Exam 1: Cost Accounting: Information for Decision Making

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

Which part of the value chain is outside the firm?

Carley Inc. incurs many types of costs in its operations. Place the number of the appropriate stage in the value chain in Column 2 in the blank next to each cost in column 1.

Megan Kris, the Vice-President for Human Resources in Learning, Inc. was concerned about a recent memo she had recently received from the CEO's office regarding the possibility of outsourcing the payroll function to Salary Experts, a growing provider of a variety of human resource services. She was shocked that the CEO's office had discussed this matter with the Board of Directors but failed to consult her. Megan was preparing for a meeting with the CEO. In reading the memo and its attachments, Megan observed the following comparison of costs in a report prepared by the controller's office: Payroll department expenses: Salaries of employees 210,000 Share of utilities 75,000 Share of building rent 39,350 Marnager's salary 69,000 Computers and supplies 26,000 Other department expenses Total annual expenses Megan also noted that Salary Experts quoted a fixed fee of $125,000 and variable processing costs of $7.50 per employee transaction. She did not believe that the company will actually save money by outsourcing the payroll function. For one, she did not think that the company will actually save all of the above-mentioned amounts. She knew that the payroll department manager could not be removed from the company because he had to oversee the payroll function and serve as a liaison with the outside company. However, all other employees in the department would likely not be required. a. Assume Learning Inc. has 14,000 employees on its payroll. Can the company save money by outsourcing the payroll function? b. What are the pros and cons of outsourcing the payroll function?

Financial accounting information is designed for decision-makers who are directly involved in the daily management of the firm.

Where there is a lack of good performance measures, it is difficult to motivate managers by using:

Two alternatives, identified X and Y, are under consideration at Hayden Corporation. Costs associated with the alternatives are listed below. Alternative X Alternative Y Material costs \ 44,000 \ 56,000 Processing costs 37,000 59,000 Building costs 14,000 14,000 Equipment rental 11,000 11,000 - What is the total differential costs of Alternative Y over Alternative X?

Create a diagram of the value chain by putting the following components into the correct order: a) purchasing; b) marketing and sales; c) research and development; d) customer service; e) distribution; f) design; g) production.

(CIA adapted) The primary reason for adopting total quality management (TQM) is to achieve:

At the middle management level, where managers supervise work and make operating decisions, cost information highlights:

The controller of one division of IntroTel, a large diversified firm is compensated by salary plus bonus. The bonus is a significant part of total compensation and is based directly on the profits of the division. Thus, the controller has an incentive to find ways to increase profits, including the delay of discretionary expenses such as research and development, delay of maintenance and repair of manufacturing equipment, and delay of sales promotions. Is finding ways to increase profits as described above unethical? Why or why not? Who is to blame, if anyone?

Systems that identify the costs of producing defective units as well as low-quality items that lose sales are called:

Two alternatives, identified X and Y, are under consideration at Hayden Corporation. Costs associated with the alternatives are listed below. Alternative X Alternative Y Material costs \ 44,000 \ 56,000 Processing costs 37,000 59,000 Building costs 14,000 14,000 Equipment rental 11,000 11,000 - Are the materials costs and processing costs differential in the choice between alternatives X and Y? (Ignore the building costs and equipment rental in this question.)

Typical ERP systems integrate information systems that link production, purchasing, human resources, and finance into a single comprehensive information system.

MegaStores is a large, publicly-held corporation. The company does about 80% of its work in government contracts. All contracts use a cost plus fixed fee basis; costs of jobs are agreed upon by contract. Any overruns will result in losses to the company. The company controller, Ricky Bowers CPA, CMA, is discussing two current jobs with the Job Supervisor, Leslie Dawn. Job 100 is currently coming in under budget, but due to construction problems, Job 102 is 20% over budget. Bowers is considering the possibility of having employees who work on Job 102 record their time to Job 101. What are the implications of this decision?

You have been employed as an entry-level management accountant for a little under a year. You suspect that your immediate supervisor is involved in a significant fraud involving diverting company assets to personal use. Briefly describe the steps you might take to resolve this dilemma.

Which of the following is not a key financial manager in an organization?

A general term for a metric that indicates how well an individual, business, product, or firm is working is called:

Cost accounting is an integral part of the ________ function in an organization.

During 2020, the Beach Restaurant had sales revenues and food costs of $800,000 and $600,000, respectively. During 2021, Beach plans to introduce a new menu item that is expected to increase sales revenues by $100,000 and food costs by $40,000. Assuming no changes are expected for the other food items, operating profits for 2021 are expected to increase by: