Fundamentals of Cost Accounting
5th Edition
ISBN: 9781259565403
Author: William N. Lanen Professor, Shannon Anderson Associate Professor, Michael W Maher
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 4, Problem 28CADQ
Consider the opportunity costs you identified in Question 4-27. Are they relevant to the decision of the airline to upgrade certain people? Which, if any, of these would be likely to be included in the accounting records? Why or why not?
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
An analyst must be familiar with the concepts involved in determining income. The amount of in- come reported for a company depends on the recognition of revenues and expenses for a given time period. In certain cases, costs are recognized as expenses at the time of product sale; in other situations, guidelines are applied in capitalizing costs and recognizing them as expenses in future periods.
Explain the rationale for recognizing costs as expenses at the time of product sale.
What is the rationale underlying the appropriateness of treating costs as expenses of a period instead of assigning the costs to an asset? Explain.
Under what circumstances is it appropriate to treat a cost as an asset instead of as an expense? Explain.
Certain expenses are assigned to specific accounting periods on the basis of systematic and rational allocation
Identify the conditions necessary to treat a cost as a loss.
JB Limited is a small specialist manufacturer of electronic components and much of its output is used by
the makers of aircraft for both civil and military purposes. One of the few aircraft manufacturers has offered
a contract to JB Limited for the supply, over the next months, of 400 identical components.
The data related to the production of each component are as follows:
O Material requirements
3 kg material M1: see note 1
2 kg material P2: see note 2
1 part N° 678: see note 3
Note 1: Material M1 is in continuous use by the company. 1000Okg are currently held in stock at a book value
of £4.70 per kg, but it is known that the current purchase price is £5.50 per kg.
Note 2:1 200 kg of material P2 are held in stock. The original cost of this material was £4.30 per kg, but as
this material has not been required for the last two years it has been written down to £1.50 per kg scrap
value. The only foreseeable alternative use is as a substitute for material X4 (in current use), but this…
Are the financial reports contained in the annual report
considered financial accounting reports or management
accounting, clarify this and provide evidence to prove it? Can
the costs contained in the income statement be used to analyze
the relationship between cost, volume and profit (CVP), if the
answer is yes, then the tools that can be used in this CVP
analysis are clarified, and if this analysis cannot be used, the
reasons will be clarified?
Chapter 4 Solutions
Fundamentals of Cost Accounting
Ch. 4 - Fixed costs are often defined as fixed over the...Ch. 4 - What is the difference between a sunk cost and a...Ch. 4 - Are sunk costs ever differential costs? Explain.Ch. 4 - What is the difference between short-run and...Ch. 4 - What costs are included in the full cost of a...Ch. 4 - What costs are included in the full cost of a...Ch. 4 - What costs should be considered for a special...Ch. 4 - What are life-cycle product costing and pricing?Ch. 4 - Prob. 9RQCh. 4 - What do the terms target cost and target price...
Ch. 4 - What is predatory pricing? Why is it illegal in...Ch. 4 - What is dumping? What role would a cost accountant...Ch. 4 - What is price discrimination? How could a cost...Ch. 4 - If we want to maximize profit, why do we use unit...Ch. 4 - A company has learned that a particular input...Ch. 4 - Why are production constraints important in...Ch. 4 - What are some nonfinancial factors in decisions to...Ch. 4 - Prob. 18RQCh. 4 - Consider the Business Application item, Cost...Ch. 4 - Prob. 20CADQCh. 4 - As a marketing manager for an airline, would you...Ch. 4 - Prob. 22CADQCh. 4 - You buy an airline ticket to New York City to see...Ch. 4 - Consider the Business Application item,...Ch. 4 - One of your acquaintances notes, This whole...Ch. 4 - A manager in your organization just received a...Ch. 4 - Many airline frequent-flier programs upgrade elite...Ch. 4 - Consider the opportunity costs you identified in...Ch. 4 - Prob. 29CADQCh. 4 - Prob. 30CADQCh. 4 - Prob. 31CADQCh. 4 - Prob. 32CADQCh. 4 - Prob. 33CADQCh. 4 - Prob. 34CADQCh. 