What problems might arise in estimating the degree of completion of semiconductor chips in a semiconductor plant?
> “Let’s be more practical. DCF is not the gospel. Managers should not become so enchanted with DCF that strategic considerations are overlooked.” Do you agree? Explain.
> “The trouble with discounted cash flow methods is that they ignore depreciation.” Do you agree? Explain.
> Describe the accrual accounting rate-of-return method. What are its main strengths and weaknesses?
> What is the payback method? What are its main strengths and weaknesses?
> “Only quantitative outcomes are relevant in capital budgeting analyses.” Do you agree? Explain.
> The Walliston Group (WG) provides tax advice to multinational firms. WG charges clients for (a) direct professional time (at an hourly rate) and (b) support services (at 30% of the direct professional costs billed). The three professionals in WG and th
> “Relevant costs for pricing decisions are full costs of the product.” Do you agree? Explain.
> What is the essence of the discounted cash flow methods?
> List and briefly describe each of the five stages in capital budgeting.
> Distinguish the nominal rate of return from the real rate of return.
> How can capital budgeting tools assist in evaluating a manager who is responsible for retaining customers of a cellular telephone company?
> Describe three ways income taxes can affect the cash inflows or outflows in a motor-vehicle-replacement decision by a taxpaying company.
> Distinguish different categories of cash flows to be considered in an equipment-replacement decision by a taxpaying company.
> Bill Watts, president of Western Publications, accepts a capital budgeting project proposed by division X. This is the division in which the president spent his first 10 years with the company. On the same day, the president rejects a capital budgeting p
> “All overhead costs are relevant in NPV analysis.” Do you agree? Explain.
> What are three factors causing reductions in the cost to place purchase orders for materials?
> “JIT purchasing has many benefits but also some risks.” Do you agree? Explain briefly.
> Vineyard Test Laboratories does heat testing (HT) and stress testing (ST) on materials and operates at capacity. Under its current simple costing system, Vineyard aggregates all operating costs of $1,190,000 into a single overhead cost pool. Vineyard cal
> Why might goal-congruence issues arise when managers use an EOQ model to guide decisions on how much to order?
> What are the steps in computing the cost of a prediction error when using the EOQ decision model?
> Give three examples of opportunity costs that typically are not recorded in accounting systems, although they are relevant when using the EOQ model in the presence of demand uncertainty.
> What assumptions are made when using the simplest version of the economic-order-quantity (EOQ) decision model?
> Discuss the differences between lean accounting and traditional cost accounting.
> Describe three different versions of backflush costing.
> Distinguish inventory-costing systems using sequential tracking from those using backflush costing.
> What are the main features of JIT production, and what are its benefits and costs?
> What is supply-chain analysis, and how can it benefit manufacturers and retailers?
> “You should always choose the supplier who offers the lowest price per unit.” Do you agree? Explain.
> Roberta, Inc., manufactures elliptical machines for several well-known companies. The machines differ significantly in their complexity and their manufacturing batch sizes. The following costs were incurred in 2017: a. Indirect manufacturing labor costs
> Why do better decisions regarding the purchasing and managing of goods for sale frequently cause dramatic percentage increases in net income?
> Give two examples of nonfinancial measures of internal-business-process quality.
> Give two examples of nonfinancial measures of customer satisfaction relating to quality.
> “Companies should focus on financial measures of quality because these are the only measures of quality that can be linked to bottom-line performance.” Do you agree? Explain.
> Describe three methods that companies use to identify quality problems.
> Distinguish between internal failure costs and external failure costs.
> “When evaluating a company’s performance on the time dimension, managers should only consider financial measures.” Do you agree? Explain.
> “Companies should always make and sell all products whose selling prices exceed variable costs.” Assuming fixed costs are irrelevant, do you agree? Explain.
> Give two reasons why delays occur.
> “There is no tradeoff between customer-response time and on-time performance.” Do you agree? Explain.
> What are three important pitfalls to avoid when implementing a balanced scorecard?
> Distinguish between customer-response time and manufacturing cycle time.
> “When evaluating alternative ways to improve quality, managers need to consider the fully allocated costs of quality.” Do you agree? Explain.
> “Total input includes abnormal as well as normal spoilage and is, therefore, inappropriate as a basis for computing normal spoilage.” Do you agree? Explain.
> Distinguish among spoilage, rework, and scrap.
> How do managers use information about scrap?
> “Abnormal rework costs should be charged to a loss account, not to manufacturing overhead.” Do you agree? Explain.
> “In job costing, the costs of normal spoilage that occur while a specific job is being done are charged to the specific job.” Do you agree? Explain.
> Describe the distinctive characteristic of FIFO computations in assigning costs to units completed and to units in ending work in process.
> Name the five steps in process costing when equivalent units are computed.
> What are the five types of conditions to consider when evaluating a strategy map?
> Explain equivalent units. Why are equivalent-unit calculations necessary in process costing?
> In process costing, why are costs often divided into two main classifications?
> “There’s no reason for me to get excited about the choice between the weighted-average and FIFO methods in my process-costing system. I have long-term contracts with my materials suppliers at fixed prices.” Do you agree with this statement made by a plan
> Why should the accountant distinguish between transferred-in costs and additional direct materials costs for each subsequent department in a process-costing system?
