MANAGERIAL ACCOUNTING FUND. W/CONNECT
5th Edition
ISBN: 9781259688713
Author: Wild
Publisher: MCG
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter 8, Problem 7BTN
To determine
Concept introduction:
Variance: The term variance is used under standard costing system. Variance is actually the difference between the standard amount and actual amount. The variance can be calculated for costs and revenues.
To discuss:
The given statement about variances.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Ted Lozano is a cost accountant for Company C. Fred Lopez, Vice President of Marketing, has asked Ted to meet with representatives of Company C’s major competitor to discuss product cost data. Fred indicates that the sharing of these data will enable Company C to determine a fair and equitable price for its products.
Instructions:
Would it be ethical for Ted to attend the meeting and share the relevant cost data? Explain your answer.
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 Sys-tems 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.
Data Master is a computer software consulting company. Its three major functional areas are computer programming, information systems consulting, and software training. Cynthia Moore, a pricing analyst in the Accounting Department, has been asked to develop total costs for the functional areas. These costs will be used as a guide in pricing a new contract. In computing these costs, Moore is considering three different methods of allocating overhead costs-the direct method, the step method, and the reciprocal method. Moore assembled the following data on overhead from its two service departments, the Information Systems Department and the Facilities Department.
Service Departments
User Departments
Info Systems
Facilities
Computer Program
Consult
Training
Total
Budgeted Overhead
$
50,000
$
25,000
$
75,000
$
110,000
$
85,000
$
345,000
Info Systems (hrs.)
400
1,100
600
900
3,000
Facilities (Square feet)
200,000…
Chapter 8 Solutions
MANAGERIAL ACCOUNTING FUND. W/CONNECT
Ch. 8 - Prob. 1MCQCh. 8 - Prob. 2MCQCh. 8 - Prob. 3MCQCh. 8 - A Company’s standard for a unit of its single...Ch. 8 - Prob. 5MCQCh. 8 - Prob. 1DQCh. 8 - Prob. 2DQCh. 8 - Prob. 3DQCh. 8 - Prob. 4DQCh. 8 - Prob. 5DQ
Ch. 8 - Prob. 6DQCh. 8 - Prob. 7DQCh. 8 - Prob. 8DQCh. 8 - Prob. 9DQCh. 8 - Prob. 10DQCh. 8 - Prob. 11DQCh. 8 - Prob. 12DQCh. 8 - Prob. 13DQCh. 8 - Prob. 14DQCh. 8 - Prob. 15DQCh. 8 - Prob. 16DQCh. 8 - Prob. 1QSCh. 8 - Prob. 2QSCh. 8 - Prob. 3QSCh. 8 - Prob. 4QSCh. 8 - Prob. 5QSCh. 8 - Prob. 6QSCh. 8 - Managers use management by exception for control...Ch. 8 - Tercer report the following on one of its...Ch. 8 - Prob. 9QSCh. 8 - Materials cost variances P2 Juan Company’s output...Ch. 8 - The following information describes a companys...Ch. 8 - Prob. 12QSCh. 8 - Fogel Co. expects 116,000 units for the year. The...Ch. 8 - AizPro Corp, reports the following for November....Ch. 8 - Refer to information in QS 8-14. Compute the...Ch. 8 - Prob. 16QSCh. 8 - A Preparing overhead entries P5 Refer to the...Ch. 8 - Mosaic Company applies overhead using machine...Ch. 8 - Refer to the information from QS 8-18. Compute the...Ch. 8 - Farad, Inc., specializes in selling used SUVs....Ch. 8 - In a recent year, BMW sold 216,944 of its 1 series...Ch. 8 - JPAK Company manufactures and sells mountain...Ch. 8 - Prob. 2ECh. 8 - Prob. 3ECh. 8 - Prob. 4ECh. 8 - Prob. 5ECh. 8 - Prob. 6ECh. 8 - Prob. 7ECh. 8 - Exercise 21-8 Standard unit cost; total variance...Ch. 8 - Prob. 9ECh. 8 - Prob. 10ECh. 8 - Prob. 11ECh. 8 - Prob. 12ECh. 8 - Prob. 13ECh. 8 - Refer to Exercise 8-13. Hart Company records...Ch. 8 - Prob. 15ECh. 8 - After evaluating Null Companys manufacturing...Ch. 8 - Prob. 17ECh. 8 - Prob. 18ECh. 8 - Exercise 21-19 Computation of total overhead rate...Ch. 8 - Prob. 20ECh. 8 - Prob. 21ECh. 8 - Prob. 22ECh. 8 - Prob. 23ECh. 8 - Phoenix Companys 2015 master budget included the...Ch. 8 - Prob. 2PSACh. 8 - Prob. 3PSACh. 8 - Prob. 4PSACh. 8 - Prob. 5PSACh. 8 - Prob. 6PSACh. 8 - Tohono Companys 2015 master budget included the...Ch. 8 - Refer to the information in Problem 8-1B. Tohono...Ch. 8 - Prob. 3PSBCh. 8 - Prob. 4PSBCh. 8 - Prob. 5PSBCh. 8 - Problem 21-6BA Materials, labor, and overhead...Ch. 8 - (This serial problem began in Chapter 1 and...Ch. 8 - Prob. 1BTNCh. 8 - Prob. 2BTNCh. 8 - Prob. 3BTNCh. 8 - The reason we use the words favorable when...Ch. 8 - Prob. 5BTNCh. 8 - Prob. 6BTNCh. 8 - Prob. 7BTNCh. 8 - Prob. 8BTNCh. 8 - Prob. 9BTN
