Exam 1: Cost Accounting: Information for Decision Making

Which part of the value chain is outside the firm?

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

The financial accounting system is the primary source of information for

Which of the following is a nonvalue-added activity?

The costing method that first assigns costs to activities and then assigns them to products based on the products' consumption of activities is called

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

The Sarbanes Oxley Act of 2002 requires an effective internal control system for publicly owned firms.Therefore,with regards to strategic investment decisions,it is important that management consider including

(CMA adapted)The process of creating a financial plan of the revenues and resources needed to carry out activities and meet financial goals is referred to as:

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.

The New York Times recently reported that a number of publicly-held corporations have been accused of illegally doctoring hourly employees' time records.Examples included: • Workers sued Family Dollar and Pep Boys,accusing managers of deleting hours from their time records. • More than a dozen former Wal-Mart employees said in interviews and depositions that managers had altered time records to shortchange employees. • The Department of Labor reached two back-pay settlements with Kinko's photocopy centers after finding that managers had erased time for 13 employees. When interviewed,many of the managers cited pressure from upper-management and the impact of their actions on their own compensation as underlying causes for their actions.All of the companies strongly denied encouraging such illegal and unethical behavior by managers.Compensation experts interviewed agreed that the companies' incentive performance systems may have contributed to the managers' behavior.(New York Times,April 4,2004) a.Explain how the incentive performance systems of the above named companies could have contributed to this illegal behavior by managers. b.Discuss the ethical issues involved in the design of incentive performance systems.In designing a performance-based incentive system,what measures should companies take to avoid illegal and unethical behavior by supervisors?

Which of the following provides much of the information necessary for the coordination of the value chain?

What are characteristics of information used in decision making?

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 ex pense 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.

A responsibility center can be a epartment,division,or segment,butnot a subsidiary of the parent company.

Moving of inventory is an example of a(n):

Geno's Body Shop had sales revenues and operating costs in 2016 of $650,000 and $525,000,respectively.In 2017,Geno's plans to expand the services it provides to customers to include detailing services.Revenues are expected to increase by $85,000 and operating costs by $50,000 as a result of this expansion.Assuming that there are no changes to the existing body shop business,operating profits would be expected to increase during 2017 by

A restaurant is deciding whether it wants to update its image or not.It currently has a cozy appeal with an outdated décor that is still in good condition,menus and carpet that need to be replaced anyway,and loyal customers.Identify the following for the restaurant management: a.Costs that are relevant to this decision.b.Costs that would not be differential to this decision.c.Any qualitative factors that should be considered.

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

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?

The Brogan family currently lives in a suburb of a major city.They have a lovely home close to major routes of transportation.Both Mr.and Mrs.Brogan have convenient commutes of 30 minutes or less.Because the school system in their town does not have a quality reputation,they currently send their daughter to private school,conveniently located less than one mile from their home.The family's current monthly living expenses are listed below: Monthsy Budget Mortgage, including taxes and insurance \ 5,000 Other utilities, including water, heat and telephone 500 Costs of running automobiles 800 Cost of private school 2,000 Total monthy budget The Brogans are considering moving to a town approximately 20 minutes away.Because of the desirability of the local schools and strict zoning,housing is very expensive in this town.Their daughter would attend public schools.The Brogans estimate that their monthly mortgage,taxes and insurance would increase to $7,000 per month,while the cost of running automobiles would increase 20% and other utilities 10%.Mortgage interest costs are tax deductible and the Brogans are in the 25% tax bracket.Assume that $700 of the increase in their monthly budget is for mortgage interest.What are the costs and benefits of moving? Which can be quantified and which cannot?