Introduction: A cost report involves information about spending and expenditure on different activities of the business. Through this cost report, it is easy to inform the client and disclose the projected and actual costs of the project. And, it is useful to get information about the profitability of the project.
Given Information: Person T got agreed to go along with reporting the favorable variance which is $21,000 for industrial engineering in the final report but the bill was not received yet. Therefore, it can mislead and exclude the final cost of the contract. This practice violated the credibility standard of the profession which is considered by the (IMA) Institute of
The acts of person T in response to the given situation.
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Chapter 9 Solutions
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- Types of Responsibility Centers Consider each of the following independent scenarios: a. Terrin Belson, plant manager for the laser printer factory of Compugear Inc., brushed his hair back and sighed. December had been a bad month. Two machines had broken down, and some factory production workers (all on salary) were idled for part of the month. Materials prices increased, and insurance premiums on the factory increased. No way out of it; costs were going up. He hoped that the marketing vice president would be able to push through some price increases, but that really wasnt his department. b. Joanna Pauly was delighted to see that her ROI figures had increased for the third straight year. She was sure that her campaign to lower costs and use machinery more efficiently (enabling her factories to sell several older machines) was the reason why. Joanna planned to take full credit for the improvements at her semiannual performance review. c. Gil Rodriguez, sales manager for ComputerWorks, was not pleased with a memo from headquarters detailing the recent cost increases for the laser printer line. Headquarters suggested raising prices. Great, thought Gil, an increase in price will kill sales and revenue will go down. Why cant the plant shape up and cut costs like every other company in America is doing? Why turn this into my problem? d. Susan Whitehorse looked at the quarterly profit and loss statement with disgust. Revenue was down, and cost was upwhat a combination! Then she had an idea. If she cut back on maintenance of equipment and let a product engineer go, expenses would decreaseperhaps enough to reverse the trend in income. e. Shonna Lowry had just been hired to improve the fortunes of the Southern Division of ABC Inc. She met with top staff and hammered out a 3-year plan to improve the situation. A centerpiece of the plan is the retiring of obsolete equipment and the purchasing of state-of-the-art, computer-assisted machinery. The new machinery would take time for the workers to learn to use, but once that was done, waste would be virtually eliminated. Required: For each of the above independent scenarios, indicate the type of responsibility center involved (cost, revenue, profit, or investment).arrow_forwardhelp mearrow_forwardIf possible, state the department and job title of the person(s) carrying out these actions. Scenario outline Company structure This is an organisation with 2,000 weekly paid staff and 175 monthly paid office- based staff. The payroll is currently processed in-house. This is a complex payroll due to the weekly paid staff having several variances. There have been a number of recent incidents which have resulted in a high volume of errors. Consequently, the company is now considering outsourcing its payroll to a payroll service provider that offers a fully managed service. The 2,000 weekly staff are paid on a Friday with the 175 monthly paid staff paid on the last working day of the month. The payroll department has a manager who splits their time between working on the two payrolls with their remaining time spent on general management tasks. There are five payroll officers working full time on the weekly payroll and one payroll officer responsible for the monthly payroll. There is a…arrow_forward
- ! Required information [The following information applies to the questions displayed below.] Totals Arctica manufactures snowmobiles and ATVs. These products are made in different departments, and each department has its own manager. Each responsibility performance report includes only those costs that the department manager can control: direct materials, direct labor, supplies used, and utilities. Budget For Year Ended December 31 Direct materials Direct labor Department manager salaries Supplies used Utilities Rent Totals Snowmobile $ 19,880 10,800 4,700 3,740 400 6,100 $ 45,620 Prepare a responsibility accounting performance report for the ATV department. Note: Under budget amounts should be indicated by a minus sign. Responsibility Accounting Performance Report Manager, ATV Department For Year Ended December 31 Budgeted Controllable Costs ATV $ 27,900 20,900 5,600 940 580 6,700 $ 62,620 Actual Over (Under) Budget Actual Snowmobile $ 19,820 11,100 4,800 3,570 370 5,700 $ 45,360 ATV…arrow_forwardQUESTION 2 Appiah and Co. Ltd is a medium size company that have expertise in the manufacturing of burglar proof doors for customers. It has three production departments through which all jobs are processed, namely, Assembling, Welding and Finishing departments. The following data relates to the year ended 31st December, 2021: Budgeted Data: Finishing Welding 118,800 Assembling 84,424 Overheads (GH) 89,320 Direct labour hours 15,400 Machine hours 6,920 7,200 Job FAA01 was undertaken during the last month of the year recording the following: Direct materials cost GH¢ 38,000 Direct labour: Assembling 460 hours @ GH¢9/hr Welding 550 hours @ GH¢9/hr Finishing 1350hours @ GH¢8/hr Trial and testing cost of GH¢7,500 is incurred on each job. Production overheads (hours): Assembling 445 Welding 540 Finishing 1350 It is company policy to make a mark-up of 50% of profit on each job. Required: i) Compute the relevant overhead absorption rate for each department for the year ended 31st December,…arrow_forwardMateriality Joseph Knapp, a newly hired accountant wanting to impress his boss, stayed late one night to analyze the office supplies expense. He determined the cost by month for the previous 12 months of each of the following: computer paper, copy paper, fax paper, pencils and pens, notepads, postage, stationery, and miscellaneous items. Required What did Joseph think his boss would learn from this information? What action might be taken as a result of knowing it? Would this information be more relevant if Joseph worked for a hardware store or for a real estate company? Discuss.arrow_forward
