The controller of a retail company has just had a $50,000 request turned down toimplement an ABC system. A senior vice president, in rejecting the request, noted,“Given a choice, I will always prefer a $50,000 investment in improving things acustomer sees or experiences, such as our shelves or our store layout. How does acustomer benefit by our spending $50,000 on a supposedly better accounting system?”How should the controller respond?
Q: A Corporation is considering to open an office in a new market area that would allow it to increase…
A: Formulas:
Q: A large retailer is going to run an experiment at one of its stores to see how cost effective it…
A: given:
Q: Gordon Grimes, a self-employed consultant near Atlanta, received an invitation to visit a…
A: In standalone method, we provide weights for allocating the cost and hence we treat clients that…
Q: You are a manager at Percolated Fiber, which is considering expanding its operations in synthetic…
A: Here, Cost of Capital is 10% Cost of the Equipment is $19,000,000 Working Capital is $7,000,000 Part…
Q: You are a manager at Percolated Fiber, which is considering expanding its operations in synthetic…
A: Net present value is the most important capital budgeting technique which helps in the decision…
Q: You are an accounting student at Berkeley College and will not graduate for another year. But…
A: There are two ways we could send goods to the buyer. The one way is to send it through FOB…
Q: Ana Chavarria, front office manager of The Times Hotel, has been meeting with the owner and general…
A: A user registration system often requires the creation of a username and password, as well as the…
Q: You are a manager at Percolated Fiber, which is considering expanding its operations in synthetic…
A: Introduction: Free cash flow (FCF) refers to the cash available with the company after bearing all…
Q: Top-Quality Stores, Inc., owns a nationwide chain of supermarkets. The company is going to open…
A: Net Present Value or NPV is a technique which determines the net present value of the project and it…
Q: 'ou are a manager at Northern Fibre, which is considering expanding its operations in synthetic…
A: Here, Cost of Project is $24 millions Net Income of Project is $4.732 million Depreciation is 2.400…
Q: Ella Maksimov is CEO of her own marketing firm. The firm recently moved from a strip mall in the…
A: The relevant cost in a decision making include those cost which would entail additional outflow of…
Q: You are considering entering the shoe business. You believe that you have a narrow window for…
A: Calculate the stock price after adjusting for dividend as follows:
Q: Suppose that you have been given a summer job as an intern at Issac Aircams, a company that man-…
A: Product costs are those costs which are incurred for manufacturing the product and can be traced to…
Q: Howard Rockness was worried. His company, Rockness Bottling, showed declining profits over the past…
A: Activity based costing (ABC) is the costing method which allocates the overheads (activity…
Q: Home Builder Supply, a retailer in the home improvement industry, currently operates seven retail…
A: The question is based on the concept of capital budgeting and the process of capital investment…
Q: a retailer in the home improvement industry, currently operates seven retail outlets in Manama and…
A: A retailer in the home improvement industry, currently operates seven retail outlets in Manama and…
Q: Haglund Department Store is located in the downtown area of a small city. While the store had been…
A:
Q: Current Operations Proposal of Vice President of Sales $2.5 $2 280,000 units Unit Price Unit Sales…
A: Income statement: Under this Statement showing the company’s performance over a period of time by…
Q: Suppose that Demont has been given a summer job as an intern at Isaac Aircams, a company that…
A: Given the following question:
Q: You are a manager at Percolated Fiber, which is considering expanding its operations in synthetic…
A: Initial Investment $ 2,50,00,000.00 Sales revenue $ 3,00,00,000.00 Cost of goods sold $…
Q: Gordon Grimes, a self-employed consultant near Atlanta, received an invitation to visit a…
A: I am preparing allocation amount under standalone method , incremental cost allocation method, and…
Q: You are a manager at Northern Fibre, which is considering expanding its operations in synthetic…
A: Net Present Value (NPV): Net present value is defined as the summation of the present value of cash…
Q: You are a manager at Percolated Fiber, which is considering expanding its operations in synthetic…
A: a. Calculate the free cash flow as follows: Formulas:
Q: Just the second question. First is info to answer the second.
