jonas Materials Science (JMS) purchases its materials from several countries. As part of its cost-control program, JMS uses a standard cost system for all aspects of its operations, including purchases of direct materials. The company establishes standar

> Going into the period just ended, Ortiz & Co., manufacturer of a moderately priced espresso maker for retail sale, had planned to produce and sell 3,900 units at $100.00 per unit. Budgeted variable manufacturing costs per unit are $50.00. Ortiz pays its

> Forever Young Inc. has developed a drug that will diminish the effects of aging. Forever Young has spent $1,000,000 on research and development and $2,108,000 for clinical trials. Once the drug is approved by the FDA, which is imminent, it will have a 5-

> Kate Stephens, the COO of BioDerm, has asked her cost management team for a product-line profitability analysis for her firm’s two products, Xderm and Yderm. The two skin care products require a large amount of research and development

> Taylor’s is a popular restaurant that offers customers a large dining room and comfortable bar area. Taylor Henry, the owner and manager of the restaurant, has seen the number of patrons increase steadily over the last two years and is considering whethe

> Chemical Products Company (CPC) produces a variety of chemicals—primarily adhesives, lubricants, and polymers—for industrial use by manufacturers to produce plastics and other compounds. Don Leo, the production vice pr

> Colton Furniture Co. is a small but fast-growing manufacturer of living room furniture. Its two principal products are end tables and sofas. The flow diagram for the manufacturing at Colton follows. Colton’s manufacturing involves five

> Bridal Photography Inc. (BPI) specializes in preparing wedding pictures, including a large book of photos for the wedding couple. Each couple works directly with a single BPI photographer, who helps the couple plan the photos to be made on the wedding da

> Hilton Yacht manufactures a line of family cruiser/racing sailboats. The boats are well known for their quality, safety, and performance. Hilton hired Matthew Perry, a well-known sailboat designer and racer, to design a new sailboat, the M33. The M33 wil

> Harpers Ltd. is a UK manufacturer of casual shoes for men and women. It has sustained strong growth in the UK market in recent years due to its close attention to fashion trends. Harpers’s shoes also have a good reputation for quality a

> Scott Power produces batteries. Scott has determined its contribution margin to be $8 per battery and their contribution margin ratio to be 0.4. What is the effect on operating profit from the sale of one additional battery? One additional dollar of sale

> Brief Exercises 7-11 through 7-14 involve departmental cost allocation with two service departments and two production departments. Use the following information for these four exercises: What is the amount of service department cost allocated to P1 an

> Caldwell Supply, a wholesaler, has determined that its operations have three primary activities: purchasing, warehousing, and distributing. The firm reports the following operating data for the year just completed: Caldwell buys 100,000 units at an ave

> VIP-MD is a health maintenance organization (HMO) located in North Carolina. Unlike the traditional fee-for-service model that determines the payment according to the actual services used or costs incurred, VIP-MD receives a fixed, prepaid amount from su

> Chapter 11 Morrow Company is a large manufacturer of auto parts for automakers and parts distributors. Although Morrow has plants throughout the world, most are in North America. Morrow is known for the quality of its parts and for the reliability of its

> UR Safe Systems installs home security systems. Two of its systems, the ICU 100 and the ICU 900, have these characteristics: The ICU 100 sells for $810 installed, and the ICU 900 sells for $1,520 installed. Required: 1. What are the current gross prof

> Estimated cash-flow data for each of two projects, A and B, and the discount rate, r, to be used for the analysis of capital investment projects are given below: Discount rate, r = 10.0%. Required: 1. In a capital budgeting context, explain the differ

> A proposed investment has the following projected after-tax cash flows over its 3-year life: Initial outlay (time 0) = ($1,000) End of year 1 = $2,000 End of year 2 = $2,000 End of year 3 = ($3,700) Required: 1. In a capital budgeting context, explain t

> Myers Manufacturing Inc. wants to build a booth for painting the boxes it makes for small transformers used to power neon signs. The company can choose either a solvent-based or a powder-based paint process. The following table summarizes the costs and i

> You and your spouse have recently inherited money from a distant relative and are considering a number of investment opportunities, one of which would involve residential real estate. Specifically, you have an opportunity to purchase an apartment complex