Managerial Accounting: Tools for Business Decision Making
7th Edition
ISBN: 9781118334331
Author: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso
Publisher: WILEY
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Chapter 4, Problem 4.6BYP
As discussed in the chapter, the principles underlying activity-based costing have evolved into the broader approach known as activity-based management. One of the common practices of activity-based management is to identify all business activities, classify each activity as either a value-added or a non-value-added activity, and then try to reduce or eliminate the time spent on non-value-added activities. Consider the implications of applying this same approach to your everyday life, at work and at school. How do you spend your time each day? How much of your day is spent on activities that help you accomplish your objectives, and how much of your day is spent on activities that do not add value?
Many “self-help” books and websites offer suggestions on how to improve your time management. Should you minimize the “non-value-added” hours in your life by adopting the methods suggested by these sources? The basic arguments for and against are as follows.
YES: There are a limited number of hours in a day. You should try to maximize your chances of achieving your goals by eliminating the time that you waste.
NO: Life is about more than working yourself to death. Being an efficiency expert doesn't guarantee that you will be happy. Schedules and daily planners are too constraining.
Instructions
Write a response indicating your position regarding this situation. Provide support for your view.
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Students have asked these similar questions
Companies that produce a variety of products need a costing system that allocates costs based on the varying resource demands of each product. Activity-based costing systems identify activities as the cost objects. An activity-based system (ABC) identifies activities as fundamental cost objects. Costs are then assigned to the activities and allocated to the individual products. Unlike simple systems, ABC systems calculate costs of individual activities to cost products.
What is activity-based management and how can it be used to improve the profitability of a company. In this discussion, be sure to compare and contrast your understanding of activity-based costing.
Identify a simple product and explain the different cost drivers used in making that product.
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?
Why would a business that uses traditional costing systems consider implementing activity-based costing? Discuss the following in your answer:
Problems with traditional costing systems in a modern manufacturing environment.
Whether the benefits of activity-based costing always outweigh the costs.
Chapter 4 Solutions
Managerial Accounting: Tools for Business Decision Making
Ch. 4 - Under what conditions is direct labor a valid...Ch. 4 - What has happened in recent industrial history to...Ch. 4 - In an automated manufacturing environment, what...Ch. 4 - What is generally true about overhead allocation...Ch. 4 - What are the principal differences between...Ch. 4 - What is the formula for computing activity-based...Ch. 4 - What steps are involved in developing an activity-...Ch. 4 - Prob. 8QCh. 4 - What is an activity cost pool?Ch. 4 - Prob. 10Q
Ch. 4 - Prob. 11QCh. 4 - What is the formula for assigning activity cost...Ch. 4 - What are the benefits of activity-based costing?Ch. 4 - What are the limitations of activity-based...Ch. 4 - Under what conditions is ABC generally the...Ch. 4 - Prob. 16QCh. 4 - Prob. 17QCh. 4 - Prob. 18QCh. 4 - Prob. 19QCh. 4 - Prob. 20QCh. 4 - Prob. 4.1BECh. 4 - Finney Inc. has conducted an analysis of overhead...Ch. 4 - Splash Co. identifies the following activities...Ch. 4 - Mason Company manufactures four products in a...Ch. 4 - Morgana Company identifies three activities in its...Ch. 4 - Weisman, Inc. uses activity-based costing as the...Ch. 4 - Spud, Inc. a manufacturer of gourmet potato chips,...Ch. 4 - Prob. 4.8BECh. 4 - Pine and Danner is an architectural firm that is...Ch. 4 - Prob. 4.10BECh. 4 - Fixlt, Inc. operates 20 injection molding machines...Ch. 4 - Prob. 4.12BECh. 4 - Indicate whether the following statements are true...Ch. 4 - Compute activity-based overhead rates and