You are working with a firm of Cost Consultants. A client having a large manufacturing FMCG co. comes to you for advice for installing a cost accounting system in his organization. What are the basic considerations you would keep in mind in designing a cost accounting and management accounting system for your client? What are the practical difficulties you perceive on its implementation by your client and how do you propose to overcome the same?
Q: Which of the following major activities of a business will result in product costs? Multiple Choice…
A: Manufacturing is a process of production of goods for sale. It involves conversion of raw material…
Q: Assume that your team is going to form a company that will manufacture chocolate chip cookies. The…
A:
Q: You are employed as a research and development manager for a production company. The chief ex-…
A: A cost appears to be an expenditure made in the manufacture or sale of a product, or in the…
Q: Data Master is a computer software consulting company. Its three major functional areas are computer…
A: Cost allocation is the process of providing relief to shared service organization’s cost centers
Q: Which of the following would be true for a service company? a. ABC helps the company make more…
A: A ) Activity based costing helps the company to make decisions with the help of cost information..…
Q: Alya is a newly appointed material control manager at the store of Aldhaira Oil Development SAOG.…
A: Economic Order Quantity control system can be used to organise the material based on quantity and…
Q: It is your first day at a new job and you talk about the themes of cost system design. One of your…
A: Cost Accounting System: It is a method that was developed to report the prices of different goods…
Q: Requirement 1. For each decision, state whether the company is following a cost leadership or a…
A: Under cost leadership, a company tries to obtain and increase market share by decreasing its cost,…
Q: What benefits and drawbacks are there for a business that uses a Standard/Traditional Costing model?
A: Note: Hi! Thank you for the question As per the honor code, We’ll answer the first question since…
Q: Would it be ethical for Aaron to attend the meeting and share the relevant cost data? Explain your…
A: Financial accounting: Financial accounting is the process of recording, summarizing, and reporting…
Q: Mel Gibbeson has recently graduated from a business school and has joined the family business as an…
A: Unit cost can be referred as the costing of the product manufactured on an individual product basis.…
Q: #1. What criteria should the operating units (i.e. producing segments of the firm) use when deciding…
A: 1. The decision to choose between the job and the process costing depends on various factors. These…
Q: Our examples in the chapter have focused on manufacturing, where the output is units of product and…
A: The productivity is calculated as total output divided by total input for the production.
Q: In the lecture video I used Lay's Potato Chips and an imaginary company (Smith Co.) as examples to…
A: Process costing is an accounting technique under which all the products produced by a company have…
Q: a. Describe the flow of costs through a product costing system. What specific accounts are involved…
A: Introduction: Product costing is the process of fixing costs for the products which are…
Q: Choose a company that creates a product or offers a service that you are familiar. Using the company…
A: Answer with explanation are s follows.
Q: How can accounting con
A: these three steps can increase the capacity of of an accounting firm. Adopt a cloud-based platform…
Q: Suppose you are the controller for a company that produces handmade glassware.1. Choose a…
A:
Q: The manager of the manufacturing unit of a company is responsibie for the costs of the manufecturing…
A: SOLUTION- The Average Cost is the per unit cost of production obtained by dividing the total cost…
Q: Companies that produce a variety of products need a costing system that allocates costs based on the…
A: Companies that produce a variety of products need a costing system that allocates costs based on the…
Q: If you were a small business owner would you implement an activity based costing system? What…
A: Activity Based Costing- It is costing in which cost of overhead is assigned firstly to those…
Q: Why would a business that uses traditional costing systems consider implementing activity-based…
A: Cost-volume profit analysis is a tool that helps in decision making by establishing a relationship…
Q: Imagine that you own your own business, or you are the manager of a company. Please tell us about…
A: Fixed costs will not change based on the level of production. Variable costs will change with the…
Q: From the choices presented in parentheses, choose the appropriate term for completing each of the…
A: Costs are classified into two categories Direct costs - which can be traced to product easily…
Q: Is Standard costing still a useful tool for the Management accountant? How could it be adapted to…
A: Costing Accounting- A cost accounting system is a type of perpetual inventory accounting system that…
Q: INDICATE THE SOLUTION.
