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Chapter: 7 -Problem: 15 >> When is a cost variance investigation undertaken under kaizen costing?
Answer Preview: A cost variance investigation is typically undertaken when there is a significant difference b…

, Chapter: 7 -Problem: 6 >> Waste, rework, and net cost of scrap are examples of what kinds of quality costs?
Answer Preview: Failure Costs . Failure costs are those associated with co…

, Chapter: 4 -Problem: 3 >> Provide several examples of cost objects.
Answer Preview: A cost object is anything for which a company wants to track and measure costs. Examples of cost obj…

, Chapter: 11 -Problem: 9 >> What is an investment center?
Answer Preview: An investment center is a part of a business that s…

, Chapter: 10 -Problem: 3 >> A student develops a spending plan for a school semester. Is this budgeting? Why?
Answer Preview: A spending plan is a type of budget. A budget is an estimation of revenue and expenses over a specif…

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, Chapter: 11 -Problem: 27 >> Give an example of a responsibility center that is properly treated as a cost center.
Answer Preview: A responsibility center that is properly treated as a cost cen…

, Chapter: 10 -Problem: 29 >> You are willing to donate to worthy organizations. However, you believe strongly that each request for a donation should be evaluated on the basis of its own merits. You would not feel bad in any year if you donated nothing. What approach to budgeting are you using?
Answer Preview: You are using a zero-based budgeting approach. This ap…

, Chapter: 11 -Problem: 21 >> How is residual income computed?
Answer Preview: Residual income is calculated as net income minus a …

, Chapter: 11 -Problem: 8 >> When do organizations use profit centers?
Answer Preview: Organ izations use profit centers when they want to track how much revenue and …

, Chapter: 11 -Problem: 19 >> How does efficiency (the ratio of income to sales) affect return on investment?
Answer Preview: E fficiency has a direct impact on return on investment ( RO I ). …

, Chapter: 7 -Problem: 44 >> According to the kaizen costing approach, who has the best knowledge to reduce costs? Why is this so?
Answer Preview: There is no one person who has the best knowledge to reduce …

, Chapter: 4 -Problem: 20 >> What does the term conversion costs mean?
Answer Preview: Conversion Costs are the total am…

, Chapter: 10 -Problem: 39 >> Budgeting allows an organization to compare its projected operating and financial results with those of competitors as a general test of the efficiency of the organization’s operating processes. Explain how this might be valuable for a machine shop that does custom machining work for its customers.
Answer Preview: Comparing budgeted results with those of competitors is valuable for a machine shop because it provi…

, Chapter: 3 -Problem: 14 >> Are avoidable costs relevant? Explain.
Answer Preview: An avoidable cost is one that can be eliminated, in whole or in part, by choosing one al…

, Chapter: 3 -Problem: 22 >> What are the three components of a linear program?
Answer Preview: Linear programming Linear programming or LP is a method of optimising operations with …

, Chapter: 7 -Problem: 11 >> Why are production cycle time and the level of work-in-process inventory positively related?
Answer Preview: One possible reason for this positive relationship is that the longer the productio…

, Chapter: 9 -Problem: 29 >> What is a stretch target?
Answer Preview: A stretch target is a goal that is difficult but w…

, Chapter: 7 -Problem: 7 >> Quality engineering, quality training, statistical process control, and supplier certification are what kinds of quality costs?
Answer Preview: Pre vention costs . Prevention costs are those costs incurre…

, Chapter: 11 -Problem: 49 >> A business whose investors require a return on investment of 8% reports an income of $1 million on an investment of $20 million. What is the residual income for this business?
Answer Preview: The required return on investment is 8% of $20 million, which is $1 6 …

, Chapter: 3 -Problem: 20 >> “When production capacity is constrained, determine what products to make by ranking them in order of their contribution per unit.” Do you agree with this statement? Explain.
Answer Preview: In a business, there are always limited resources and this includes production capacity. As a result…

, Chapter: 9 -Problem: 3 >> What two broad technical considerations must designers of management and control systems address?
Answer Preview: To design a management and control system, a designer must consider t…

, Chapter: 8 -Problem: 10 >> In which stage of the total life cycle of a product is target costing most applicable?
Answer Preview: In the design stage. Target costing is used when designing new products and determining a targ…

, Chapter: 3 -Problem: 10 >> What are sunk costs? Explain whether they are relevant costs.
Answer Preview: A sunk cost is a cost that an entity has incurred, and w…

, Chapter: 9 -Problem: 31 >> What is an intrinsic reward?
Answer Preview: Intrinsic rewards can be anything from com…

, Chapter: 3 -Problem: 17 >> What is an opportunity cost that is relevant in a make-or-buy decision?
Answer Preview: An opportunity cost is the benefit that …

, Chapter: 6 -Problem: 9 >> What does a pricing waterfall chart depict?
Answer Preview: A pricing waterfall chart is a graphical representation of the price for each size …

