Fundamentals of Cost Accounting
5th Edition
ISBN: 9781259565403
Author: William N. Lanen Professor, Shannon Anderson Associate Professor, Michael W Maher
Publisher: McGraw-Hill Education
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Chapter 10, Problem 51E
To determine
Classify the given costs according to the information given in the question.
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Preparation of financial statements to be submitted to government regulator agencies for perusal of the firm's stakeholders require the use of ___ costing method. A. AbsorptionB. variable C. throughput D. activity based
A profit center responsibility report ________.
A.
is the same as a performance report
B.
includes traceable fixed expenses
C.
does not include revenues since that information only appears on the revenue center responsibility report
D.
should not include costs for which the profit center manager is not accountable
1-What are relevant revenues and cost delays?
2- How do managers use financial and nonfinancial measures to evaluate quality?
Chapter 10 Solutions
Fundamentals of Cost Accounting
Ch. 10 - How are activity-based costing and activity-based...Ch. 10 - Can activity-based management be implemented...Ch. 10 - Prob. 3RQCh. 10 - What are some ways in which customers affect a...Ch. 10 - How is computing the cost of customers the same as...Ch. 10 - Prob. 6RQCh. 10 - Prob. 7RQCh. 10 - Under what conditions should the cost of excess...Ch. 10 - In what ways does quality affect cost?Ch. 10 - What are the four categories in a cost of quality...
Ch. 10 - Prob. 11CADQCh. 10 - Prob. 12CADQCh. 10 - Consider a library that spends 25,000 to move most...Ch. 10 - Prob. 14CADQCh. 10 - Prob. 15CADQCh. 10 - You can get the cost of customers by first...Ch. 10 - Prob. 17CADQCh. 10 - Prob. 18CADQCh. 10 - Prob. 19CADQCh. 10 - Prob. 20CADQCh. 10 - Many if not most schools in the United States have...Ch. 10 - Prob. 22CADQCh. 10 - Prob. 23CADQCh. 10 - Prob. 24ECh. 10 - Prob. 25ECh. 10 - Cost Hierarchy for a Not-for-Profit Below are...Ch. 10 - Prob. 27ECh. 10 - Driver Identification Below are various activities...Ch. 10 - Activity-Based Costing of Customers Marvins...Ch. 10 - Activity-Based Costing of Customers Rock Solid...Ch. 10 - Activity-Based Costing of Customers Refer to the...Ch. 10 - Activity-Based Costing of Customers: Ethical...Ch. 10 - Prob. 33ECh. 10 - Activity-Based Costing of Suppliers Hult Games...Ch. 10 - Prob. 35ECh. 10 - Activity-Based Costing of Suppliers Kinnear...Ch. 10 - Activity-Based Costing of Suppliers Refer to the...Ch. 10 - Resources Used versus Resources Supplied Tri-State...Ch. 10 - Prob. 39ECh. 10 - Resources Used versus Resources Supplied Conlon...Ch. 10 - Prob. 41ECh. 10 - Prob. 42ECh. 10 - Assigning Cost of Capacity Mimis Fixtures...Ch. 10 - Assigning Cost of Capacity Curts Casting...Ch. 10 - Prob. 45ECh. 10 - Costs of Quality The following represents the...Ch. 10 - Trading-Off Costs of Quality Using the costs...Ch. 10 - Costs of Quality Nuke-It-Now manufactures...Ch. 10 - Prob. 49ECh. 10 - Cost of Quality: Environmental Issues Many...Ch. 10 - Prob. 51ECh. 10 - Prob. 52PCh. 10 - Activity-Based Reporting: Service Organization...Ch. 10 - Prob. 54PCh. 10 - Customer Profitability Carmel Company has a...Ch. 10 - Activity-Based Costing of Suppliers JFI Foods...Ch. 10 - Activity-Based Costing of Suppliers Consider the...Ch. 10 - Activity-Based Reporting: Manufacturing...Ch. 10 - Assigning Capacity Costs Cathy and Toms Specialty...Ch. 10 - Prob. 60PCh. 10 - Prob. 61PCh. 10 - Assigning Capacity Costs Mercia Chocolates...Ch. 10 - Prob. 63PCh. 10 - Prob. 64PCh. 10 - Prob. 65P
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- A responsibility accounting system utilizes and assigns costs on the basis of their a. controllability b. variability c. timing of recognition d. traceabilityarrow_forward1. Which of the following are the example of appropriate subject matter related to assurance engagement? i. Budget ii. Financial statements iii. Standard costing iv. Take-over target a. Only i, iii, & iv b. Only i, ii, & iv c. i, ii, iii & iv d. Only ii, iii & ivarrow_forwardDiscuss the concept of controllable and uncontrollable costs and how they affect the evaluation of the responsibility centers financial performance.arrow_forward
- For each of the following situations, two scenarios are described, labeled A and B. Choose which scenario is descriptive of a setting corresponding to activity-based responsibility accounting and which is descriptive of financial-based responsibility accounting. Provide a brief commentary on the differences between the two systems for each situation, addressing the possible advantages of the activity-based view over the financial-based view. Situation 1 A: The purchasing manager, receiving manager, and accounts payable manager are given joint responsibility for procurement. The charges given to the group of managers are to reduce costs of acquiring materials, decrease the time required to obtain materials from outside suppliers, and reduce the number of purchasing mistakes (e.g., wrong type of materials or the wrong quantities ordered). B: The plant manager commended the manager of the Grinding Department for increasing his departments machine utilization ratesand doing so without exceeding the departments budget. The plant manager then asked other department managers to make an effort to obtain similar efficiency improvements. Situation 2 A: Delivery mistakes had been reduced by 70 percent, saving over 40,000 per year. Furthermore, delivery time to customers had been cut by two days. According to company policy, the team responsible for the savings was given a bonus equal to 25 percent of the savings attributable to improving delivery quality. Company policy also provided a salary increase of 1 percent for every day saved in delivery time. B: Bill Johnson, manager of the Product Development Department, was pleased with his departments performance on the last quarters projects. They had managed to complete all projects under budget, virtually assuring Bill of a fat bonus, just in time to help with