A: 1. Calculate the manufacturing cycle efficiency. Manufacturing cycle efficency = Processing time /…
Q: Besides the “Shop,” how else does Barcelona try to maximize employee fit? What other suggestions do…
A: Company can improve new hires’ fit with the job and organization by using following strategies: a.…
Q: gear involves many complex and specialized activities that, before now, have lacked of organization…
A: As the company manufactures Gear which involves complex, difficult and specialized activities,…
Q: Paula Woodward is the head of the Information Systems Department at Mo Manufacturing Company. Roland…
A: Job Order Costing - It is system when customers order small and unique bathes of products in which…
Q: mitments, some overtime working would be required to complete the printing of the pamphlet. A…
A: Revised Cost Estimate a. Direct materials : paper ink 2500 3000 5500 b. Direct labour…
Q: Consider the business application," filing excess capacity 'below cost'. As noted there, the…
A: USPS is a monopoly player in postal services legally which prevents others from entering into the…
Q: Give an example of a product you would like to make and sell (like coffee - just pretend). What are…
A: Production Cost: It includes expenses incurred by a firm when it manufactures a product or provides…
Q: Setting standards in an organization may be primarily to assist in the calculation of a standard…
A: Standardization in customer service firm is necessary just like the standardization in products…
Q: 1, How can accounting consultants or auditors minimize the cost of doing business? How is this…
A: solution : dear student as per bartleby guideline we are required to solve the first question only…
Q: Which of the following is a benefit of activity-based cost management system? a.It makes it easy to…
A: Activity based costing is a method of allocating indirect costs to the products or services based on…
Q: Hello, Have a question. Which of the following are the advantages of the ABC approach relative to…
A: Out of the choices provided, the following are the advantages of the ABC approach relative to using…
Q: Aaron McKinney is a cost accountant for Majik Systems Inc. Martin Dodd, Vice President of Marketing,…
A: A cost accountant is a person in a business who is responsible for the recording of all the costs…
Q: “I’m going to focus on the customers of my business and leave cost-allocation issues to my…
A: Costing: Costing is a technique used in cost accounting to determine the cost of a product. With the…
Q: A large manufacturer of electronic machinery stated the following as one of its goals: “The company…
A: Managerial accounting: Managerial accounting is a system, or a process of collecting and organizing,…
Q: Assume you are the manager of the finished goods warehouse of a computer manufacturer. Which…
A: Balanced scorecard: A balanced scorecard is a strategic management performance metric used to…
Q: The following situations describe decision scenarios that could use managerial accounting…
A: Managerial accounting is the process of analysing and circulating important financial information to…
Q: In addition to the "Shop," what other initiatives does Barcelona have in place to enhance employee…
A: The Answer :
Q: As a Chief financial officer (CFO) recommend three actions you could take regarding the company's…
A: Ways to reduce manufacturing costs: Use the materials that are low in cost and are a good…
Q: 1. What is the primary trade-off an accountant must consider when deciding whether to identify cost…
A: Answer 1: Is the cost/benefit of the process reasonable for more accurate behavior obtained.
Q: In light of the research you've done, identify two major takeaways that may be applied to your…
A: ABC (activity-based costing): The activity-based costing (ABC) framework was developed to address…
Step by step
Solved in 2 steps
- In a team of two or three students, interview the manager/owner of a local business. In this interview, ask the manager/owner the following questions: A. Does the business collect and use cost information to make decisions? B. Does it have a specialist in cost estimation who works with this cost data? If not, who is responsible for the collection of cost information? Be as specific as possible. C. What type of cost information does the business collect and how is each type of information used? D. How important does the owner/manager believe cost information is to the success of the business? Then, write a report to the instructor summarizing the results of the interview. Content of the memo must include date of the interview, the name and title of the person interviewed, name and location of the business, type of business (service, merchandising, manufacturing) and brief description of the goods/services provided by the business, and responses to questions A-D.Aaron McKinney is a cost accountant for Majik Systems Inc. Martin Dodd, Vice President of Marketing, has asked Aaron to meet with representatives of Majik Systems major competitor to discuss product cost data. Martin indicates that the sharing of these data will enable Majik Systems to determine a fair and equitable price for its products. Would it be ethical for Aaron to attend the meeting and share the relevant cost data? Explain your answer.Assume you have been hired by Cabelas Sporting Goods. As part of your new role in the accounting department, you have been tasked to set up a responsibility accounting structure for the company. As your first task, your supervisor has asked you to give an example of a cost center, profit center, and an investment center within the Cabelas organization. Your supervisor is a little unsure of the difference between a profit center and investment center and would like you to explain the difference.
