Mel Gibbeson has recently graduated from a business school and has joined the family business as an accountant. At the first management meeting with production, marketing and sales, a great deal of time was spent discussing the unit cost of products. Required: What kinds of decisions can managers make using the unit cost information? (explain with detail)

Mel Gibbeson has recently graduated from a business school and has joined the family business as an accountant. At the first management meeting with production, marketing and sales, a great deal of time was spent discussing the unit cost of products. Required: What kinds of decisions can managers make using the unit cost information? (explain with detail)

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter2: Building Blocks Of Managerial Accounting

Section: Chapter Questions

Problem 3Q: Walsh & Coggins, a professional accounting firm, collects cost information about the services they...

See similar textbooks

Similar questions

In a team of two or three students, interview the manager/owner of a local business. In this interview, ask the manager/owner the following questions: A. Does the business collect and use cost information to make decisions? B. Does it have a specialist in cost estimation who works with this cost data? If not, who is responsible for the collection of cost information? Be as specific as possible. C. What type of cost information does the business collect and how is each type of information used? D. How important does the owner/manager believe cost information is to the success of the business? Then, write a report to the instructor summarizing the results of the interview. Content of the memo must include date of the interview, the name and title of the person interviewed, name and location of the business, type of business (service, merchandising, manufacturing) and brief description of the goods/services provided by the business, and responses to questions A-D.
As manager of department B in MarIeys Manufacturing, based on the costs you identified in the previous exercise for further research, how does this impact the financial performance of your department, and what might be some questions you want to ask or solutions you might propose to Marleys management?
Assume you have been hired by Cabelas Sporting Goods. As part of your new role in the accounting department, you have been tasked to set up a responsibility accounting structure for the company. As your first task, your supervisor has asked you to give an example of a cost center, profit center, and an investment center within the Cabelas organization. Your supervisor is a little unsure of the difference between a profit center and investment center and would like you to explain the difference.
Randy Harris, controller, has been given the charge to implement an advanced cost management system. As part of this process, he needs to identify activity drivers for the activities of the firm. During the past four months, Randy has spent considerable effort identifying activities, their associated costs, and possible drivers for the activities costs. Initially, Randy made his selections based on his own judgment using his experience and input from employees who perform the activities. Later, he used regression analysis to confirm his judgment. Randy prefers to use one driver per activity, provided that an R2 of at least 80 percent can be produced. Otherwise, multiple drivers will be used, based on evidence provided by multiple regression analysis. For example, the activity of inspecting finished goods produced an R2 of less than 80 percent for any single activity driver. Randy believes, however, that a satisfactory cost formula can be developed using two activity drivers: the number of batches and the number of inspection hours. Data collected for a 14-month period are as follows: Required: 1. Calculate the cost formula for inspection costs using the two drivers, inspection hours and number of batches. Are both activity drivers useful? What does the R2 indicate about the formula? 2. Using the formula developed in Requirement 1, calculate the inspection cost when 300 inspection hours are used and 30 batches are produced. Prepare a 90 percent confidence interval for this prediction.
Walsh & Coggins, a professional accounting firm, collects cost information about the services they provide to their clients. Describe the types of cost data they would collect and explain the importance of analyzing this cost data.
Mel Gibbeson has recently graduated from a business school and has joined the family business as anaccountant. At the first management meeting with production, marketing and sales, a great deal oftime was spent discussing the unit cost of products.Required: What kinds of decisions can managers make using the unit cost information?( explain briefly your answer) (use your own words to avoid plagirism)
Consumer Focus is a marketing research firm that organizes focus groups for consumerproduct companies. A Consumer Focus Staff member attends each session to ensure that all the logistical aspects run smoothly”In light to the above statement, classify each of the following cost items as:a. Direct or Indirect (D or I) costs with respect to each individual focus group.b. Variable or Fixed (V or F) costs with respect to how the total costs of Consumer Focus change as the number of focus groups conducted changes. (If in doubt, select on the basis of whether the total costs will change substantially if there is a large change in the number of groups conducted.)You will have two answers (D or I; V or F) for each of the following items followed by a short interpretation note. Use the sample answer table and continue from Cost Item BCost ItemA. Payment to individual in each focus group to provide comments on new products.B. Annual subscription of Consumer Focus to Consumer Reports magazine.C.…
Discuss cost functions and assess the importance of causality in estimating cost functions/relationships. Imagine that you are the managerial accounting manager at General Motors. Management of Tesla has approached you about buying GM. Describe the elements needed to establish a target price that meets the intent of Tesla.
1. Managerial accounting helps managers make planning decisions. Which of the following is related to the Planning function? Group of answer choices Establishing goals at the beginning of a period and identifying steps on how to achieve them Comparing actual results with the expected results at the end of a period Monitoring business operations during a period Evaluating mid-level managers and providing feedback 2. Classification of Direct and Indirect costs is based on: Group of answer choices When the costs are reported to income statement. How easily and cost-effectively product costs can be traced to cost objects. When the costs are reported to balance sheet. Whether the costs are substantial part of the total product costs. 3. The finished goods inventory account is used to record: Group of answer choices The costs of products that are complet and ready to sell The cost of materials not yet put into production The costs of products that are in production but that…
You are working with a firm of Cost Consultants. A client having a large manufacturing FMCG co. comes to you for advice for installing a cost accounting system in his organization. What are the basic considerations you would keep in mind in designing a cost accounting and management accounting system for your client? What are the practical difficulties you perceive on its implementation by your client and how do you propose to overcome the same?
Assume you have just been hired as the management accountant in charge of providing your firm’s managers with product cost information. Identify the activities you might undertake for the follow-ing four value chain components: a. Research and developmentb. Productionc. Marketingd. Customer service
Match each of the following cost items with the value chain business function where you would expect the cost to be incurred: Cost Item 1. Purchase of raw materials 2. Advertising 3. Salary of research scientists 4. Delivery expenses 5. Reengineering of product assembly process 6. Replacement labor expense for warranty repairs 7. Manufacturing supplies 8. Sales salaries 9. Purchase of CAD (computer-aided design) software 10. Salary of website manager Business Function