Knowledge Booster
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
- 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. Instructions: Would it be ethical for Aaron to attend the meeting and share the relevant cost data? Explain your answer using150 words or morearrow_forwardYou are Accountant of the company and you are being asked to submit a report to the Managementregarding following matters:1) Briefly discuss the different cost classifications which are relevant for a business like RaajjeFresh.2) Using the information in Annex 1, identify the Fixed Costs and Variable Costs, showing them ina table.3) Using the table prepared in (2) above, prepare a break-even chart for the given period (withclear labels).4) Using the information in Annex 2, prepare an overhead summary, showing clearly the totaloverheads for each department. Prepare the following calculations using the total overhead foreach department:i. Calculate the Overhead Absorption Rate (OAR) based on Labour hours.ii. Calculate Overhead Absorption Rate (OAR) based on number of units (for 3000 units)iii. Calculate the Total Cost per unit from the available information (use OAR based on costper unit)iv. Which of the above absorption bases is more suitable for Raajje Fresh?arrow_forwardData Master is a computer software consulting company. Its three major functional areas are computer programming, information systems consulting, and software training. Cynthia Moore, a pricing analyst in the Accounting Department, has been asked to develop total costs for the functional areas. These costs will be used as a guide in pricing a new contract. In computing these costs, Moore is considering three different methods of allocating overhead costs: the direct method, the step method, and the reciprocal method. Moore assembled the following data on overhead from its two service departments, the Information Systems Department and the Facilities Department. Service Departments User Departments Info Systems Facilities Computer Program Consulting $ 50,000 $110,000 600 $25,000 400 $75,000 1,100 400,000 200,000 600,000 information systems are allocated on the basis of hours of computer usage; facilities are allocated on the basis of floor space. Required: Allocate the service…arrow_forward
- 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.arrow_forwardRandy 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.arrow_forwardRecently Spartans Inc. switched from using the FIFO method of process costing to the weighted- average method of process costing. When asked about the impact on profitability, Andrew, the chief accountant, shrugged and said "I don't know, I'm too busy. Look it up yourself." and hands you his calculations. Which, if any, ethical standards did Andrew violate? O Integrity - failure to mitigate conflicts of interest. O Credibility - failure to report any delays or deficiencies in information. O Confidentiality - failure to refrain from using information for an unethical advantage. O Confidentiality - disclosure of confidential information without authorization or legal requirement. O Integrity - failure to abstain from activities that might discredit the profession. O Competence - failure to provide information that is accurate, clear, and concise.arrow_forward
- Chrom Company manufactures two models, the XL and RD. It also has two departments, Assembly and Finishing. The company wants to assign budgeted overhead costs to its two different models to better understand the profitability of each model. The Tableau Dashboard provides data for our analysis. ***My table is wrong, please give me the right answers for it.