What are the three types of inventory in a manufacturing firm?
> What are unit-level activities? Give two examples of unit-level activities.
> What type of company can benefit from an activity-based costing system?
> Briefly describe the first- and second-stage procedures in assigning costs to products when using an activity-based costing system.
> Identify the general levels of cost hierarchy in activity-based costing systems.
> What is activity-based costing, and how can it improve an organization’s costing system?
> Explain why a costing system that uses a volume-based rate is likely to produce distorted product costs.
> Adams Furniture receives a special order for 10 sofas for a special price of $3,000. The direct materials and direct labor for each sofa amount to $100. In addition, supervision and other fixed overhead costs average $150 per sofa. Should Adams accept th
> 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 total cost in P1 and P2 and what is the amount of se
> Firms sell products with high costs at high prices. High selling prices increase revenues and profits. Why then should managers worry about product overcosting?
> Identify opportunities afforded by performing a customer profitability analysis.
> How can activity-based costing and management be used in service organizations?
> What is activity-based management?
> Why do product costing systems using a single, volume-based cost driver tend to over-cost high-volume products? Will there be any undesirable strategic effects from such product cost distortion?
> What are facility-level activities? Give two examples of facility-level activities.
> What are product-level activities? Give two examples of product-level activities.
> “Undercosting a product increases the profit from the product and benefits the firm.” Do you agree? Why?
> What does the following statement mean? “Accounting for overhead involves an important cost-benefit issue.” Why is that issue important?
> What is the role of materials requisitions in a job costing system? Time tickets? Bills of materials?
> ElecPlus Batteries has two different products, AAA and AA batteries. The AA batteries have a contribution margin of $1 per package, and the AAA batteries have a contribution margin of $2 per package. ElecPlus has a capacity for 1,000,000 batteries per mo
> Explain how predetermined factory overhead rates are computed and why they are used to apply factory overhead to units of products instead of actual overhead costs.
> What document is prepared to accumulate costs for each separate job in a job costing system? What types of costs are recorded in the document?
> Which costing system is extensively used in the service industry for hospitals, law firms, or accounting firms? Explain why.
> Explain when companies are likely to use a job costing system or a process costing system. Provide examples.
> Distinguish between job costing and process costing.
> Identify the three characteristics of costing systems.
> How is job costing in a service firm different from job costing in a manufacturer?
> What is the difference between normal and abnormal spoilage?
> What is the best way to choose an appropriate cost driver or cost drivers when applying factory overhead?
> Distinguish between an actual costing system and a normal costing system. What are the components of actual manufacturing costs and the components of normal manufacturing costs?
> Lance’s Diner has a hot-lunch special each weekday and Sunday afternoon. The cost of food and other variable costs for each meal served is $3.50; weekly fixed costs (e.g., building depreciation and equipment rental costs) are $6,000, regardless of the ho
> Explain why overhead might be overapplied in a given period.
> Why would a manufacturing firm switch from direct labor hours to machine hours as the cost driver for factory overhead application?
> What do underapplied overhead and overapplied overhead mean? How are these amounts disposed of at the end of a period?
> Describe the flow of costs through a job costing system from materials through finished product.
> What is the strategic role of a costing system?
> What are conversion costs? What are prime costs?
> Define relevant range and explain its use.
> Explain step costs and give an example.
> What is the difference between variable and fixed costs?
> Define cost driver.
> Sweet Dream Hotel has labor costs that are mostly fixed, including registration desk, maintenance and general repairs and cleaning. The housekeeping staff is hired in sufficient numbers to clean the number of rooms that need cleaning so that housekeeping
> Are all fixed costs indirect? Explain.
> Are all direct costs variable? Explain.
> Provide an example of an indirect labor cost.
> Distinguish between direct and indirect costs and give several examples of each.
> Provide an example of an indirect materials cost.
> Provide an example of a structural cost driver.
> Provide an example of an executional cost driver.
> Cost management information should be timely and accurate. Which of these attributes is most important? Why?
> Explain the difference between cost of goods sold and cost of goods manufactured.
> Durant Co. manufactures glass bottles for dairy products. The contribution margin is $0.10 per bottle. Durant just received notification that one of its orders for 100,000 bottles contained misprinted labels and thus had to recall and reprint the bottle
> Distinguish between product costs and period costs.
> How do total variable costs, total fixed costs, average variable costs, and average fixed costs react to changes in the cost driver?
> Why might the term average cost be misleading?
> What does the term unit cost mean?
> What is the difference between cost allocation and cost assignment?
> Identify four or five potential critical success factors for a manufacturer of industrial chemicals.
> What is a critical success factor? What is its role in strategic management and in cost management?
> What is the role of the management accountant regarding nonfinancial performance measures such as delivery speed and customer satisfaction?