4 - Prob. 35ECh. 4 - Prob. 36ECh. 4 - Pricing Decisions Assume that MTA Sandwiches sells...Ch. 4 - Pricing Decisions Rutkey Collectibles is a small...Ch. 4 - Prob. 39ECh. 4 - Special Order Fairmount Travel Gear produces...Ch. 4 - Target Costing and Pricing Sids Skins makes a...Ch. 4 - Target Costing and Pricing Domingo Corporation...Ch. 4 - Target Costing and Purchasing Decisions Mira Mesa...Ch. 4 - Target Costing Kearney, Inc., makes kitchen tools....Ch. 4 - Make-or-Buy Decisions Mobility Partners makes...Ch. 4 - Make-or-Buy Decisions Mels Meals 2 Go purchases...Ch. 4 - Prob. 47ECh. 4 - Prob. 48ECh. 4 - Dropping Product Lines Freeflight Airlines is...Ch. 4 - Theory of Constraints CompDesk, Inc., makes a...Ch. 4 - Prob. 51ECh. 4 - Unter Components manufactures low-cost navigation...Ch. 4 - Special Orders Sherene Nili manages a company that...Ch. 4 - Prob. 54PCh. 4 - M. Anthony, LLP, produces music in a studio in...Ch. 4 - Davis Kitchen Supply produces stoves for...Ch. 4 - Make or Buy King City Specialty Bikes (KCSB)...Ch. 4 - Agnew Manufacturing produces and sells three...Ch. 4 - Prob. 59PCh. 4 - Power Music owns five music stores, where it sells...Ch. 4 - You have been asked to assist the management of...Ch. 4 - Prob. 62PCh. 4 - Prob. 63PCh. 4 - Slavin Corporation manufactures two products,...Ch. 4 - Prob. 65P
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- What should businesses consider when it comes to the expense side of the BPM equation?arrow_forwardWhen should a company recognize revenue under GAAP? Multiple Choice When the promised performance has been satisfied. k ces All of the choices are necessary to recognize revenue. When delivery has occurred or services have been provided (rendered). When the price is measurable.arrow_forwardWhich of the following is NOT a period cost? Select one: O a. manufacturing costs. Ob general and administrative costs. Oc marketing costs. Od. research and development costs. Which of the following is NOT one of the questions management accountants might attempt to help answer in the formulation of strategy? Select one: a. What substitute products exist in the marketplace? Ob. Who are our most important customers? Does the strategy comply with GAAP (Generally Accepted Accounting Principles)? Od. Will adequate cash be available to implement the strategy?arrow_forward
- Choose the letter of the correct answers.arrow_forwardWhat are the measurement alternatives involved with using ROA as a performance measure? For example, in what ways can income be measured? In what ways can assets be measured?arrow_forwardExplain the impact on a company's financial statements if it shifts from using the historical cost principle to using the revaluation model. What adjustments should be made to the financial statements to reflect this change?arrow_forward
- When preparing cost estimates for account analysis purposes, should the costs be extracted from the historical accounting records?arrow_forward1. State if each of the costs identified above should be provided for. Givereasons for your answers. Include calculations where necessary 2.Calculate the amount of the restructuring provision if any.arrow_forwardWhat is meant by discontinued operations, and what can I put as one example.What is meant by comprehensive income? and what example can I put downarrow_forward
- In your own understanding, please answer the following: 1. What are the importance of knowing, analyzing and assessing the financial statement in the decision making of internal and external users in the organization? 2. Explain briefly how do you understand the concept of Cost of Good Sold.arrow_forwardChoose the letter of the correct answer.arrow_forwardIncome reported for a business entity depends on the proper recognition of revenues and expenses. In certain cases, costs are recognised as expenses at the time of product sale and in other situations costs are capitalised if they bring future benefits.In around 250 words, comment on the above statement. Your comments should include valid examples and illustrations.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
Financial Reporting, Financial Statement Analysis...FinanceISBN:9781285190907Author:James M. Wahlen, Stephen P. Baginski, Mark BradshawPublisher:Cengage Learning
Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax College- Business/Professional Ethics Directors/Executives...AccountingISBN:9781337485913Author:BROOKSPublisher:Cengage
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning
Financial Reporting, Financial Statement Analysis...
Finance
ISBN:9781285190907
Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:Cengage Learning
Principles of Accounting Volume 2
Accounting
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax College
Business/Professional Ethics Directors/Executives...
Accounting
ISBN:9781337485913
Author:BROOKS
Publisher:Cengage
Relevant Costing Explained; Author: Kaplan UK;https://www.youtube.com/watch?v=hnsh3hlJAkI;License: Standard Youtube License