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, Chapter: 7 -Problem: 55 >> Some firms in the fashion industry have adopted lean or just-in-time approaches to maintain or increase their competitive advantage. Read the following articles or other resources to address the questions below: “Brand-New Bag: Louis Vuitton Tries Modern Methods On Factory Lines” (C. Passariello, The Wall Street Journal, October 9, 2006, p. A1) and “Zara Thrives By Breaking All Rules” (K. Capell,
Answer Preview: (a) The comparison between Louis Vuitton's previous and current processes for making a bag would dep…

, Chapter: 7 -Problem: 23 >> What is a benchmarking (performance) gap?
Answer Preview: A performance gap is the difference between a …

, Chapter: 11 -Problem: 18 >> What is return on investment?
Answer Preview: Return on investment in managerial accounting is a me…

, Chapter: 11 -Problem: 42 >> A store is divided into four departments: automotive products, home products, paint, and lumber. How would you assign the building costs, such as depreciation, to each of these departments?
Answer Preview: There are a few different ways to approach this problem . One way would be …

, Chapter: 9 -Problem: 21 >> What is meant by gaming a performance indicator?
Answer Preview: Performance indicators are metrics used to measure and track the progress or suc…

, Chapter: 4 -Problem: 12 >> What are indirect cost pools?
Answer Preview: Indirect cost pool means a grouping of incurred costs identi…

, Chapter: 10 -Problem: 78 >> Judd’s Reproductions makes reproductions of antique tables and chairs and sells them through three sales outlets. The product line consists of two styles of chairs, two styles of tables, and three styles of cabinets. Although customers often ask Judd Molinari, the owner/manager of Judd’s Reproductions, to make other products, he does not intend to expand the product line.    The planning group at
Answer Preview: (a) Sales forecast, staffing plan, production plan, estimated cash flow statement, pro forma income statement for the year ended December 31, 2012, an…

, Chapter: 7 -Problem: 46 >> Under what condition will the cost savings due to kaizen costing not be applied to production?
Answer Preview: According to kaizen the only thing that cannot lead to a …

, Chapter: 9 -Problem: 36 >> What is a cash bonus?
Answer Preview: A cash bonus is consider…

, Chapter: 3 -Problem: 13 >> What is an opportunity cost?
Answer Preview: Breakeven point is a term that is associated wi…

, Chapter: 10 -Problem: 28 >> You are planning your expenditures for the upcoming school semester. You assume that this year’s expenditures will equal last year’s plus 2%. What approach to budgeting are you using?
Answer Preview: You are using the historical approach to budgeting. This approa…

, Chapter: 7 -Problem: 39 >> Read “Everyone Likes to Laud Serving the Customer; Doing It Is the Problem,” by Carol Hymowitz (Wall Street Journal, February 27, 2006, p. B1).Required   (a) According to the article, what measures are commonly used to evaluate customer service representatives, and what measure(s) should be used?   (b) Explain how the prevention, appraisal, and external failure aspects of the cost-of-quality frame
Answer Preview: a) According to the article, measures commonly used to evaluate customer service representatives inc…

, Chapter: 10 -Problem: 11 >> What does a capital spending plan do?
Answer Preview: A capital spending plan provides a roadma…

, What does the term breakeven point mean?
Answer Preview: Breakeven point is a term which is associated w…

, Chapter: 11 -Problem: 15 >> What are the four bases for setting a transfer price?
Answer Preview: The four bases for setting a transfer price are : m…

, Kaizen costing is a method that many Japanese companies have found effective in reducing costs.
Answer Preview: There is no one person who has the best knowledge to reduce …

, Chapter: 9 -Problem: 32 >> What is an extrinsic reward?
Answer Preview: An extrinsic reward is a type of reinforce…

, Chapter: 3 -Problem: 5 >> What does the term breakeven point mean?
Answer Preview: A breakeven point is used in multiple areas of business a…

, Chapter: 8 -Problem: 32 >> Refer to Exhibit 8-14 regarding Greyson Technology’s launch of a new digital communications device. Suppose that Greyson reduced the quarterly spending on product development in panel A, which delayed launching the new product for two quarters, at which time the selling price and sales volume would be lower. Specifically, assume the following:Required Assuming that the cost per unit remains $10 an
Answer Preview: To determine the difference between the breakeven time metrics under the initial assumptions in panel A and the new assumptions, we need to calculate the breakeven point (BEP) for both scenarios and c…

, Chapter: 8 -Problem: 27 >> What is the profitability measure most widely used to develop the target profit margin under target costing?
Answer Preview: The most commonly used profitability measure to develop the target profit margin under target costin…

, Chapter: 9 -Problem: 33 >> What is incentive compensation?
Answer Preview: Incentive compensation is the system used to reward employees …

