Exam 11: Reporting for Control

Granting subordinates autonomy and profit responsibility almost invariably also grants them the right to make mistakes.

Prevention costs and appraisal costs are incurred in an effort to keep poor quality of conformance from occurring.

The costs of which of the following business functions making up the value chain are NOT part of the downstream costs?

Eagan Company's quality cost report is to be based on the following data: -What will be the total prevention cost appearing on the quality cost report?

Harstin Corporation has provided the following data: -What was the minimum required rate of return for the past year?

Thais Company's quality cost report is to be based on the following data: -What will be the total appraisal cost appearing on the quality cost report?

Division A produces a part with the following characteristics: Division B, another division in the company, would like to buy this part from Division A. Division B is presently purchasing the part from an outside source at $28 per unit. If Division A sells to Division B, $1 in variable costs can be avoided. -Suppose Division A is currently operating at capacity and can sell all of the units it produces on the outside market for its usual selling price.From the point of view of Division A,any sales to Division B should be priced no lower than which of the following?

Ieso Company has two stores: J and K. During November, Ieso Company reported operating income of $30,000 and sales of $450,000. The contribution margin in Store J was $100,000, or 40% of sales. The segment margin in Store K was $30,000, or 15% of sales. Traceable fixed expenses were $60,000 in Store J, and $40,000 in Store K. -What was the segment margin ratio in Store J?

Which of the following is NOT an operating asset?

Which costing system focuses on all costs along the value chain?

Faust Company's quality cost report is to be based on the following data: -What will be the total prevention cost appearing on the quality cost report?

Harui Company's quality cost report is to be based on the following data: Test and inspection of in-process goods \ 32,000 Net cost of spoilage \ 45,000 Quality circles \ 33,000 Downtime caused by quality problems \ 28,000 Final product testing and inspection \ 78,000 Rework labour and overhead \ 48,000 Quality training \ 93,000 Returns arising from quality problems \ 92,000 Warranty repairs and replacements \ 67,000 Required: a)Prepare a quality cost report in good form with separate sections for prevention costs,appraisal costs,internal failure costs,and external failure costs. b)If Harui's efforts to ensure quality conformance are working,how would you expect the Quality Cost Report next year to compare with this one?

Fabri Company's quality cost report is to be based on the following data: -What will be the total appraisal cost appearing on the quality cost report?

The following data are available for the South Division of Redride Products,Inc.and the single product it makes: Unit Selling Price \ 20 Variable Cost per Unit \ 12 Annual Fixed Costs \ 280,000 Average Operating Assets \ 1.500,000 How many units must South sell each year to have an ROI of 16%?

What would be a good example of a common cost that normally could NOT be assigned to products on a segmented income statement except on an arbitrary basis?

Ricric Corporation has provided the following data for one of its products: -What is the delivery cycle time for this operation?

Faast Company's quality cost report is to be based on the following data: -What will be the total external failure cost appearing on the quality cost report?

Which of the following represents value-added time in the manufacturing cycle?

Division A makes a part with the following characteristics: Division B, another division of the same company, would like to purchase 5,000 units of the part each period from Division A. Division B is now purchasing these parts from an outside supplier at a price of $24 each. -Suppose that Division A is operating at capacity and can sell all of its output to outside customers at its usual selling price.If Division A sells the parts to Division B at $24 per unit (Division B's outside price),what will be the effect on the operating income of company as a whole?

Financial data for Bingham Company for last year appear below: Bingham Company Statements of Financial Position Beginning Balance Ending Balance Assets: Cash \ 135,000 \ 266,000 Accounts receivable 225,000 475,000 Inventory 314,000 394,000 Plant and equipment (net) 940,000 860,000 Investment in Carr Company 104,000 101,000 Land (undeveloped) Total assets \ 1,916,000 \ 2,161,000 Liabilities and owners' equity: Accounts payable \ 88,000 \ 119,000 Long-term debt 585,000 665,000 Owners' equity 1,243,000 1,377,000 Total liabilities and owners' equity \ 1,916,000 \ 2,161,000 Bingham Company Income Statement Sales Less operating expenses Net operating income Less interest and taxes: Interest expense Tax expense Operating Income \ \ 90,000 129,000 \ 4,644,000 4,291,000 353,000 219,000 \ 134,000 The "Investment in Carr Company" on the statement of financial position represents an investment in the stock of another company. Required: a) Compute the company's margin, turnover, and return on investment for last year. b) The Board of Directors of Beaker Company have set a minimum required return of 15%. What was the company's residual income last year?