Managerial Accounting - With Access
Managerial Accounting - With Access
3rd Edition
ISBN: 9781259847424
Author: Whitecotton
Publisher: MCG
bartleby

Concept explainers

Question
Chapter 1, Problem 21Q
To determine

Concept introduction:

Managerial Decision:

Decision making plays an important role in the management. The decisions taken by managers are called managerial decisions. Managerial Decisions are decisions taken by managers for the operations of a firm. These decisions include setting target growth rates, hiring or firing employees, and deciding what products to sell. Manager’s decisions are taken on the basis of quantitative as well as the qualitative measures. The managerial decision includes the decisions like make or buy, accept or reject new offers, sell or further process etc. These decisions are taken on the basis of relevant costs.

Relevant costs are the costs that are relevant for any decision making. Relevant costs are helpful for take managerial decisions like make or buy, accept or reject new offers, sell or further process etc.

Two basic types of the relevant costs are as follows:

  1. Out-of-pocket costs
  2. Opportunity costs

To indicate:

The two relevant and two irrelevant costs for the trip decision

Blurred answer
Students have asked these similar questions
You are trying to decide if you are going to drive or fly to San Diego, California for your upcoming vacation. Which of the following is irrelevant when deciding whether to drive or fly to San Diego?     Cost of plane ticket.     Cost of car insurance.     Wear and tear on your vehicle.     Cost of the gasoline.
Please refer to the attached scenario Which costs are relevant to Brad’s decision to purchase a new, larger boat?
Shanice works in finance for a small manufacturing company and is working on next year’s budget. She has been doing research to compare the cost of outsourcing some upcoming jobs versus the cost of purchasing the equipment to keep the jobs in-house. In what step in financial planning is Shanice involved? Multiple Choice developing financial statements for outside investors forecasting short-term financial needs establishing financial controls and tax policy forecasting long-term financial needs

