Managerial Accounting (4th Edition)
4th Edition
ISBN: 9780133428377
Author: Karen W. Braun, Wendy M. Tietz
Publisher: PEARSON
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Textbook Question
Chapter 4, Problem 4.50ACT
ABC in Real Companies
Choose a company in any of the following categories: airline, florist, bookstore, bank, grocery store, restaurant, college, retail clothing shop, movie theater, or lawn service. In this activity, you will be making reasonable estimates of the types of costs and activities associated with this company: companies do not typically publish internal cost or process information. Be reasonable in your cost estimates and include your assumptions used in selecting costs.
Basic Discussion Questions
- 1. Describe the company selected, including its products or services.
- 2. List eight key activities performed at this company. Choose at least one activity in the areas of production, sales, human resources, and accounting.
- 3. For each of the key activities, list a potential cost driver for that activity and describe why this cost driver would be appropriate for the associated activity.
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Students have asked these similar questions
Value chain classifications Match each of the following cost items with the value
chain business function where you would expect the cost to be incurred:
Cost Item
Answer
Business Function
a. Research and development
b. Design
c. Production
d. Marketing
e. Distribution
t Customer service
1. Labor time to repair products under warranty
2. TV commercial spots
3. Labor costs of filling customer orders
4. Testing of competitor's product
5. Direct manufacturing labor costs
6. Development of order tracking system for
the Internet
7. Printing cost of new product brochures
8. Hours spent designing childproof bottles
9. Training costs for representatives to staff
the customer call center
10. Installation of robotics equipment in
manufacturing plant
Have a conversation with an Owner-Manager of a business in Australia or a Manager in an organization
such as a Bank, Retail Store, Restaurant, Hotel, Factory etc. Ask the Owner-Manager or the Manager the
following questions:
Does the business collect and use cost information for planning and control purposes? How
often?
ii)
i)
ii) Who is responsible for the collection of cost information? Be as specific as possible.
ii) What type of cost information does the business collect? Provide examples incl. types of
reports.
iv) How important does the Owner-Manager or the Manager believe cost information are to
iv).
the Business's success? Explain.
IF
Concepts and terminology
From the choices presented in parentheses, choose the appropriate term for completing each of the following sentences:
The salaries of salespeople are normally considered a (period, product) cost.
The plant manager’s salary would be considered (direct, indirect) to the product.
Long-term plans are called (strategic, operational) plans.
Chapter 4 Solutions
Managerial Accounting (4th Edition)
Ch. 4 - Prob. 1QCCh. 4 - Prob. 2QCCh. 4 - Prob. 3QCCh. 4 - Prob. 4QCCh. 4 - Prob. 5QCCh. 4 - Prob. 6QCCh. 4 - Prob. 7QCCh. 4 - Prob. 8QCCh. 4 - Prob. 9QCCh. 4 - Prob. 10QC
Ch. 4 - Prob. 4.1SECh. 4 - S4-2 Use departmental overhead rates to allocate...Ch. 4 - S4-3 Compute departmental overhead rates (Learning...Ch. 4 - S4-4 Compute activity cost allocation rates...Ch. 4 - Prob. 4.5SECh. 4 - Prob. 4.6SECh. 4 - Prob. 4.7SECh. 4 - Prob. 4.8SECh. 4 - Prob. 4.9SECh. 4 - Prob. 4.10SECh. 4 - Prob. 4.11SECh. 4 - S4-15 Identifying waste activities in an office...Ch. 4 - Prob. 4.12SECh. 4 - Prob. 4.13SECh. 4 - Prob. 4.14SECh. 4 - Prob. 4.16SECh. 4 - Prob. 4.17AECh. 4 - Prob. 4.18AECh. 4 - Prob. 4.19AECh. 4 - Prob. 4.20AECh. 4 - Prob. 4.21AECh. 4 - Prob. 4.22AECh. 4 - Prob. 4.23AECh. 4 - Prob. 4.24AECh. 4 - Prob. 4.25AECh. 4 - Prob. 4.27AECh. 4 - Prob. 4.26AECh. 4 - Prob. 4.28BECh. 4 - Prob. 4.29BECh. 4 - Prob. 4.30BECh. 4 - Prob. 4.31BECh. 4 - Prob. 4.32BECh. 4 - Prob. 4.33BECh. 4 - Prob. 4.34BECh. 4 - Prob. 4.35BECh. 4 - Prob. 4.36BECh. 4 - Prob. 4.38BECh. 4 - Prob. 4.39APCh. 4 - Prob. 4.40APCh. 4 - Prob. 4.41APCh. 4 - P4-42A Using ABC in conjunction with quality...Ch. 4 - Prob. 4.43APCh. 4 - Prob. 4.44BPCh. 4 - Prob. 4.45BPCh. 4 - Prob. 4.46BPCh. 4 - Prob. 4.47BPCh. 4 - Prob. 4.48BPCh. 4 - Discussion Questions 1. Explain why departmental...Ch. 4 - ABC in Real Companies Choose a company in any of...Ch. 4 - Value-Added versus Non-Value-Added at a Restaurant...Ch. 4 - Ethics involved with ABC and hazardous waste costs...