A: Calculate the stock price after adjusting for dividend as follows:
Q: Ben Blum recently graduated from Moonshadow University's accounting program. He has been hired as an…
A: Contribution is the value resulting from the deduction of variable costs from the revenue generated…
Q: Muscat Tubes Manufacturing LLC is a manufacturer of television picture tubes. The company must keep…
A: ABC analysis basically helps an organization to manage its inventory it basically works by…
Q: Jade Ltd is now considering how to obtain a computer software. The director of Jade Ltd has noticed…
A: Here intangible asset is recognized for internally generating asset
Q: Please show all equations and work as needed. If possible, please type the work so that it may be…
A: Calculation of Value of Call:The value of call is $3.54.Excel Spreadsheet:
Q: At the BlueFin Bank corporate headquarters, management was discussing the potential of outsourcing…
A: Outsourcing refers to a mutual deal between two firms in which one firm hires another firm to do…
Q: Two years ago the manager of a large department store purchased new bar code scanners costing…
A:
Q: You are a manager at Northem Fibre, which is considering expanding its operations in synthetic fibre…
A: Free Cash Flow: It is the amount by which operating cash flow of business exceeds its working…
Q: You are a manager at Percolated Fiber, which is considering expanding its operations in synthetic…
A: The value of any project or Investment is equal to present value of all future free cash flows over…
Q: A manager in your organization just received a special order at a price that is “below cost.” The…
A: This is the case of a ‘special order’. In accounting we consider special orders as those one off…
Q: Howard Rockness was worried. His company, Rockness Bottling, showed declining profits over the past…
A: The answer is given below:
Q: A large brokerage company is assessing the introduction of a new computer system to improve routing…
A: Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts…
Q: Rock Designs, Inc. is a jewelry store located in Miramar Beach, Florida. After Valentine’s Day, the…
A: (1)
Q: Gordon Grimes, a self-employed consultant near Atlanta, received an invitation to visit a…
A: Grimes can allocate cost on 3 basis: a. Standalone cost method b. Incremental cost allocation…
Q: The controller of a retail company has just had a $50,000 request to implement an ABC system quickly…
A: Activity based costing system is a costing system in which all indirect costs or overhead costs are…
Q: er, the minimum order size is 250 units; Webster's annual usage forecast is 5,000 units; and the…
A: Economic order quantity is the order quantity at which there is minimal inventory carrying cost and…
Q: Suppose that you have been given a summer job as an intern at Issac Aircams, a company that…
A: Product cost: Product costs are quite simply the costs incurred to make a product. Generally,…
Q: Howard Rockness was worried. His company, Rockness Bottling, showed declining profits over the past…
A: Units costs are the cost for one product. They are computed by dividing total cost with number of…
Q: You are considering entering the shoe business. You believe that you have a narrow window for…
A: Calculation of Value of Call:The value of call is $3.54.Excel Spreadsheet:
Q: the financial results and their bonuses. 1. Managerial Accounting 2. Would it be easy for Perlman to…
A: 1. According to the IMA's statement of ethical professional practice, P is not behaving ethically…
Q: You are a manager at Northern Fibre, which is considering expanding its operations in synthetic…
A: Net Present Value (NPV): Net present value is defined as the summation of the present value of cash…
The controller of a retail company has just had a $50,000 request turned down to
implement an ABC system. A senior vice president, in rejecting the request, noted,
“Given a choice, I will always prefer a $50,000 investment in improving things a
customer sees or experiences, such as our shelves or our store layout. How does a
customer benefit by our spending $50,000 on a supposedly better accounting system?”
How should the controller respond?
