Cost Accounting Homework Chapter 1

For Bledsoe Brands to develop a line of generic bagged cereals to be sold to a national discount chain, management accountants can provide the following information:

-Cash needed to manufacture, package, and sell new bagged cereal -Cost to manufacture, package, and sell new bagged cereal -price of competitive low-priced breakfast cereal -productivity, efficiency, and cost advantages relative to competition -sensitivity of target customers to price and quality -market demand for bagged cereal -the production capacity of Bledsoe to produce new cereals

Salaries of the food specialists in the corporate test kitchen who create new menu items

design or research and development

For Brandon Coverings development of window shades that will let light into a room and reduce glare based on the outside brightness, management accountants can provide the following information:

-Cost of producing new window shades -Premium price that customers would be willing to pay for the window -prices of regular window shades -the production capacity needed to manufacture the window shades

For Julian Phones decision to launch production and sale of a cell phone with standard features, management accountants can provide the following information:

-Cost to manufacture and sell the cell phone -productivity, efficiency, and cost advantages relative to competition -prices of competitive cell phones -sensitivity of target customers to price and quality -the production capacity of Julian Phones and its competitors -how the market for cell phones with standard features is growing

Signing a contract to sponsor a basketball star to increase exposure and sales to a younger customer market

cost benefit approach

analyzing whether to keep the billing function within an organization or to outsource it

cost benefit approach

signing a lease on a costlier retail location when a lower cost location had available space

cost benefit approach

cost of "to go" bags requested by customers who could not finish their meals in the restaurant

customer service

Including costs of all the value chain functions before deciding to launch a new product, but including only its manufacturing costs in determining its inventory valuation

different costs for different purposes

recording research costs as an expense for financial reporting purposes (as required by US GAAP) but capitalizing and expensing them over a longer period for management performance evaluation purposes

different costs for different purposes

wages of the counter who give customers the food they order

distribution

cost of the posters indicating the special "two tacos for $2.00"

marketing

costs of corporate sponsorship of the World Series

marketing

Cost of oil for the deep fryer

production

cost of salsa packets given away with customer orders

production

cost of tortilllas and lettuce

production

Linda Butler is the new division controller of the​ snack-foods division of Daniel Foods. Daniel Foods has reported a minimum​ 15% growth in annual earnings for each of the past 5 years. The​ snack-foods division has reported annual earnings growth of more than​ 20% each year in this same period. During the current​ year, the economy went into a recession. The corporate controller estimates a​ 10% annual earnings growth rate for Daniel Foods this year. One month before the December 31 fiscal​ year-end of the current​ year, Butler estimates the​ snack-foods division will report an annual earnings growth of only​ 8%. Rex​ Ray, the​ snack-foods division​ president, is not​ happy, but he notes that the​ "end-of-year actions" still need to be taken. Butler makes some inquiries and is able to compile the following list of​ end-of-year actions that were more or less accepted by the previous division​ controller: Why might the​ snack-foods division president want to take these​ end-of-year actions?

-Management incentives. Daniel Foods may have a division bonus scheme based on one year reported division earnings. Efforts to front end revenue into the current year or transfer costs into the next year can increase this bonus -Promotion opportunity and job security. Top management of Daniel Foods likely will view those division managers that deliver high reported earnings growth rates as being the best prospects for promotion -Retain division autonomy. If top management of Daniel Foods adopts a "management by exception" approach, divisions that report sharp reductions in their earnings growth rates may attract a sizable increase in top management supervision

For Western Airlines investigating market demand for a unique design for first class seating in the form of cabins on its route from Los Angeles to Honolulu, management accountants can provide the following information:

-the cost of any additional staffing and amenities necessary for first class service -premium price that passengers would be willing to pay for first class service -cost of modifying planes or purchasing new planes to accommodate for the additional first class seating -financial comparison of added first class seats to lost coach seats -market demand for first class service from Los Angeles to Honolulu

Rachel Mosby is the president of Carolina Landscaping Service. She takes the following actions, not necessarily in the order given. A. Compares payroll costs of the part quarter to budgeted costs B. Calculates material costs of a project that was recently completed C. Evaluates hiring a marketing professional to grow sales D. Estimates the weekly cost of providing landscaping services next year to a local resort E. Decides to expand service offerings to include snow removal during the slower winter months

A. control B. control C. planning D. planning E. planning

Butler is deeply troubled and reads the​ "Standards of Ethical Behavior for Practitioners of Management Accounting and Financial​ Management." Determine whether each of the​ end-of-year actions is in clear violation​ (Violation), is clearly in compliance with​ (No Violation), or may be in violation with​ (Possible Violation) the​ "Standards of Ethical Behavior for Practitioners of Management Accounting and Financial​ Management". A. Deferring December's routine monthly maintenance on packaging equipment by an independent contractor until January of next year. B. Extending the close of the current fiscal year beyond December 31 so that some sales of next year are included in the current year C. Altering dates of shipping documents of next January's sales to record them as sales in December of the current year D. Giving salespeople a double bonus to exceed December sales targets E. Deferring the current period's advertising by reducing the number of television spots run in December and running more than planned in January of next year F. Deferring the current period's reported advertising costs by having Daniel Foods' outside advertising agency delay billing December advertisements until January of next year or by having the agency alter invoices to conceal the December date G. Persuading carriers to accept merchandise for shipment in December of the current year though they normally would not have done so.

A. no violation B.violation C. violation D.potential violation E. no violation F. violation G. potential violation

"Knowledge of technical issues such as computer technology is a necessary but not sufficient condition to becoming a successful management accountant." Do you agree? Why?

Agree. A successful management accountant requires general business skills and people skills as well as technical skills

What should Butler do if Ray suggests that these​ end-of-year actions are taken in every division of Daniel Foods and that she will greatly harm the​ snack-foods division if she does not cooperate and paint the rosiest picture possible of the​ division's results?

Butler should first directly raise her concerns with Ray. If Ray is unwilling to change his​ request, Butler should discuss her concerns with the Corporate Controller of Daniel Foods. In the​ extreme, she may want to resign if the corporate culture of Daniel Foods is to reward division managers who take​ "end-of-year actions" that Butler views as unethical and possibly illegal.

Julian Phones is about to decide whether to launch production and sale of a cell phone with standard features. Western Airlines is investigating market demand for a unique first-class seating in the form of cabins on its route from Los Angeles to Honolulu. Brandon Coverings is developing window shades that will let light into a room and reduce glare based on the outside brightness. There are no such shades currently on the market. Bledsoe Brands, a manufacturer of breakfast cereal, is developing a line of generic bagged cereals to be sold to a national discount chain.

Cost leadership product differentiation strategy product differentiation strategy cost leadership

"Management accounting should not fit the straitjacket of financial accounting." Explain and give an example.

Management accounting does not have to comply with the same standards of financial accounting such as generally accepted accounting principles.

Deciding to give bonuses for superior performance to the employees in a Japanese subsidiary and extra vacation time to the employees in a Swedish subsidiary

behavioral and technical considerations

Giving constructive feedback when actual performance falls short of the budget

behavioral and technical considerations

installing a participatory budgeting system in which managers set their own performance targets instead of top management imposing performance target on managers

behavioral and technical considerations

selecting between a salary plan and a commission plan to compensate sales managers

behavioral and technical considerations