Managerial Accounting: Creating Value in a Dynamic Business Environment
12th Edition
ISBN: 9781260417074
Author: HILTON, Ronald
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Textbook Question
Chapter 2, Problem 56P
The Department of Natural Resources is responsible for maintaining the state’s parks and forest lands, stocking the lakes and rivers with fish, and generally overseeing the protection of the environment. Several costs incurred by the agency are listed below. For each cost, indicate which of the following classifications best describe the cost. More than one classification may apply to the same cost item.
Cost Classifications
- a. Variable
- b. Fixed
- c. Controllable by the department director
- d. Uncontrollable by the department director
- e. Differential cost
- f. Marginal cost
- g. Opportunity cost
- h. Sunk cost
- i. Out-of-pocket cost
- j. Direct cost of the agency
- k. Indirect cost of the agency
- l. Direct cost of providing a particular service
- m. Indirect cost of providing a particular service
Cost Items
- 1. Cost of the automobiles used by the department’s rangers. These cars were purchased by the state, and they would otherwise have been used by the state police.
- 2. Cost of live-trapping and moving beaver that were creating a nuisance in recreational lakes.
- 3. The department director’s salary.
- 4. Cost of containing naturally caused forest fires, which are threatening private property.
- 5. Cost of the fish purchased from private hatcheries, which are used to stock the state’s public waters.
- 6. The difference between (a) the cost of purchasing fish from private hatcheries and (b) the cost of running a state hatchery.
- 7. Cost of producing literature that describes the department’s role in environmental protection. This literature is mailed free, upon request, to schools, county governments, libraries, and private citizens.
- 8. Cost of sending the department’s hydroengineers to inspect one additional dam for stability and safety.
- 9. Cost of operating the state’s computer services department, a portion of which is allocated to the Department of Natural Resources.
- 10. Cost of administrative supplies used in the agency’s head office.
- 11. Cost of providing a toll-free number for the state’s residents to report environmental problems.
- 12. The cost of replacing batteries in sophisticated monitoring equipment used to evaluate the effects of acid rain on the state’s lakes.
- 13. Cost of a ranger’s wages, when the ranger is giving a talk about environmental protection to elementary school children.
- 14. Cost of direct-mailing to 1 million state residents a brochure explaining the benefits of voluntarily recycling cans and bottles.
- 15. The cost of producing a TV show to be aired on public television. The purpose of the show is to educate people on how to spot and properly dispose of hazardous waste.
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Which of the following statements is not an Objective of the cost management system
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a. Identify and evaluate new activities that can improve performance.
b. Determine efficiency and effectiveness of major activities.
c. Publish the annual financial statements.
d. Measure the cost of resources consumed.
For each of the following costs, indicate whether the amount is a direct or indirect cost of the equipment maintenance department. Also indicate whether each cost is at least partially controllable by the departmentsupervisor.1. Cost of plant manager’s salary, which is allocated to the maintenance department.2. Cost of property taxes allocated to the maintenance department.3. Cost of electricity used in the maintenance department.4. Depreciation on the building space occupied by the maintenance department.5. Idle time of maintenance department employees.
Comprehensive support department allocations (Need answers for parts C, D, and E please. Thank you!)
Management at C. Pier Press has decided to allocate costs of the paper’s two support departments (administration and human resources) to the two revenue-generating departments (advertising and circulation). Administration costs are to be allocated on the basis of dollars of assets employed; human resources costs are to be allocated on the basis of number of employees. The following costs and allocation bases are available:
Department
Direct Costs
Number of Employees
Assets Employed
Administration
$390,750
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$193,550
Human resources
246,350
4
145,850
Advertising
478,900
6
381,200
Circulation
676,300
13
935,150
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$1,792,300
28
$1,655,750
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Chapter 2 Solutions
Managerial Accounting: Creating Value in a Dynamic Business Environment
Ch. 2 - Distinguish between product costs and period...Ch. 2 - Why are product costs also called inventoriable...Ch. 2 - What is the most important difference between a...Ch. 2 - List several product costs incurred in the...Ch. 2 - Prob. 5RQCh. 2 - Why is the cost of idle time treated as...Ch. 2 - Explain why an overtime premium is included in...Ch. 2 - Prob. 8RQCh. 2 - Give examples to illustrate how the city of Tampa...Ch. 2 - Distinguish between fixed costs and variable...