> What is SWOT analysis? For what is it used?
> What is a strategy map and how is it used?
> Jackson Inc. disposes of other companies’ toxic waste. Currently, Jackson loads the waste by hand into a truck, which requires labor of $20 per load. Jackson is considering a machine that would reduce the amount of time needed to load the waste. The mac
> How are the four strategic resources—SWOT analysis, execution, the value chain, and the balanced scorecard—linked in a comprehensive strategic analysis?
> Identify three or four well-known firms that succeed through product differentiation.
> Consider Question 2-22 again. How would your answer differ if the firm were a manufacturer? Question 2-22: Suppose you are the CEO of a large firm in a service business and you think that by acquiring a certain competing firm, you can generate growth an
> Suppose you are the CEO of a large firm in a service business and you think that by acquiring a certain competing firm, you can generate growth and profits at a greater rate for the combined firm. You have asked some financial analysts to study the propo
> How would you explain the relationship between value-chain analysis and the use of the balanced scorecard for a firm that uses both? Use a hospital as an example.
> What industries do you think are most suited for value-chain analysis and why?
> Identify three or four well-known firms that succeed through cost leadership.
> Think of an example of a firm that succeeds on differentiation and give some examples of its strengths and weaknesses that would be included in a SWOT analysis.
> Think of an example of a firm that succeeds on cost leadership and give some examples of its strengths and weaknesses that would be included in a SWOT analysis.
> Explain the uses of value-chain analysis.
> Williams Auto has a machine that installs tires. The machine is now in need of repair. The machine originally cost $10,000 and the repair will cost $1,000, but the machine will then last two years. The labor cost of operating the machine is $0.50 per tir
> What is sustainability, and what does it mean for a business?
> Contrast using the balanced scorecard with using only financial measures of success.
> What is a balanced scorecard? What is its primary objective?
> Identify four or five potential critical success factors for an auto-repair shop.
> Identify four or five potential critical success factors for a large retail discount store that features a broad range of consumer merchandise.
> Identify four or five potential critical success factors for a small chain of retail jewelry stores.
> Identify four or five potential critical success factors for a large savings and loan institution.
> Identify and explain the two types of competitive strategy.
> Many would argue that the TV manufacturing business has become largely a commodity business, and competition is based on price, with many good brands offered at low prices at retailers such as Walmart. The manufacturers of TVs are said to have a barrier
> a. Consider a commodity business such as building materials, many types of food products, and many types of electronics products. A good example of a commodity is gasoline. Are these companies likely to compete on cost leadership or differentiation? Why?
> A company is formulating its marketing expense budget for the last quarter of the year. Sales in units for the third quarter amounted to 4,000; sales volume for the fourth quarter is expected to increase by 10 percent. Variable marketing expense per unit
> How many measures are usually on the balanced scorecard?
> What are some of the key issues to consider in effectively implementing a balanced scorecard?
> What is the difference between strategy and planning?
> Michael Porter argues a firm cannot be at the same time a cost leader and a differentiator. Do you think a firm could be a cost leader and then become a differentiator, or vice versa?
> Consider the three broad categories of firms: manufacturers, retailers, and service firms. Give an example of a cost leader and a differentiator in each of the three categories. Do there tend to be more cost leaders relative to differentiators in one or
> Take as an example the bank where you have your account(s) and state whether you think it is a cost leader or a differentiator and why.
> What is a commodity? Give some examples of what you consider to be commodities and explain whether you think the company making the commodity product or service is a cost leader or a differentiator and why.
> What would you consider to be the strategy of The Coca-Cola Company: cost leadership or differentiation? Why?
> In recent years, the drug VIOXX was removed from the market by the pharmaceutical giant Merck & Co. The drug was used to relieve arthritis pain and was especially beneficial for patients who needed a medication that was easy on the stomach. But research
> Do you think there is value to the firm and to its shareholders of a strong ethical climate in the firm? Why or why not? Do you think there is value to the firm and to its shareholders of a strong ethical climate in the firm? Why or why not?
> If the December 1 balance in the Direct Materials Inventory account was $37,000, the December 31 balance was $39,500, and $150,000 of direct materials were issued to production during December, what was the amount of direct materials purchased during the
> Identify what you think is a very successful firm and explain why. How did it become successful?
> Name the 13 contemporary management techniques and describe each briefly.
> Contrast past and present business environments with regard to the following aspects: basis of competition, manufacturing processes and manufacturing technology, required labor skills, emphasis on quality, number of products, number of markets, types of
> What are some factors in the contemporary business environment that are causing changes in business firms and other organizations? How are the changes affecting the way those firms and organizations use cost management information?
> The management accountant is a full business partner with management in which of the four stages of cost system development, and why?