- Tom Young, vice president of Dunn Company (a producer of plastic products), has been supervising the implementation of an activity-based cost management system. One of Toms objectives is to improve process efficiency by improving the activities that define the processes. To illustrate the potential of the new system to the president, Tom has decided to focus on two processes: production and customer service. Within each process, one activity will be selected for improvement: molding for production and sustaining engineering for customer service. (Sustaining engineers are responsible for redesigning products based on customer needs and feedback.) Value-added standards are identified for each activity. For molding, the value-added standard calls for nine pounds per mold. (Although the products differ in shape and function, their size, as measured by weight, is uniform.) The value-added standard is based on the elimination of all waste due to defective molds (materials is by far the major cost for the molding activity). The standard price for molding is 15 per pound. For sustaining engineering, the standard is 60 percent of current practical activity capacity. This standard is based on the fact that about 40 percent of the complaints have to do with design features that could have been avoided or anticipated by the company. Current practical capacity (the first year) is defined by the following requirements: 18,000 engineering hours for each product group that has been on the market or in development for five years or less, and 7,200 hours per product group of more than five years. Four product groups have less than five years experience, and 10 product groups have more. There are 72 engineers, each paid a salary of 70,000. Each engineer can provide 2,000 hours of service per year. There are no other significant costs for the engineering activity. For the first year, actual pounds used for molding were 25 percent above the level called for by the value-added standard; engineering usage was 138,000 hours. There were 240,000 units of output produced. Tom and the operational managers have selected some improvement measures that promise to reduce non-value-added activity usage by 30 percent in the second year. Selected actual results achieved for the second year are as follows: The actual prices paid per pound and per engineering hour are identical to the standard or budgeted prices. Required: 1. For the first year, calculate the non-value-added usage and costs for molding and sustaining engineering. Also, calculate the cost of unused capacity for the engineering activity. 2. Using the targeted reduction, establish kaizen standards for molding and engineering (for the second year). 3. Using the kaizen standards prepared in Requirement 2, compute the second-year usage variances, expressed in both physical and financial measures, for molding and engineering. (For engineering, explain why it is necessary to compare actual resource usage with the kaizen standard.) Comment on the companys ability to achieve its targeted reductions. In particular, discuss what measures the company must take to capture any realized reductions in resource usage.Randy Harris, controller, has been given the charge to implement an advanced cost management system. As part of this process, he needs to identify activity drivers for the activities of the firm. During the past four months, Randy has spent considerable effort identifying activities, their associated costs, and possible drivers for the activities costs. Initially, Randy made his selections based on his own judgment using his experience and input from employees who perform the activities. Later, he used regression analysis to confirm his judgment. Randy prefers to use one driver per activity, provided that an R2 of at least 80 percent can be produced. Otherwise, multiple drivers will be used, based on evidence provided by multiple regression analysis. For example, the activity of inspecting finished goods produced an R2 of less than 80 percent for any single activity driver. Randy believes, however, that a satisfactory cost formula can be developed using two activity drivers: the number of batches and the number of inspection hours. Data collected for a 14-month period are as follows: Required: 1. Calculate the cost formula for inspection costs using the two drivers, inspection hours and number of batches. Are both activity drivers useful? What does the R2 indicate about the formula? 2. Using the formula developed in Requirement 1, calculate the inspection cost when 300 inspection hours are used and 30 batches are produced. Prepare a 90 percent confidence interval for this prediction.John Thomas, vice president of Mallett Company (a producer of a variety of plastic products), has been supervising the implementation of an ABC management system. John wants to improve process efficiency by improving the activities that define the processes. To illustrate the potential of the new system to the president, John has decided to focus on two processes: production and customer service. Within each process, one activity will be selected for improvement: materials usage for production and sustaining engineering for customer service (sustaining engineers are responsible for redesigning products based on customer needs and feedback). Value-added standards are identified for each activity. For materials usage, the value-added standard calls for six pounds per unit of output (the products differ in shape and function, but their weight is uniform). The value-added standard is based on the elimination of all waste due to