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
- Cost Information and Ethical Behavior, Service Organization Jean Erickson, manager and owner of an advertising company in Charlotte, North Carolina, arranged a meeting with Leroy Gee, the chief accountant of a large, local competitor. The two are lifelong friends. They grew up together in a small town and attended the same university. Leroy is a competent, successful accountant but is having some personal financial difficulties after some of his investments turned sour, leaving him with a 15,000 personal loan to pay offjust when his oldest son is starting college. Jean, on the other hand, is struggling to establish a successful advertising business. She had recently acquired the rights to open a branch office of a large regional advertising firm headquartered in Atlanta, Georgia. During her first 2 years, she was able to build a small, profitable practice. However, the chance to gain a significant foothold in Charlotte hinged on the success of winning a bid to represent the state of North Carolina in a major campaign to attract new industry and tourism. The meeting she had scheduled with Leroy concerned the bid she planned to submit. Jean: Leroy, Im at a critical point in my business venture. If I can win the bid for the states advertising dollars, Ill be set. Winning the bid will bring 600,000 to 700,000 of revenues into the firm. On top of that, I estimate that the publicity will bring another 200,000 to 300,000 of new business. Leroy: I understand. My boss is anxious to win that business as well. It would mean a huge increase in profits for my firm. Its a competitive business, though. As new as you are, I doubt that youll have much chance of winning. Jean: Youre forgetting two very important considerations. First, I have the backing of all the resources and talent of a regional firm. Second, I have some political connections. Last year, I was hired to run the publicity side of the governors campaign. He was impressed with my work and would like me to have this business. I am confident that the proposals I submit will be very competitive. My only concern is to submit a bid that beats your firm. If I come in with a lower bid and good proposals, the governor can see to it that I get the work. Leroy: Sounds promising. If you do win, however, there will be a lot of upset people. After all, they are going to claim that the business should have been given to local advertisers, not to some out-of-state firm. Given the size of your office, youll have to get support from Atlanta. You could take a lot of heat. Jean: True. But I am the owner of the branch office. That fact alone should blunt most of the criticism. Who can argue that Im not a local? Listen, with your help, I think I can win this bid. Furthermore, if I do win it, you can reap some direct benefits. With that kind of business, I can afford to hire an accountant, and Ill make it worthwhile for you to transfer jobs. I can offer you an up-front bonus of 15,000. On top of that, Ill increase your annual salary by 20%. That should solve most of your financial difficulties. After all, we have been friends since day oneand what are friends for? Leroy: Jean, my wife would be ecstatic if I were able to improve our financial position as quickly as this opportunity affords. I certainly hope that you win the bid. What kind of help can I provide? Jean: Simple. To win, all I have to do is beat the bid of your firm. Before I submit my bid, I would like you to review it. With the financial skills you have, it should be easy for you to spot any excessive costs that I may have included. Or perhaps I included the wrong kind of costs. By cutting excessive costs and eliminating costs that may not be directly related to the project, my bid should be competitive enough to meet or beat your firms bid. Required: 1. What would you do if you were Leroy? Fully explain the reasons for your choice. What do you suppose the code of conduct for Leroys company would say about this situation? 2. What is the likely outcome if Leroy agrees to review the bid? Is there much risk to him personally if he reviews the bid? Should the degree of risk have any bearing on his decision?You begin a new job at Cabrera Medical Supplies. The company is considering a new accounting system, with an initial investment of about half a million dollars for new software and hardware. You are excited for the opportunity to apply your managerial accounting skills regarding screening and preference methods to decide on the best system for the company. Your boss is a little old-school, and when you mention some of the things you learned in managerial accounting, he says. Discounted cash flow methods are not the only way to approach this. I have more of a gut reaction approach that blows most managers out of the water when they become absorbed by discounted cash flow methods (DCF). How would you react and what would you discuss with your boss?Bannister Company, an electronics firm, buys circuit boards and manually inserts various electronic devices into the printed circuit board. Bannister sells its products to original equipment manufacturers. Profits for the last two years have been less than expected. Mandy Confer, owner of Bannister, was convinced that her firm needed to adopt a revenue growth and cost reduction strategy to increase overall profits. After a careful review of her firms condition, Mandy realized that the main obstacle for increasing revenues and reducing costs was the high defect rate of her products (a 6 percent reject rate). She was certain that revenues would grow if the defect rate was reduced dramatically. Costs would also decline as there would be fewer rejects and less rework. By decreasing the defect rate, customer satisfaction would increase, causing, in turn, an increase in market share. Mandy also felt that the following actions were needed to help ensure the success of the revenue growth and cost reduction strategy: a. Improve the soldering capabilities by sending employees to an outside course. b. Redesign the insertion process to eliminate some of the common mistakes. c. Improve the procurement process by selecting suppliers that provide higher-quality circuit boards. Required: 1. State the revenue growth and cost reduction strategy using a series of cause-and-effect relationships expressed as if-then statements. 2. Illustrate the strategy using a strategy map. 3. Explain how the revenue growth strategy can be tested. In your explanation, discuss the role of lead and lag measures, targets, and double-loop feedback.