Chapter 1 Solutions

Managerial Accounting - With Access

Ch. 1 - Prob. 11QCh. 1 - Prob. 12QCh. 1 - Why are businesses starting to incorporate...Ch. 1 - What factors does sustainability accounting...Ch. 1 - Think about your activities over the last week....Ch. 1 - Prob. 16QCh. 1 - Why is it important for managers to be able to...Ch. 1 - Prob. 18QCh. 1 - Prob. 19QCh. 1 - Explain the difference between relevant and...Ch. 1 - Prob. 21QCh. 1 - What are prime costs? Why have they decreased in...Ch. 1 - Prob. 23QCh. 1 - Why can't prime cost and conversion cost be added...Ch. 1 - Prob. 25QCh. 1 - Prob. 26QCh. 1 - Prob. 27QCh. 1 - Prob. 28QCh. 1 - Prob. 29QCh. 1 - Prob. 1MCCh. 1 - Prob. 2MCCh. 1 - Prob. 3MCCh. 1 - Prob. 4MCCh. 1 - Prob. 5MCCh. 1 - What is Garcia's total manufacturing cost? a....Ch. 1 - Prob. 7MCCh. 1 - What is Garcia's manufacturing overhead? a....Ch. 1 - Prob. 9MCCh. 1 - Which of the following would not be treated as a...Ch. 1 - MINI-EXERCISES Comparing Financial and Managerial...Ch. 1 - Prob. 4MECh. 1 - Prob. 5MECh. 1 - Prob. 6MECh. 1 - Prob. 8MECh. 1 - Prob. 9MECh. 1 - Prob. 10MECh. 1 - Identifying Direct and Indirect Costs for a...Ch. 1 - Prob. 12MECh. 1 - Identify sustainability issues affecting the...Ch. 1 - Classifying Costs Seth's Skateboard Company incurs...Ch. 1 - Calculation Costs Cotton White, Inc., makes...Ch. 1 - Prob. 7ECh. 1 - Prob. 8ECh. 1 - Classifying Costs Blockett Company makes...Ch. 1 - Prob. 10ECh. 1 - Prob. 12ECh. 1 - Prob. 13ECh. 1 - Explaining Effects of Cost Misclassification Donna...Ch. 1 - Prob. 4.1GAPCh. 1 - Prob. 4.2GAPCh. 1 - Prob. 4.3GAPCh. 1 - Prob. 3.1GBPCh. 1 - Prob. 3.2GBPCh. 1 - Classifying Costs, Calculating Total Costs, and...Ch. 1 - Prob. 4.2GBPCh. 1 - Classifying Costs, Calculating Total Costs, and...
Knowledge Booster
Accounting
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • You are trying to decide whether to take a job after you graduate or go onto graduate school. Consider the following questions as you make your decision. A. Which of these costs, for the most part, would be relevant (R), and which would be irrelevant (IR)? Cost of your Undergraduate education Salary with an undergraduate degree Salary with both an undergraduate degree and a graduate degree Rent Car Insurance Graduate school tuition and fees Food costs Moving expenses B. Which of these costs could have a differential amount that is relevant/irrelevant, depending upon the location and or policies of your new job?
    Shanice works in finance for a small manufacturing company and is working on next year’s budget. She has been doing research to compare the cost of outsourcing some upcoming jobs versus the cost of purchasing the equipment to keep the jobs in-house. In what step in financial planning is Shanice involved?
    Gordon Grimes, a self-employed consultant near Atlanta, received an invitation to visit a prospective client in Seattle. A few days later, he received an invitation to make a presentation to a prospective client in Denver. He decided to combine his visits, traveling from Atlanta to Seattle, Seattle to Denver, and Denver to Atlanta. Grimes received offers for his consulting services from both companies. Upon his return, he decided to accept the engagement in Denver. He is puzzled over how to allocate his travel costs between the two clients. He has collected the following data for regular round-trip fares with no stopovers: Atlanta to Seattle = $600 Atlanta to Denver = $400 Grimes paid $900 for his three-leg flight (Atlanta–Seattle, Seattle–Denver, Denver–Atlanta). In addition, he paid $45 each way ($90 total) for limousines from his home to Atlanta Airport and back when he returned. Q. How should Grimes allocate the $900 airfare between the clients in Seattle and Denver. Which method…
  • Gordon Grimes, a self-employed consultant near Atlanta, received an invitation to visit a prospective client in Seattle. A few days later, he received an invitation to make a presentation to a prospective client in Denver. He decided to combine his visits, traveling from Atlanta to Seattle, Seattle to Denver, and Denver to Atlanta. Grimes received offers for his consulting services from both companies. Upon his return, he decided to accept the engagement in Denver. He is puzzled over how to allocate his travel costs between the two clients. He has collected the following data for regular round-trip fares with no stopovers: Atlanta to Seattle = $600 Atlanta to Denver = $400 Grimes paid $900 for his three-leg flight (Atlanta–Seattle, Seattle–Denver, Denver–Atlanta). In addition, he paid $45 each way ($90 total) for limousines from his home to Atlanta Airport and back when he returned. Q. How should Grimes allocate the $90 limousine charges between the clients in Seattle and Denver?
    Gordon Grimes, a self-employed consultant near Atlanta, received an invitation to visit a prospective client in Seattle. A few days later, he received an invitation to make a presentation to a prospective client in Denver. He decided to combine his visits, traveling from Atlanta to Seattle, Seattle to Denver, and Denver to Atlanta. Grimes received offers for his consulting services from both companies. Upon his return, he decided to accept the engagement in Denver. He is puzzled over how to allocate his travel costs between the two clients. He has collected the following data for regular round-trip fares with no stopovers: Atlanta to Seattle = $600 Atlanta to Denver = $400 Grimes paid $900 for his three-leg flight (Atlanta–Seattle, Seattle–Denver, Denver–Atlanta). In addition, he paid $45 each way ($90 total) for limousines from his home to Atlanta Airport and back when he returned. Q. How should Grimes allocate the $900 airfare between the clients in Seattle and Denver using (a) the…
    Hudson Corporation is considering three options for managing its data warehouse: continuing with its own staff, hiring an outside vendor to do the managing, or using a combination of its own staff and an outside vendor. The cost of the operation depends on future demand. The annual cost of each option (in thousands of dollars) depends on demand as follows: If the demand probabilities are 0.2, 0.5, and 0.3, which decision alternative will minimize the expected cost of the data warehouse? What is the expected annual cost associated with that recommendation? Construct a risk profile for the optimal decision in part (a). What is the probability of the cost exceeding $700,000?