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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
- 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.arrow_forwardHave a conversation with an Owner-Manager of a business in Australia or a Manager in an organisation such as a Bank, Retail Store, Restaurant, Hotel, Factory etc. Ask the Owner-Manager or the Manager the followingquestions:i) Does the business collect and use cost information for planning and control purposes? How often? ii) Who is responsible for the collection of cost information? Be as specific as possible. iii) What type of cost information does the business collect? Provide examples incl. types of reports.iv) How important does the Owner-Manager or the Manager believe cost information are to the Business's success? Explain. Question:Write a summary of the results of the interview. The content of the interview summary 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/retail, manufacturing) and a brief description of the goods/services provided by the Business, and•…arrow_forwardHave a conversation with an Owner-Manager of a business in Australia or a Manager in an organisation such as a Bank, Retail Store, Restaurant, Hotel, Factory etc. Ask the Owner-Manager or the Manager the following questions: i) Does the business collect and use cost information for planning and control purposes? How often? (3 marks) ii) Who is responsible for the collection of cost information? Be as specific as possible. (3 mark) iii) What type of cost information does the business collect? Provide examples incl. types of reports. (3 marks) iv) How important does the Owner-Manager or the Manager believe cost information are to the Business's success? Explain. (3 marks)arrow_forward
- Which 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_forwardWhich of the following is not a period cost? Group of answer choices Sales commissions. Public relations costs. The salary of a company's chief financial officer (CFO). Legal costs. Wages of assembly-line workers.arrow_forwardMatch 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 Functionarrow_forward
- Listed as follows are various costs found in businesses. Classify each cost as a fixed or variable cost, and as a product and/or period cost. a. Wages of administrative staff b. Shipping costs on merchandise sold C. Wages of workers assembling computers d. Cost of lease on factory equipment e. Insurance on factory f. Direct materials used in production of lamps g. Supervisor salary, factory h. Advertising costs_ i. Property taxes, factory j. Health insurance cost for company executives k. Rent on factoryarrow_forwardValue chain classifications Match each of the following cost items with the value chain business function where you would expect the cost to be incurred: Business Function Cost Item Answera. Research and development 1. Labor time to repair products under warrantyb. Design 2. TV commercial spotsc. Production 3. Labor costs of fi lling customer ordersd. Marketing 4. Testing of competitor’s producte. Distribution 5. Direct manufacturing labor costsf. Customer service 6. Development of order tracking system forthe Internet7. Printing cost of new product brochures8. Hours spent designing childproof bottles9. Training costs for representatives to staff the customer call center10. Installation of robotics equipment in manufacturing plantarrow_forwardInstruction: Write "T" if the statement is TRUE. If FALSE, write "F" and underline the word that makes the statement incorrect. 1. A knowledge of the costs of doing business is needed to estimate a job or to bid for jobs or contracts. The order generally goes to the highest bidder. 2. Cost accounting is also used in preparing a company's budget which is the overall financial plan for present activities. 3. Raw material to one manufacturer is not considered finished goods by the supplier of those materials. 4. In the manufacturing of clothing, the earnings of cutters are indirect labor costs. 5. All costs incurred in the factory that cannot be considered direct materials or direct labor are classified as factory burden. _6. Oil used for lubricating the factory machinery is an operating supply. _7. Manufacturing expenses includes costs that can be charged directly to specific products. 8. Wages and salaries of factory workers as supervisor is a direct labor cost. _9. Service firms have…arrow_forward
- You have been asked to install a costing system in a manufacturing company. What practical difficulties will you expect and how will you propose to overcome the same? In view of the difficulties and suggestion to overcome them what main considerations will you keep in mind to introduce the system?arrow_forwardWhich one is a product cost Select one: a. Travel Expenses b. Power c. Rent Factory Building d. Salesmen Salariesarrow_forwardCase Study: Cost Accounting for Operational Efficiency and Decision-Making Introduction: Cost accounting plays a pivotal role in helping organizations manage and optimize their financial resources. This case study delves into the realm of cost accounting, examining its significance in operational efficiency and decision-making within a business context. Cost Classification and Allocation: In cost accounting, costs are classified into various categories such as direct costs, indirect costs, variable costs, and fixed costs. Understanding these classifications enables businesses to allocate costs accurately to products, services, or departments. For instance, direct costs like raw materials can be directly traced to a specific product, while indirect costs like overhead may be allocated based on a predetermined formula. Job Order Costing in Manufacturing: For manufacturing businesses, job order costing is a common approach in cost accounting. This method involves assigning costs to…arrow_forward
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