- Consider the following conversation between Leonard Bryner, president and manager of a firm engaged in job manufacturing, and Chuck Davis, certified management accountant, the firms controller. Leonard: Chuck, as you know, our firm has been losing market share over the past 3 years. We have been losing more and more bids, and I dont understand why. At first, I thought that other firms were undercutting simply to gain business, but after examining some of the public financial reports, I believe that they are making a reasonable rate of return. I am beginning to believe that our costs and costing methods are at fault. Chuck: I cant agree with that. We have good control over our costs. Like most firms in our industry, we use a normal job-costing system. I really dont see any significant waste in the plant. Leonard: After talking with some other managers at a recent industrial convention, Im not so sure that waste by itself is the issue. They talked about activity-based management, activity-based costing, and continuous improvement. They mentioned the use of something called activity drivers to assign overhead. They claimed that these new procedures can help to produce more efficiency in manufacturing, better control of overhead, and more accurate product costing. A big deal was made of eliminating activities that added no value. Maybe our bids are too high because these other firms have found ways to decrease their overhead costs and to increase the accuracy of their product costing. Chuck: I doubt it. For one thing, I dont see how we can increase product-costing accuracy. So many of our costs are indirect costs. Furthermore, everyone uses some measure of production activity to assign overhead costs. I imagine that what they are calling activity drivers is just some new buzzword for measures of production volume. Fads in costing come and go. I wouldnt worry about it. Ill bet that our problems with decreasing sales are temporary. You might recall that we experienced a similar problem about 12 years agoit was 2 years before it straightened out. Required: 1. Do you agree or disagree with Chuck Davis and the advice that he gave Leonard Bryner? Explain. 2. Was there anything wrong or unethical in the behavior that Chuck Davis displayed? Explain your reasoning. 3. Do you think that Chuck was well informedthat he was aware of the accounting implications of ABC and that he knew what was meant by cost drivers? Should he have been well informed? Review (in Chapter 1) the first category of the Statement of Ethical Professional Practice for management accountants. Do any of these standards apply in Chucks case?The controller of a retail company has just had a $50,000 request to implement an ABC system quickly turned down. A senior vice president, in rejecting the request, noted, "Given a choice, I will always prefer a $50,000 investment in improving things a customer sees or experiences, such as our shelves or our store layout. How does a customer benefit by our spending $50,000 on a supposedly better accounting system?" Question: How should the controller respond?As a recent hire of B-Well, your job is to evaluate whether the company should open a traditional grocery store in Astoria or start online shopping option instead. Before deciding which project to undertake, the Board of Directors has already agreed that they will hire a consultant to verify their decision. The consultant is charging $16, 580 total. They have also agreed that they will hire an NYC marketing agency to promote B-Well's reputation. They are not sure what the charge will be for the marketing services. For now, they just have to decide which project they will undertake. Brick & Mortar Store. B-Well Health Mart has to rent and renovate a space in Astoria. The estimates for the up-front renovation costs range from $2,250,000 to $2,650,000 to be depreciated over the life of the project using straight-line with a zero salvage value. There is a foreclosed warehouse in the area that their lenders are offering at a large discount since the lenders are losing money on it. The…