- Required information [The following information applies to the questions displayed below.] Arctica manufactures snowmobiles and ATVS. These products are made in different departments, and each department has its own manager. Each responsibility performance report includes only those costs that the department manager can control: direct materials, direct labor, supplies used, and utilities. Budget For Year Ended December 31 Direct materials Direct labor Totals Department manager salaries Supplies used Utilities Rent Totals Snowmobile $ 19,810 10,700 ▸ 4,600 3,630 Controllable Costs Responsibility Accounting Performance Report Manager, Snowmobile Department For Year Ended December 31 Budgeted $ 390 6,000 $ 45,130 Prepare a responsibility accounting performance report for the snowmobile department. Note: Under budget amounts should be indicated by a minus sign. 0 $ ATV $ 27,800 20,800 5,500 Actual 930 570 6,600 $ 62,200 Actual Snowmobile $ 19,720 10,990 4,700 3,470 360 5,600 $ 44,840 Over…arrow_forwardComprehensive Problem 5 (Algo) [The following information applies to the questions displayed below.] The Gilster Company, a machine tooling firm, has several plants. One plant, located in St. Cloud, Minnesota, uses a job order costing system for its batch production processes. The St. Cloud plant has two departments through which most jobs pass. Plant-wide overhead, which includes the plant manager's salary, accounting personnel, cafeteria, and human resources, is budgeted at $300,000. During the past year, actual plantwide overhead was $244,000. Each department's overhead consists primarily of depreciation and other machine-related expenses. Selected budgeted and actual data from the St. Cloud plant for the past year are as follows. Budgeted department overhead (excludes plantwide overhead) Actual department overhead Expected total activity: Direct labor hours Machine-hours Actual activity: Direct labor hours Machine-hours Department A Department B $ 567,000 585,000 $ 109,200 132,000…arrow_forward7-7 Calculating traditional and ABC overhead rates (LO 2) Eric Parker has been studying his department's profitability reports for the past six months. He has just completed a managerial accounting course and is beginning to question the company's approach to allocating overhead to products based on machine hours. The current department overhead budget of $1,140,000 is based on 40,000 machine hours. In an initial analysis of overhead costs, Eric has identified the following activity cost pools. Cost Pool Expected Cost Expected Activities Product assembly $ 600,000 40,000 machine hours Machine setup and calibration 320,000 2,000 setups Product inspection 90,000 1,500 batches Raw materials storage 130,000 500,000 pounds $1,140,000 Required a.Calculate the company's overhead rate based on machine hours. b.Calculate the company's overhead rates using the proposed activity-based costing pools.arrow_forward
- Not Graded(Please explain in A.B.C etc Format)Please give realistic, answers so I can understand.Thank You!Porter Corporation has just hired Bill Harlow as its new controller. Although Harlow has had little formal accounting training, he professes to be highly experienced having learned accounting "the hard way" in the field. At the end of his first months work, Harlow prepared the following performance report: Porter CorporationPeformance reportFor the moth June, 2018 Total Actual Cost Total Budgeted Costs Variances Direct Materials 216,630 237,600 20,970 (F) Direct Labor 119,340 132,000 12,660 (F) Variable Overhead 63,000 66,000 3,000(F) Fixed Overhead 184,00 184,00 582,970 619,000 36,630 (F) In the presentation at Porters month end management meeting, Harlow indicated that things were going "fantastically." the figure indicate, he said, "that the firm is beating its budget in all cost categories. " This good news made everyone at the meeting happy and…arrow_forward7. The table below illustrates the costs that have been recorded in a factory manufacturing electrical wires. Costs of Quality Inspection of Incoming Raw Materials Training of Personnel Repairing Products within Warranty Process Planning Scrap Costs Final Goods Inspection Rework, e.g., fixing a defect Litigation What are the costs of prevention? a. $10,000 b. $9,000 c. $8,200 d. $9,700 e. $11,500 Amount $1,500 $2,000 $8,000 $7,000 $3,200 $6,500 $5,000 $6,000arrow_forward* 00 %24 %24 D. Check my work mode : This shows what is correct or incorrect for the work you have completed so far. It does not indicate comple Re Developing). Management has decided to allocate maintenance costs on the basis of machine-hours in each department and personnel costs on the basis of labor-hours worked by the employees in each. The following data appear in the company records for the current period: Maintenance Personnel Printing Developing Machine-hours 006 3,100 Labor-hours 00E T 006 006 Department direct costs $15,200 009 $ 009'ET$ 009 Required: Use the direct method to allocate these service department costs to the operating departments. (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations.) XAnswer is not complete. Maintenance Personnel Printing Developing 3,600 X $ X 009 13,600 X Service department costs 13,600 Maintenance allocation (3,600) 13,600 X (009) Personnel allocation Total costs allocated $ 17.200 17,200 Mc Graw K…arrow_forward
- Financial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage LearningManagerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage Learning
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