defective molds. The standard price of materials is 5 per pound. For sustaining engineering, the standard is 58% of current practical activity capacity. This standard is based on the fact that about 42% of the complaints have to do with design features that could have been avoided or anticipated by the company. Current practical capacity (at the end of 20X1) is defined by the following requirements: 6,000 engineering hours for each product group that has been on the market or in development for 5 years or less and 2,400 hours per product group of more than 5 years. Four product groups have less than 5 years experience, and 10 product groups have more. Each of the 24 engineers is paid a salary of 60,000. Each engineer can provide 2,000 hours of service per year. No other significant costs are incurred for the engineering activity. Actual materials usage for 20X1 was 25% above the level called for by the value-added standard; engineering usage was 46,000 hours. A total of 80,000 units of output were produced. John and the operational managers have selected some improvement measures that promise to reduce nonvalue-added activity usage by 40% in 20X2. Selected actual results achieved for 20X2 are as follows: The actual prices paid for materials and engineering hours are identical to the standard or budgeted prices. Required: 1. For 20X1, calculate the nonvalue-added usage and costs for materials usage and sustaining engineering. 2. CONCEPTUAL CONNECTION Using the budgeted improvements, calculate the expected activity usage levels for 20X2. Now, compute the 20X2 usage variances (the difference between the expected and actual values), expressed in both physical and financial measures, for materials and engineering. Comment on the companys ability to achieve its targeted reductions. In particular, discuss what measures the company must take to capture any realized reductions in resource usage.
- As manager of department B in MarIeys Manufacturing, based on the costs you identified in the previous exercise for further research, how does this impact the financial performance of your department, and what might be some questions you want to ask or solutions you might propose to Marleys management?Classify the following cost drivers as structural, executional, or operational. a. Number of plants b. Number of moves c. Degree of employee involvement d. Capacity utilization e. Number of product lines f. Number of distribution channels g. Engineering hours h. Direct labor hours i. Scope j. Product configuration k. Quality management approach l. Number of receiving orders m. Number of defective units n. Employee experience o. Types of process technologies p. Number of purchase orders q. Type and efficiency of layout r. Scale s. Number of functional departments t. Number of planning meetingsThe actions listed next are associated with either an activity-based operational control system or a traditional operational control system: a. Budgeted costs for the maintenance department are compared with the actual costs of the maintenance department. b. The maintenance department manager receives a bonus for beating budget. c. The costs of resources are traced to activities and then to products. d. The purchasing department is set up as a responsibility center. e. Activities are identified and listed. f. Activities are categorized as adding or not adding value to the organization. g. A standard for a products material usage cost is set and compared against the products actual materials usage cost. h. The cost of performing an activity is tracked over time. i. The distance between moves is identified as the cause of materials handling cost. j. A purchasing agent is rewarded for buying parts below the standard price set by the company. k. The cost of the materials handling activity is reduced dramatically by redesigning the plant layout. l. An investigation is undertaken to find out why the actual labor cost for the production of 1,000 units is greater than the labor standard allowed. m. The percentage of defective units is calculated and tracked over time. n. Engineering has been given the charge to find a way to reduce setup time by 75 percent. o. The manager of the receiving department lays off two receiving clerks so that the fourth-quarter budget can be met. Required: Classify the preceding actions as belonging to either an activity-based operational control system or a traditional control system. Explain why you classified each action as you did.
- Assume you have been hired by Hilton Hotels and Resorts. As part of your new role in the accounting department, you have been tasked to set up a responsibility accounting structure for the company. As your first task, your supervisor has asked you to give an example of a cost center, profit center, and an investment center within the Hilton organization. Your supervisor is a little unsure of the difference between a profit center and investment center and would like you to explain the difference.There are individuals who are under the impression that managerial accounting provides services mainly for manufacturing organizations. Are they correct? Explain.Stan is opening a coffee shop next to Big State University. He knows that controlling his costs will be important to the success of the shop. He will not be able to work all the hours the shop is open, so the employees will need some guidelines to perform their jobs correctly. After talking to an accounting professor, he decides he needs a standard cost system for his shop. Describe the process Stan should follow in setting his standards for materials and labor.