this years Christmas purchases. Situation 3 A: Harvey, dont worry about the fact that your department is producing at only 70 percent capacity. Increasing your output would simply pile up inventory in front of the next production department. That would be costly for the organization as a whole. Sometimes, one department must reduce its performance so that the performance of the entire organization can improve. B: Susan, I am concerned about the fact that your departments performance measures have really dropped over the past quarter. Labor usage variances are unfavorable, and I also see that your machine utilization rates are down. Now, I know you are not a bottleneck department, but I get a lot of flack when my managers efficiency ratings drop. Situation 4 A: Colby was muttering to himself. He had just received last quarters budgetary performance report. Once again, he had managed to spend more than budgeted for both materials and labor. The real question now was how to improve his performance for the next quarter. B: Great! Cycle time had been reduced and, at the same time, the number of defective products had been cut by 35 percent. Cutting the number of defects reduced production costs by more than planned. Trends were favorable for all three performance measures. Situation 5 A: Cambry was furious. An across-the-board budget cut! How can they expect me to provide the computer services required on less money? Management is convinced that costs are out of control, but I would like to know whereat least in my department! B: After a careful study of the Accounts Payable Department, it was discovered that 80 percent of an accounts payable clerks time was spent resolving discrepancies between the purchase order, receiving document, and the suppliers invoice. Other activities such as recording and preparing checks consumed only 20 percent of a clerks time. A redesign of the procurement process eliminated virtually all discrepancies and produced significant cost savings. Situation 6 A: Five years ago, the management of Breeann Products commissioned an outside engineering consulting firm to conduct a time-and-motion study so that labor efficiency standards could be developed and used in production. These labor efficiency standards are still in use today and are viewed by management as an important indicator of productive efficiency. B: Janet was quite satisfied with this quarters labor performance. When compared with the same quarter of last year, labor productivity had increased by 23 percent. Most of the increase was due to a new assembly approach suggested by production line workers. She was also pleased to see that materials productivity had increased. The increase in materials productivity was attributed to reducing scrap because of improved quality. Situation 7 A: The system converts materials into products, not people at work stations. Therefore, process efficiency is more important than labor efficiencybut we also must pay particular attention to those who use the products we produce, whether inside or outside the firm. B: I was quite happy to see a revenue increase of 15 percent over last year, especially when the budget called for a 10 percent increase. However, after reading the recent copy of our trade journal, I now wonder whether we are doing so well. I found out that the market expanded by 30 percent, and our leading competitor increased its sales by 40 percent.arrow_forwardExplain why the Accounting Department should be responsible for producing quality cost reports.arrow_forwardReporting financial information imposes costs and obviously these costs should be justified by the ____________ of reporting that information. a. Availability • b. Benefits c Timeliness d. Qualityarrow_forward
- 1- What are the four cost categories of a costs of quality program? 2- What are relevant revenues and cost delays? 3- How do managers use financial and nonfinancial measures to evaluate quality? 4- Describe the three main measures used in the theory of constraints 5- What are the steps managers can take to manage bottlenecks?arrow_forwardCost is a pervasive constraint on the information that can be provided by financial reporting. Reporting financial information imposes costs, and it is important that those costs are justified by the benefits of reporting that information. b. Describe any THREE (3) costs each incurred by the providers and users of the information.arrow_forwardAnswer with logical reasoning. Give an example where needed i. How management accounting and cost accounting can be an efficient in monetary and non-monetary report management as compared to financial accounting reporting system. ii. How flexible budget through performance reporting is help for the management in determination of direct material cost control?arrow_forward
- MACRS stands for a. Modified Annual Cost Recovery System b. Modified Audited Cost Recovery System c. Modified Accounting Cost Recovery System d. Modified Accelerated Cost Recovery Systemarrow_forwardInstructions: Designate the best answer for each of the following questions. 1.Which of the following is a responsibility center that incurs expenses, generates revenues, and is responsible for generating a return on assets? a. Cost center b. Revenue center c. Profit center d. Investment center 2.Which one of the following is the most useful measure for evaluating a manager's performance in controlling revenues and costs in a profit center? a. Contribution margin b. Contribution net income c. Contribution gross profit d. Controllable margin 3.Hanover Corporation desires to earn target net income of $42,000. The selling price per unit is $18, unit variable cost is $5.60, and total fixed costs are $123,912. How many units must the company sell to earn its target net income? a. 13,380 b. 9,993 c. 3,387 d. 9,217 4.Remark…arrow_forward1.A determination of cost savings obtained by outsourcing cafeteria services is most likely to be an objective of...a.) Environmental auditingb.) Financial auditingc.) Compliance auditingd.) Operational auditing 2.arrow_forward
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