Exam 1: Cost Accounting: Information for Decision Making

The Institute of Management Accountants' (IMA) standards of ethical conduct for management accountants includes the elements of:

Place the letter of the appropriate business function of the value chain in Column 2 in the blank next to each cost item in Column 1.

San Juan, Inc. is considering two alternatives: A and B. The costs associated with the alternatives are listed below: Alternative A Alternative B Material costs \ 35,000 \ 57,000 Processing costs 36,000 57,000 Building costs 12,00C 28,000 Equipment rental 19,000 19,00C - If only the differential costs of the two decisions are considered, the total differential costs of Alternative B is:

Managers face ethical situations on a daily basis, while accountants face them infrequently.

A firm's reply to customer questions via email would be an example of which component of the value chain?

The set of activities that transforms raw resources into the goods and services end users purchase and consume is called the:

Which area(s) of a business can be improved by using a just-in-time (JIT) system?

Which of the following is a false statement regarding cost information and ethical responsibilities?

Administrative functions are not

Clancy Mining Company mines iron ore for production into various metal products. During recent years, the company had large fluctuations in its inventories of metal ingots. Much of the volatility of the inventory levels is due to the variability of demand by the company's largest customers, automobile manufacturers. For large orders, the company has the technology to quickly shift production from one product to another. Explain how the company can improve its inventory control system and give the advantages of whatever you recommend.

Research and development (R&D), production, and customer service are business functions that are all included as part of:

Megan Towe is putting together a training session about value chain components. Which of the following would be a good example of a cost for the component of research and development?

The Arielle Company reported the following results for the manufacture and sale of one of its products known as Controllers during the most recent year. Sales (6,500 Controllers at \ 130 each ) \ 845,000 Cost of sales 390,000 Distribution costs 65,000 Advertising expense 275,000 Salaries 25,000 Building costs Operating loss The Arielle Company is trying to determine whether or not to discontinue the manufacture and sale of Controllers. The operating results reported above for last year are expected to continue in the foreseeable future if the product is not dropped. The building costs represent the costs of production facilities and equipment that the Controllers product shares with other products produced by Arielle. If the Controllers product were dropped, there would be no change in the building costs of the company. Management has determined that discontinuing the manufacture and sale of Controllers will have no effect on the company's other product lines. Determine the change in operating profits that will happen if the manufacture and sale of Controllers is discontinued.

Mr. Lee is the production manager of Cathy Company. It is the beginning of the month and he storms into the controller's department, clutching a large folder of reports. "Why am I getting so many reports? I don't need them nor do I want all the details. I've delegated responsibility to my managers so I don't have to worry about details. You've got to do something about this, John." John, the controller, starts to think about the problem that seems to have come about as the company decentralized with many layers of responsibility. He has a vague memory of something he learned from his old cost accounting class and has called you, his former professor, for some advice or suggestions in order to reduce the paper flow. Briefly describe the concept of the hierarchy of performance reports.

Dockside Sandal Company, a manufacturer of women's sandals, recently implemented a quality improvement program aimed at streamlining the manufacturing process. Bo Mattison, industrial engineer and a resident expert on process improvement, was assigned the task of implementing the program. Mattison's first task was to educate all the employees involved with the production process. He sent a memo to representatives in product design and development, materials management (including purchasing), marketing, distribution, customer service and accounting, in addition to those in the production department, inviting them to attend an information session on the improvement program. He began the meeting by thanking all those who were present (over 35 in number) and spent the first hour explaining the need for such a program. Soon after, the attendees were engaged in a discussion. Several questions were raised during the discussion. Among these, three questions stood out. 1. What is the need for including members from design, marketing, and other functional areas when the improvement program's focus is on streamlining the manufacturing process? 2. What is the role of the cost management expert in this program? 3. Finally, why should the machine operators be involved, as they are not engineers? Consider the three questions that stood out in the discussion. Assume the role of Bo Mattison and prepare a response addressing the questions.

According to the Institute of Management Accountants (IMA), the final step in resolving an ethical dilemma is to:

It is more important for financial accounting information to be comparable between firms than to be useful for managerial decision-making.

Managers evaluate value-added activities to determine how they contribute to the final product's:

Benchmarking is a continuous process of measuring a company's products, services, or activities against competitors' performance.

Cost accounting information developed for managers to use in making decisions must comply with generally accepted accounting principles (GAAP) and international financial reporting standards (IFRS).