  • Kurt and Sam are planning to open a small shop selling lunch boxes, which they will prepare on the premises. After experimenting for some weeks Kurt and Sam have arrived at two possible lunch box sets, which they think will be popular: Lunch Box A and Lunch Box B. As they can only prepare one lunch box on the premises, they need to decide, which one to choose. a) What is the break-even point for both options? b) What profit would the expected sales of each option achieve? c) How many boxes of each option would Kurt and Sam have to sell if they wanted to achieve a profit of £800. d) Kurt and Sam are considering a selling price increase of 10% for both lunch box options. How many boxes of each option would they have to sell to achieve a target profit of £900? e)Based on the information calculated above explain, which option Kurt and Sam should choose: Lunch Box A or Lunch Box B. You should also consider if the information you calculated is sufficient for making an informed decision.
    ​Emily's Bakery's customers have asked her to open a second location in a neighboring town offering the same menu as the original location. If Emily decides to do​ this, she will be following a​ ________ strategy.
    Ms. Faye Santos is an accounting major at a Midwestern state university located approximately 60 miles  from a major city. Ms. Faye Santos is an accounting major at a Midwestern state university located approximately 60 miles  from a major city. Many of the students attending the university are from the metropolitan areas and  visit their homes regularly on the weekends. Faye, an entrepreneur at heart, realizes that few good  commuting alternatives are available for students doing weekend travel. She believes that a weekend  commuting service could be organized and run profitably from several suburban and downtown  shopping mall locations. Faye has gathered the following investment information. Five used vans would cost a total of $75,000 to purchase and would have a three-year useful life with negligible salvage value. Faye plans to use straight-line depreciation. Ten drivers would have to be employed at a total payroll expense of $48,000. 3. Other annual out-of-pocket expenses…
  • Bill has just returned from a duck hunting trip. He has brought home eight ducks. Bill’s friend, John, disapproves of duck hunting, and to discourage Bill from further hunting, John has presented him with the following cost estimate per duck:   1. Assuming that the duck hunting trip Bill has just completed is typical, what costs are relevant to a decision as to whether Bill should go duck hunting again this season?2. Suppose that Bill gets lucky on his next hunting trip and shoots 10 ducks in the amount of time it took him to shoot 8 ducks on his last trip. How much would it have cost him to shoot the last two ducks if costs are estimated per duck? Explain.3. Which costs are relevant in a decision of whether Bill should give up hunting? Explain.
    Lon Timur is an accounting major at a midwestern state university located approximately 60 miles from a major city. Many of the students attending the university are from the metropolitan area and visit their homes regularly on the weekends. Lon, an entrepreneur at heart, realizes that few good commuting alternatives are available for students doing weekend travel. He believes that a weekend commuting service could be organized and run profitably from several suburban and downtown shopping mall locations. Lon has gathered the following investment information. 1.   Five used vans would cost a total of $75,551 to purchase and would have a 3-year useful life with negligible salvage value. Lon plans to use straight-line depreciation.   2.   Ten drivers would have to be employed at a total payroll expense of $48,300.   3.   Other annual out-of-pocket expenses associated with running the commuter service would include Gasoline $16,200, Maintenance $3,300, Repairs $3,800, Insurance…
    Penny is compiling a list of costs incurred so far on a project. She must categorize these costs so that she can present the amount of direct cost incurred. Which of the following should Penny include in this list?This type of question contains radio buttons and checkboxes for selection of options. Use Tab for navigation and Enter or space to select the option. option A Expense incurred in meeting the regulatory standards for the company option B Benefits for employees in the organization option C Travel expenses to the customer’s office option D Costs incurred for maintaining coffee stations around the office.
    • SEE MORE QUESTIONS
    Recommended textbooks for you
  • CONCEPTS IN FED.TAX., 2020-W/ACCESS
    Accounting
    ISBN:9780357110362
    Author:Murphy
    Publisher:CENGAGE L
    Principles of Accounting Volume 2
    Accounting
    ISBN:9781947172609
    Author:OpenStax
    Publisher:OpenStax College
    Essentials of Business Analytics (MindTap Course ...
    Statistics
    ISBN:9781305627734
    Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson
    Publisher:Cengage Learning
  • Personal Finance
    Finance
    ISBN:9781337669214
    Author:GARMAN
    Publisher:Cengage
    Pfin (with Mindtap, 1 Term Printed Access Card) (...
    Finance
    ISBN:9780357033609
    Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
    Publisher:Cengage Learning
  • CONCEPTS IN FED.TAX., 2020-W/ACCESS
    Accounting
    ISBN:9780357110362
    Author:Murphy
    Publisher:CENGAGE L
    Principles of Accounting Volume 2
    Accounting
    ISBN:9781947172609
    Author:OpenStax
    Publisher:OpenStax College
    Essentials of Business Analytics (MindTap Course ...
    Statistics
    ISBN:9781305627734
    Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson
    Publisher:Cengage Learning
    Personal Finance
    Finance
    ISBN:9781337669214
    Author:GARMAN
    Publisher:Cengage
    Pfin (with Mindtap, 1 Term Printed Access Card) (...
    Finance
    ISBN:9780357033609
    Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
    Publisher:Cengage Learning