, How does efficiency (the ratio of income to sales) affect return on investment?
Answer Preview: E fficiency has a direct impact on return on investment ( RO I ). …

, Chapter: 4 -Problem: 26 >> Kappa Company runs two shifts each day. Workers on average have four weeks off per year and after training and breaks, average 34 hours per week. What is Kappa’s practical capacity number of labor hours per year?
Answer Preview: Answer is 97,920 hours working notes Total weeks in a year = …

, Chapter: 9 -Problem: 22 >> What is data falsification?
Answer Preview: Data falsification occurs when errors are introduced int…

, Chapter: 4 -Problem: 10 >> How are indirect cost rates determined?
Answer Preview: An indirect cost rate is established on the basis of a …

, Chapter: 11 -Problem: 4 >> What does control mean in a decentralized organization?
Answer Preview: In a decentralized organization, control means that each bu…

, Chapter: 10 -Problem: 2 >> What is the difference between flexible and capacity-related resources?
Answer Preview: Flexible resources, are the result of the variable or flexible demand for ele…

, Chapter: 7 -Problem: 16 >> Why is it said that a kaizen costing system operates “outside the standard costing system”?
Answer Preview: There are a couple of reasons why ka izen costing is said to operate outside the …

, Chapter: 10 -Problem: 27 >> What is a periodic budget?
Answer Preview: A periodic budget, as the name suggests, involves dividing th…

, Chapter: 9 -Problem: 38 >> What is gain sharing?
Answer Preview: G ain sharing is a business arrangement in whic…

, Chapter: 7 -Problem: 21 >> What are the two general methods of information gathering and sharing when undertaking a benchmarking exercise?
Answer Preview: 1 . Primary data collection : This involves collecting data directl…

, Chapter: 11 -Problem: 20 >> How does productivity (the ratio of sales to investment) affect return on investment?
Answer Preview: There is a direct relationship between productivity and return o…

, Chapter: 11 -Problem: 6 >> What is a cost center?
Answer Preview: A cost center is an organization or project …

, Chapter: 6 -Problem: 33 >> Midwest Office Products*   John Malone, general manager of Midwest Office Products (MOP), was concerned about the financial results for calendar year 2003. Despite a sales increase from the prior year, the company had just suffered the first loss in its history (see summary income statement in Exhibit 6-9).   Midwest Office Products was a regional distributor of office supplies to institutions and
Answer Preview: (a) Based on the information provided in the case, we can estimate the following costs: (1) Cost of processing cartons through the facility: The cost of processing cartons through the facility is prop…

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, Chapter: 11 -Problem: 25 >> What control problem does decentralization create in organizations?
Answer Preview: The main disadvantage of a decentralized organization …

, Chapter: 9 -Problem: 28 >> What is the most motivating type of budget with respect to targets?
Answer Preview: Motive type of budget with respect to targets is a …

, Chapter: 7 -Problem: 20 >> What stage of the benchmarking process is the most important for benchmarking management accounting methods? Why?
Answer Preview: The most important stage of the benchmark ing process for benchmark ing management accounting me…

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, Chapter: 4 -Problem: 8 >> What are predetermined indirect cost rates commonly called in practice?
Answer Preview: Predetermined indirect cost rates are commonly …

, Chapter: 7 -Problem: 5 >> What is meant by the phrase cost of nonconformance in relation to quality?
Answer Preview: The cost of nonconformance is the loss in time, resources, or produc…

, Chapter: 4 -Problem: 11 >> How is overhead cost estimated for individual jobs?
Answer Preview: Over head cost is estimated for individual jobs by using a predetermin…

, Chapter: 5 -Problem: 18 >> Ken’s Cornerspot, a popular university eatery in a competitive market, has seating and staff capacity to serve about 600 lunch customers every day. For the past two months, demand has fallen from its previous near-capacity level. Concerned about his declining profit, Ken decided to take a closer look at his costs. He concluded that food was the primary cost that varied with meals served; the remai
Answer Preview: a) If Ken continues to recompute his costs using the same approach (…

, Chapter: 7 -Problem: 14 >> What is kaizen costing?
Answer Preview: Ka izen costing is a method of cost accounting that focuses on continuous improvem…

, Chapter: 9 -Problem: 52 >> What distinguishes data falsification from gaming activities?
Answer Preview: Data falsification is the alteration of dat…

, Chapter: 10 -Problem: 12 >> What is an example of a capacity-related expenditure?
Answer Preview: Typical examples of this nature are …

, Chapter: 7 -Problem: 25 >> What is the additional cost if a unit rejected at inspection can be reworked to meet quality standards by performing some additional operations?
Answer Preview: There is no definitive answer to this question since it will depend on the specific circumstances o…

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8 Reviews for Management Accounting Information for Decision-Making and Strategy Execution Textbook Questions And Answers