MANAGERIAL ACCOUNTING W/CONNECT>IC<
17th Edition
ISBN: 9781308302751
Author: Garrison
Publisher: MCG/CREATE
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Textbook Question
Chapter P, Problem 12E
EXERCISE P-12 Cognitive Bias and Decision Making
During World War II,the U.S. military was studying its combat-tested fighter planes to determine the parts of the plane that were most vulnerable to enemy fire The purpose of the study was to identify the most vulnerable sections of each plane and then take steps to reinforce those sections to improve pilot safety and airplane durability The data gathered by the U.S.military showed that certain sections of its combat-tested fighter places were consistently hit more often with enemy fire than other sections of the plane.
Required:
- Would you recommend reinforcing the sections of the plane that were hit most often by enemy fire, or would you reinforce the sections that were hit less frequently by enemy fire? Why?
- Do you think cognitive bias had the potential to influence the U.S. military's decision-making process with respect to reinforcing its fighter planes? Source: Jerker Denrell,"Selection Bias and the Perils of Benchmarking,” Harvard Business Review, Volume 83,Issue 4, pp. 114-119.
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QUESTION 30
WKU is doing the following two research projects:
X: Developing identity theft prevention software. The software will be sold in the market.
Y: Cost reimbursement contract with the US Treasury Department. WKU performs a financial fraud
detection research and it will be reimbursed 250% of the reported costs incurred in the project.
For each project, WKU incurred both direct and indirect costs. WKU incurred a total of $1,000,000 indirect costs. Indirect costs are allocated using a base chosen by WKU. The following information is given:
Project
Direct costs
Computer time in hours
(CTH)
Pages of all articles read
(PAR)
Lab experimental hours (LEH)
Number of assistants used (NAU)
X
$1,000,000
5,000
65,000
1,000
300
Y
$2,500,000
5,000
35,000
4,000
500
Which of the following allocation bases is the best for the benefit of WKU?
A.
CTH
B.
LEH
C.
PAR…
Required information
Exercise 5A-2 (Algo) Least-Squares Regression [LO5-11]
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[The following information applies to the questions displayed below.]
Bargain Rental Car offers rental cars in an off-airport location near a major tourist destination in California. Management would like to better understand the variable and fixed portions of its car washing costs. The company operates its own car wash facility in which each rental car that is returned is thoroughly cleaned before being released for rental to another customer. Management believes that the variable portion of its car washing costs relates to the number of rental returns. Accordingly, the following data have been compiled:
Month
Rental Returns
Car Wash Costs
January
2,400
$ 11,000
February
2,500
$ 13,100
March
2,700
$ 11,800
April
3,000
$ 14,300
May
3,600
$ 16,200
June
5,000
$ 23,300
July
5,500
$ 22,200
August
5,500
$ 22,200
September
4,700
$ 22,800
October
4,000
$ 21,100…
Q2. Consult Paragraphs 3-6 of Quality Control Standard No. 20 (QC 20). Considering the example in the Waste Management case, please explain why a review by the practice director and audit division head is important in the operations of a CPA firm. In your opinion, was this review effective at Waste Management? Why or why not?
Q3. Consult Paragraph 7 of PCAOB Auditing Standard No. 13. Do you believe that Andersen’s final decision regarding the PAJE’s was appropriate, under the circumstances? Would your opinion change if you knew that all of the adjustments were based on subjective differences (such as a difference in the estimate of the allowance for doubtful accounts), as compared to objective differences (such as a difference in the account receivable balance of their biggest customer)?
Q4. Refer to Sections 203 and 206 of SARBOX. How would these sections of the law have impacted the Waste Management audit? Do you believe that these sections were needed? Why or why not?
Chapter P Solutions
MANAGERIAL ACCOUNTING W/CONNECT>IC<
Ch. P - Prob. 1QCh. P - Pick any major television network and describe...Ch. P - If you had to decide whether to continue making a...Ch. P - Why do companies prepare budgets?Ch. P - Why is managerial accounting relevant to business...Ch. P - Why is managerial accounting relevant to...Ch. P - Pick any large company and describe its strategy...Ch. P - Why do management accountants need to understand...Ch. P - Prob. 9QCh. P - Prob. 10Q
Ch. P - Prob. 11QCh. P - Locate the website of any company that publishes a...Ch. P - Why do companies that implement Lean Production...Ch. P - Why are leadership skillsimportant to managers?Ch. P - Prob. 15QCh. P - Prob. 16QCh. P - Prob. 17QCh. P - What internal controls would you implement to help...Ch. P - Why do companies take a physical count of their...Ch. P - Why do companies use sequential prenumbering for...Ch. P - Prob. 1ECh. P - Assume that you work for an airline unloading...Ch. P - Prob. 3ECh. P - EXERCISE P-4 Ethics and the Manager Richmond,...Ch. P - Prob. 5ECh. P - Prob. 6ECh. P - Prob. 7ECh. P - Prob. 8ECh. P - Prob. 9ECh. P - Prob. 10ECh. P - Prob. 11ECh. P - EXERCISE P-12 Cognitive Bias and Decision Making...Ch. P - Prob. 13E
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- Examine the last column in Table 8.2 (p. 280) for the following personnel only: access control officer, chief information officer (CIO), structural security/disaster recovery manager, testing/quality assurance, and database administrator. For each of the five functions, list one control plan from this chapter that would address the control concern described in the last column of Table 8.2 (p. 280) for that function. Explain how the plan might address the concern mentioned. Do not use the same plan twice; use five different plans.arrow_forwardWhat two variables should be considered when choosing a method to train employees to operate a new system?arrow_forward10.1a With regards to the Springer's Lumber & Supply case presented in chapter 10, what deficiencies existed in the internal control environment at Springer's? 10.3 One function of the AIS is to provide adequate controls to ensure the safety of organizational assets, including data. However, many people view control procedures as “red tape” that unnecessarily slow down the process and make them less efficient. They also believe that, instead of producing tangible benefits, business controls create resentment and loss of company morale. Discuss this position. Explain what is meant by objective setting and describe the four types of objectives used in ERM. How would you calculate the net benefit (value) of implementing risk responses/controls? How would you determine if the risk responses/controls selected were adequate or if additional risk responses/controls were needed?arrow_forward
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