**arrow_forwardConsumer Focus is a marketing research firm that organizes focus groups for consumerproduct companies. A Consumer Focus Staff member attends each session to ensure that all the logistical aspects run smoothly”In light to the above statement, classify each of the following cost items as:a. Direct or Indirect (D or I) costs with respect to each individual focus group.b. Variable or Fixed (V or F) costs with respect to how the total costs of Consumer Focus change as the number of focus groups conducted changes. (If in doubt, select on the basis of whether the total costs will change substantially if there is a large change in the number of groups conducted.)You will have two answers (D or I; V or F) for each of the following items followed by a short interpretation note. Use the sample answer table and continue from Cost Item BCost ItemA. Payment to individual in each focus group to provide comments on new products.B. Annual subscription of Consumer Focus to Consumer Reports magazine.C.…arrow_forwardAndrew Jarvis started his manufacturing business earlier this year and has been preparing management accounts using variable (marginal) costing. He has approached you as a Certified Chartered Management Accountant, to help his finance team prepare annual financial statements. As part of your discussions with the company’s finance team, you mentioned that you will use absorption costing to prepare the financial statements. Peter Cullen, the Finance Manager, said that he was unfamiliar with this method of costing and has asked you for more information about it.REQUIREMENT:Draft a Report for Peter Cullen that:a) Describes and explains the basis of variable (marginal) and absorption costing systems.b) Explains the effect on profit of using variable (marginal) and absorption costing. c) Outlines TWO advantages and TWO disadvantages of both variable (marginal) AND absorption costing systems.arrow_forward
- You are the new cost accountant for ABX Corporation. After careful review of the company’s operations you have been tasked to determine the company’s break-even point, the numbers sold to meet the company’s target profit and contribution income statement for both outcomes. Management has also asked that you provide the pros and cons for variable, traditional and activity-based costing method. After providing the pros and cons of each method recommend one method for the company’s use and support your discussion.Company’s Data:ABX Corporation sold 450,000 units at $65/unit. Fixed cost are $8,500,000 per year. Variable costs are $30 per unit. ABX Corporation desires a target profit of $3,500,000 per year.arrow_forwardYou are the new cost accountant for ABX Corporation. After careful review of the company’s operations you have been tasked to determine the company’s break-even point, the numbers sold to meet the company’s target profit and contribution income statement for both outcomes. Management has also asked that you provide the pros and cons for variable, traditional and activity-based costing method. After providing the pros and cons of each method recommend one method for the company’s use and support your discussion. Company’s Data: ABX Corporation sold 450,000 units at $75/unit. Fixed cost are $5,300,000 per year. Variable costs are $45 per unit. ABX Corporation desires a target profit of $6,500,000 per year.arrow_forwardAndrew Jarvis started his manufacturing business earlier this year and has been preparing management accounts using variable (marginal) costing. He has approached you as a Certified Chartered Management Accountant, to help his finance team prepare annual financial statements. As part of your discussions with the company’s finance team, you mentioned that you will use absorption costing to prepare the financial statements. Peter Cullen, the Finance Manager, said that he was unfamiliar with this method of costing and has asked you for more information about it. Draft a Report for Peter Cullen that:a) Describes and explains the basis of variable (marginal) and absorption costing systems. b) Explains the effect on profit of using variable (marginal) and absorption costing. c) Outlines TWO advantages and TWO disadvantages of both variable (marginal) AND absorption costing systems.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College PubCornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage Learning
Managerial Accounting
Accounting
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:South-Western College Pub
Cornerstones of Cost Management (Cornerstones Ser...
Accounting
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Cengage Learning
What is variance analysis?; Author: Corporate finance institute;https://www.youtube.com/watch?v=SMTa1lZu7Qw;License: Standard YouTube License, CC-BY