- A large brokerage company is assessing the introduction of a new computer system to improve routing and execution of customer orders. The managing director wants to install a new Smart Routing system, whereas another director prefers the Direct Routing system. Each machine provides the same order-execution ability and can satisfy the broker’s obligation to give investors the best possible order execution. The initial cost of each system is $170,000, but because of differing software, maintenance, and processing requirements, estimates of the after-tax costs of operation differ. These are as follows: Period Smart Routing Direct Routing 1 39,000 56,000 2 48,000 61,000 3 48,000 61,000 4…Ethics and the ManagerRichmond, Inc., operates a chain of 44 department stores. Two years ago, the board of directors of Richmond approved a large-scale remodelling of its stores to attract a more upscale clientele.Before finalizing these plans, two stores were remodelled as a test. Linda Perlman, assistant controller, was asked to oversee the financial reporting for these test stores, and she and other management personnel were offered bonuses based on the sales growth and profitability of these stores. While completing the financial reports, Perlman discovered a sizable inventory of outdated goods that should have been discounted for sale or returned to the manufacturer. She discussed the situation with her management colleagues; the consensus was to ignore reporting this inventory as obsolete because reporting it would diminish the financial results and their bonuses.1. Managerial Accounting2. Would it be easy for Perlman to take the ethical action in this situation?Richmond, Inc., operates a chain of 44 department stores. Two years ago, the board of directors of Richmond approved a large-scale remodeling of its stores to attract a more upscale clientele. Before finalizing these plans, two stores were remodeled as a test. Linda Perlman, assistant controller, was asked to oversee the financial reporting for these test stores, and she and other management personnel were offered bonuses based on the sales growth and profitability of these stores. While completing the financial reports, Perlman discovered a sizable inventory of outdated goods that should have been discounted for sale or returned to the manufacturer. She discussed the Situation with her management colleagues; the consensus was to ignore reporting this inventory as obsolete because reporting it would diminish the financial results and their bonuses. Required: According to the IMA’s Statement of Ethical Professional Practice, would it be ethical for Perlman not to report the inventory…
- Ethics and the Manager Richmond. Inc., operates a chain of 44 department stores. Two years ago, the board of directors of Richmond approved a large-scale remodeling of its stores to attract a more upscale clientele. Before finalizing these plans, two stores were remodeled as a test. Linda Perlman, assistant controller, was asked to oversee the financial reporting for these test stores, and she and other management personnel were offered bonuses based on the sales growth and profitability of these stores. While completing the financial reports. Perlman discovered a sizable inventory of outdated goods that should have been discounted for sale or returned to the manufacturer. She discussed the situation with her management colleagues; the consensus was to ignore reporting this inventory as obsolete because reporting it would diminish the financial results and their bonuses. Required: 1. According to the IMA’s Statement of Ethical Professional Practice, would it be ethical for Perlman not…Carni’s boss stated that after reviewing first-quarter earnings, the companydecided to invest in only one store in the city. After evaluating the performanceof the store, the company will determine if it wants to increase itspresence in the area.a. If you were Carni, what method of evaluation would you use to recommenda site for a new video store?b. Explain how you would determine which site to invest in.Big Tractor, Inc.'s best salesperson is Misty Hammond. Hammond's largest sales have been to Farmer's Cooperative, a customer she brought to the company. Another salesperson, Bob Blanchette has been told in confidence by his cousin (an employee of Farmer's Cooperative) that Farmer's Cooperative is experiencing financial difficulties and may not be able to pay Big Tractor Inc. what is owed. Both Hammond and Blanchette are being considered for a promotion to a new sales manager position. What are the ethical considerations that Bob Blanchette faces? What alternatives do you think he has?