Horngren's Cost Accounting Plus MyLab Accounting with Pearson eText -- Access Card Package (16th Edition)
16th Edition
ISBN: 9780134642444
Author: Srikant M. Datar, Madhav V. Rajan
Publisher: PEARSON
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Chapter 17, Problem 17.47P
Benchmarking, ethics. Amanda McNall is the corporate controller of Scott Quarry. Scott Quarry operates 12 rock-crushing plants in Scott County, Kentucky, that process huge chunks of limestone rock extracted from underground mines.
Given the competitive landscape for pricing, Scott’s managers pay close attention to costs. Each plant uses a process-costing system, and at the end of every quarter, each plant manager submits a production report and a production-cost report. The production report includes the plant manager’s estimate of the percentage of completion of the ending work in process as to direct materials and conversion costs, as well as the level of processed limestone inventory. McNall uses these estimates to compute the cost per equivalent unit of work done for each input for the quarter. Plants are ranked from 1 to 12, and the three plants with the lowest cost per equivalent unit for direct materials and conversion costs are each given a bonus and recognized in the company newsletter.
McNall has been pleased with the success of her benchmarking program. However, she has recently received anonymous e-mails that two plant managers have been manipulating their monthly estimates of percentage of completion in an attempt to obtain the bonus.
- 1. Why and how might managers manipulate their monthly estimates of percentage of completion and level of inventory?
- 2. McNall’s first reaction is to contact each plant controller and discuss the problem raised by the anonymous communications. Is that a good idea?
- 3. Assume that each plant controller’s primary reporting responsibility is to the plant manager and that each plant controller receives the phone call from McNall mentioned in requirement 2. What is the ethical responsibility of each plant controller (a) to Amanda McNall and (b) to Scott Quarry in relation to the equivalent-unit and inventory information each plant provides?
- 4. How might McNall learn whether the data provided by particular plants are being manipulated?
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Benchmarking, ethics. Amanda McNall is the corporate controller of Scott Quarry. Scott Quarry operates 12 rock-crushing plants in Scott County, Kentucky, that process huge chunks of limestone rock extracted from underground mines. Given the competitive landscape for pricing, Scott’s managers pay close attention to costs. Each plant uses a process-costing system, and at the end of every quarter, each plant manager submits a production report and a production-cost report. The production report includes the plant manager’s estimate of the percentage of completion of the ending work in process as to direct materials and conversion costs, as well as the level of processed limestone inventory. McNall uses these estimates to compute the cost per equivalent unit of work done for each input for the quarter. Plants are ranked from 1 to 12, and the three plants with the lowest cost per equivalent unit for direct materials and conversion costs are each given a bonus and recognized in the company…
Benchmarking, ethics. Amanda McNall is the corporate controller of Scott Quarry. Scott Quarry operates 12 rock-crushing plants in Scott County, Kentucky, that process huge chunks of limestone rock extracted from underground mines. Given the competitive landscape for pricing, Scott’s managers pay close attention to costs. Each plant uses a process-costing system, and at the end of every quarter, each plant manager submits a production report and a production-cost report. The production report includes the plant manager’s estimate of the percentage of completion of the ending work in process as to direct materials and conversion costs, as well as the level of processed limestone inventory. McNall uses these estimates to compute the cost per equivalent unit of work done for each input for the quarter. Plants are ranked from 1 to 12, and the three plants with the lowest cost per equivalent unit for direct materials and conversion costs are each given a bonus and recognized in the company…
Benchmarking, ethics. Amanda McNall is the corporate controller of Scott Quarry. Scott Quarry operates 12 rock-crushing plants in Scott County, Kentucky, that process huge chunks of limestone rock extracted from underground mines. Given the competitive landscape for pricing, Scott’s managers pay close attention to costs. Each plant uses a process-costing system, and at the end of every quarter, each plant manager submits a production report and a production-cost report. The production report includes the plant manager’s estimate of the percentage of completion of the ending work in process as to direct materials and conversion costs, as well as the level of processed limestone inventory. McNall uses these estimates to compute the cost per equivalent unit of work done for each input for the quarter. Plants are ranked from 1 to 12, and the three plants with the lowest cost per equivalent unit for direct materials and conversion costs are each given a bonus and recognized in the company…
Chapter 17 Solutions
Horngren's Cost Accounting Plus MyLab Accounting with Pearson eText -- Access Card Package (16th Edition)
Ch. 17 - Give three examples of industries that use...Ch. 17 - In process costing, why are costs often divided...Ch. 17 - Explain equivalent units. Why are equivalent-unit...Ch. 17 - What problems might arise in estimating the degree...Ch. 17 - Name the five steps in process costing when...Ch. 17 - Name the three inventory methods commonly...Ch. 17 - Describe the distinctive characteristic of...Ch. 17 - Describe the distinctive characteristic of FIFO...Ch. 17 - Prob. 17.9QCh. 17 - Identify a major advantage of the FIFO method for...
Ch. 17 - Identify the main difference between journal...Ch. 17 - The standard-costing method is particularly...Ch. 17 - Why should the accountant distinguish between...Ch. 17 - Transferred-in costs are those costs incurred in...Ch. 17 - Theres no reason for me to get excited about the...Ch. 17 - Assuming beginning work in process is zero, the...Ch. 17 - The following information concerns Westheimer...Ch. 17 - Sepulveda Corporation uses a process costing...Ch. 17 - Penn Manufacturing Corporation uses a...Ch. 17 - Kimberly Manufacturing uses a process-costing...Ch. 17 - Equivalent units, zero beginning inventory....Ch. 17 - Journal entries (continuation of 17-21). Refer to...Ch. 17 - Zero beginning inventory, materials introduced in...Ch. 17 - Weighted-average method, equivalent units. The...Ch. 17 - Weighted-average method, assigning costs...Ch. 17 - FIFO method, equivalent units. Refer to the...Ch. 17 - FIFO method, assigning costs (continuation of...Ch. 17 - Operation costing. The Carter Furniture Company...Ch. 17 - Weighted-average method, assigning costs....Ch. 17 - FIFO method, assigning costs. 1. Do Exercise 17-29...Ch. 17 - Transferred-in costs, weighted-average method....Ch. 17 - Transferred-in costs, FIFO method. Refer to the...Ch. 17 - Operation costing. Egyptian Spa produces two...Ch. 17 - Standard-costing with beginning and ending work in...Ch. 17 - Equivalent units, comprehensive. Louisville Sports...Ch. 17 - Weighted-average method. Hoffman Company...Ch. 17 - Journal entries (continuation of 17-36). Required...Ch. 17 - FIFO method (continuation of 17-36). 1. Do Problem...Ch. 17 - Transferred-in costs, weighted-average method...Ch. 17 - Transferred-in costs, FIFO method (continuation of...Ch. 17 - Weighted-average method. McKnight Handcraft is a...Ch. 17 - FIFO method (continuation of 17-41). 1. Complete...Ch. 17 - Transferred-in costs, weighted-average method....Ch. 17 - Transferred-in costs, FIFO method. Refer to the...Ch. 17 - Standard costing, journal entries. The Warner...Ch. 17 - Multiple processes or operations, costing. The...Ch. 17 - Benchmarking, ethics. Amanda McNall is the...
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