> “The standard-costing method is particularly applicable to process-costing situations.” Do you agree? Why?
> Give two limitations of the physical-measure method of joint-cost allocation.
> Distinguish between the sales value at splitoff method and the NRV method.
> Describe a situation in which the sales value at splitoff method cannot be used but the NRV method can be used for joint-cost allocation.
> Provide three reasons for allocating joint costs to individual products or services.
> Why might the number of products in a joint-cost situation differ from the number of outputs? Give an example.
> “We are already measuring total factor productivity. Measuring partial productivities would be of no value.” Do you agree? Comment briefly.
> Distinguish between a joint product and a byproduct.
> Why might managers seeking a monthly bonus based on attaining a target operating income prefer the sales method of accounting for byproducts rather than the production method?
> “Managers should consider only additional revenues and separable costs when making decisions about selling at splitoff or processing further.” Do you agree? Explain.
> “Managers must decide whether a product should be sold at splitoff or processed further. The sales value at splitoff method of joint-cost allocation is the best method for generating the information managers need for this decision.” Do you agree? Explain
> Why is the constant gross-margin percentage NRV method sometimes called a “joint-cost-allocation and a profit-allocation” method?
> Distinguish among the three methods of allocating the costs of support departments to operating departments.
> Why might a manager prefer that budgeted rather than actual cost-allocation rates be used for costs being allocated to his or her department from another department?
> Identify and discuss arguments that individual product managers may put forward to support their preferred revenue-allocation method.
> Distinguish between the stand-alone and the incremental revenue-allocation methods.
> Why might an analyst incorporate the industry-market-size factor and the interrelationships among the growth, price-recovery, and productivity components into a strategic analysis of operating income?
> What are the challenges of using the incremental cost allocation method when allocating common costs and how might they be overcome?
> Distinguish between the single-rate and the dual-rate methods.
> “Once a company allocates corporate costs to divisions, these costs should not be reallocated to the indirect-cost pools of the division.” Do you agree? Explain.
> What criteria might managers use to guide cost-allocation decisions? Which are the dominant criteria?
> “A company should not allocate all of its corporate costs to its divisions.” Do you agree? Explain.
> Give examples of three different levels of costs in a customer-cost hierarchy.
> “A customer-profitability profile highlights those customers a company should drop to improve profitability.” Do you agree? Explain.
> How can the sales-quantity variance be decomposed further?
> How can the concept of a composite unit be used to explain why an unfavorable total sales-mix variance of contribution margin occurs?
> Show how managers can gain insight into the causes of a sales-volume variance by subdividing the components of this variance.
> “Managers will always choose the alternative that maximizes operating income or minimizes costs in the decision model.” Do you agree? Why?
> How should a company decide on the number of cost pools it should use to allocate costs to divisions, channels, and customers?
> “A company should not allocate costs that are fixed in the short run to customers.” Do you agree? Explain briefly.
> Give two examples of a value-added cost and two examples of a non-value-added cost.
> Describe two alternative approaches to long-run pricing decisions.
> Define predatory pricing, dumping, and collusive pricing.
> What are three benefits of using a product life-cycle reporting format?
> Give two examples in which the difference in the costs of two products or services is much smaller than the difference in their prices.
> Joyce Brown has run Medical Maids, a specialty cleaning service for medical and dental offices, for the past 10 years. Her static budget and actual results for April 2017 are shown below. Joyce has one employee who has been with her for all 10 years that
> Emerald Statuary manufactures bust statues of famous historical figures. All statues are the same size. Each unit requires the same amount of resources. The following information is from the static budget for 2017: Expected production and salesâ
> Tyva makes a very popular undyed cloth sandal in one style, but in Regular and Deluxe. The Regular sandals have cloth soles and the Deluxe sandals have cloth-covered wooden soles. Tyva is preparing its budget for June 2018 and has estimated sales based o
> How does an engineered cost differ from a discretionary cost?
> Apex Chemical Company currently operates three manufacturing plants in Colorado, Utah, and Arizona. Annual carbon emissions for these plants in the first quarter of 2018 are 125,000 metric tons per quarter (or 500,000 metric tons in 2018). Apex managemen
> Jayzee Company manufactures a variety of products in a variety of departments and evaluates departments and departmental managers by comparing actual cost and output relative to the budget. Departmental managers help create the budgets and usually provid
> Refer to the information in Problem 6-44. All purchases made in a given month are paid for in the following month, and direct material purchases make up all of the accounts payable balance and are reflected in the accounts payable balances at the beginni
> Hazlett, Inc., operates at capacity and makes plastic combs and hairbrushes. Although the combs and brushes are a matching set, they are sold individually and so the sales mix is not 1:1. Hazlett’s management is planning its annual budg
> Refer to the information in Problem 6-42. Budgeted balances at January 31, 2018 are as follows: Cash…………………â
> Skulas, Inc., manufactures and sells snowboards. Skulas manufactures a single model, the Pipex. In late 2017, Skulas’s management accountant gathered the following data to prepare budgets for January 2018: Skulas’s CE
> Refer to the information in Problem 6-40. Assume the following: Animal Gear (AG) does not make any sales on credit. AG sells only to the public and accepts cash and credit cards; 90% of its sales are to customers using credit cards, for which AG gets the