Ch. 2 - How does the fixed cost per unit change as the...Ch. 2 - Prob. 12RQCh. 2 - Prob. 13RQCh. 2 - Would each of the following characteristics be a...Ch. 2 - List three direct costs of the food and beverage...Ch. 2 - List three costs that are likely to be...Ch. 2 - Which of the following costs are likely to be...Ch. 2 - Distinguish between out-of-pocket costs and...Ch. 2 - Define the terms sunk cost and differential cost.Ch. 2 - Distinguish between marginal and average costs.Ch. 2 - Prob. 21RQCh. 2 - Two years ago the manager of a large department...Ch. 2 - Indicate whether each of the following costs is a...Ch. 2 - For each case below, find the missing amount.Ch. 2 - A foundry employee worked a normal 40-hour shift,...Ch. 2 - A loom operator in a textiles factory earns 16 per...Ch. 2 - Consider the following costs that were incurred...Ch. 2 - Alexandria Aluminum Company, a manufacturer of...Ch. 2 - Prob. 30ECh. 2 - A hotel pays the phone company 100 per month plus...Ch. 2 - Prob. 32ECh. 2 - Orbital Communications, Inc. manufactures...Ch. 2 - The state Department of Education owns a computer...Ch. 2 - Prob. 35ECh. 2 - List the costs that would likely be included in...Ch. 2 - Consider the following cost items: 1. Salaries of...Ch. 2 - The following selected information was extracted...Ch. 2 - Prob. 39PCh. 2 - Mason Corporation began operations at the...Ch. 2 - Determine the missing amounts in each of the...Ch. 2 - The following cost data for the year just ended...Ch. 2 - The following data refer to San Fernando Fashions...Ch. 2 - Highlander Cutlery manufactures kitchen knives....Ch. 2 - Cape Cod Shirt Shop manufactures T-shirts and...Ch. 2 - Heartland Airways operates commuter flights in...Ch. 2 - San Diego Sheet Metal, Inc. incurs a variable cost...Ch. 2 - Hightide Upholstery Company manufactures a special...Ch. 2 - For each of the following costs, indicate whether...Ch. 2 - Indicate for each of the following costs whether...Ch. 2 - Water Technology, Inc. incurred the following...Ch. 2 - The following terms are used to describe various...Ch. 2 - Several costs incurred by Bayview Hotel and...Ch. 2 - Refer to Exhibit 23, and answer the following...Ch. 2 - Roberta Coy makes custom mooring covers for boats....Ch. 2 - The Department of Natural Resources is responsible...Ch. 2 - Prob. 57PCh. 2 - Prob. 58PCh. 2 - CompTech, Inc. manufactures printers for use with...Ch. 2 - You just started a summer internship with the...
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- The actions listed next are associated with either an activity-based operational control system or a traditional operational control system: a. Budgeted costs for the maintenance department are compared with the actual costs of the maintenance department. b. The maintenance department manager receives a bonus for beating budget. c. The costs of resources are traced to activities and then to products. d. The purchasing department is set up as a responsibility center. e. Activities are identified and listed. f. Activities are categorized as adding or not adding value to the organization. g. A standard for a products material usage cost is set and compared against the products actual materials usage cost. h. The cost of performing an activity is tracked over time. i. The distance between moves is identified as the cause of materials handling cost. j. A purchasing agent is rewarded for buying parts below the standard price set by the company. k. The cost of the materials handling activity is reduced dramatically by redesigning the plant layout. l. An investigation is undertaken to find out why the actual labor cost for the production of 1,000 units is greater than the labor standard allowed. m. The percentage of defective units is calculated and tracked over time. n. Engineering has been given the charge to find a way to reduce setup time by 75 percent. o. The manager of the receiving department lays off two receiving clerks so that the fourth-quarter budget can be met. Required: Classify the preceding actions as belonging to either an activity-based operational control system or a traditional control system. Explain why you classified each action as you did.arrow_forwardWhen allocating service department costs to production departments, why is the standard cost that the service department was expected to incur, rather than the actual cost that was incurred, used in the allocation?arrow_forwardFor the following descriptions state whether the cost is controllable or uncontrollable by responsibility center managers. A. property tax of an existing manufacturing facility B. research and development of a product C. advertising of a product D. insurance cost of the existing manufacturing facility E. design of a productarrow_forward
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