assign...Ch. 4 - Adamson Company manufactures four lines of garden...Ch. 4 - Ready Ride is a trucking company. It provides...Ch. 4 - Saddle Inc. has two types of handbags: standard...Ch. 4 - Ayala Inc. has conducted the following analysis...Ch. 4 - EcoFabrics has budgeted overhead costs of 945,000....Ch. 4 - Altex Inc. manufactures two products: car wheels...Ch. 4 - Perdon Corporation manufactures safeslarge mobile...Ch. 4 - Santana Corporation manufactures snowmobiles in...Ch. 4 - Rojas Vineyards in Oakville, California, produces...Ch. 4 - Wilmington, Inc. manufactures five models of...Ch. 4 - Air United, Inc. manufactures two products:...Ch. 4 - Kragan Clothing Company manufactures its own...Ch. 4 - Health 'R Us, Inc., uses a traditional product...Ch. 4 - Santana Corporation manufactures snowmobiles in...Ch. 4 - William Mendel Sons, Inc. is a small...Ch. 4 - Venus Creations sells window treatments (shades,...Ch. 4 - Snap Prints Company is a small printing and...Ch. 4 - Lasso and Markowitz is a law firm that is...Ch. 4 - Manzeck Company operates a snow-removal service....Ch. 4 - Combat Fire, Inc. manufactures steel cylinders and...Ch. 4 - Prob. 4.2APCh. 4 - Shaker Stairs Co. designs and builds factory-made...Ch. 4 - Prob. 4.4APCh. 4 - Lewis and Stark is a public accounting firm that...Ch. 4 - CURRENT DESIGNS As you teamed in the previous...Ch. 4 - Prob. 4.1BYPCh. 4 - Prob. 4.2BYPCh. 4 - Curtis Rich, the cost accountant for Hi-Power...Ch. 4 - As discussed in the chapter, the principles...
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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
- How might Sander’s managers use the new cost information from its activity-based costing system to better manage its business?arrow_forwardThe three types of responsibility centers are cost centers, profit centers, and investment centers. Please define these responsibility centers. Also, please consider an everyday item in your home and the manufacturing company that made that item. Please describe a cost center, profit center, and investment center that the manufacturing company that made your item might use.arrow_forwardIf you were a small business owner would you implement an activity based costing system? What potential benefits or pitfalls do you foresee? The answer doesn't have to be long.arrow_forward
- How can activity-based costing be used to switch the management of business activities from a custodial task to a continuous improvement activity?arrow_forwardDo some research (use sources other than your prescribed textbook) on the traditional costing system and the activity-based costing (ABC) system and answer the following questions. Remember to reference your answer and add your reference list to the bottom of this question. Q.4.1.1 Discuss any two differences between the traditional costing system and the activity-based costing (ABC) system for a business. Q.4.1.2 Identify one characteristic in organisation that make them more suited to using ABC method as opposed to the traditional costing method. Provide a reason for your answer. Q4.1.3 Discuss three advantages of activity-based costingarrow_forwardJob costing is defined by cost accumulation and cost measurement that support the strategic role of costing and cost flows. Managing costs is a main duty of a cost accountant. Discuss how the concepts of cost accumulation and cost measurement apply to direct, indirect, and manufacturing overhead costs when using job costing. Include an example of your thinking.arrow_forward
- The concerns that encourage management to look at the life- cycle costing are? 1.Opportunity Costs 2.Customer Satisfaction and Customer Loyalty . 3.Repair costs, maintenance, and warranties 4.Production Costsarrow_forwardProvide 2 differences between traditional and activity based costing system.arrow_forwardPlease solve the following task by using the attached picture of background knowledge. What problems can arise if you use the results of your full costing approach for decision accounting, e.g. •Calculation of an additional order ? •Eliminating a product?•Assortment decisions?Are there alternatives for the decision accounting?arrow_forward
- What are the benefits of Activity-based costing: a.All of the answers are correct b.It assists in justifying equipment purchases or improvements c.It is more credible than traditional costing d.It helps to improve responsibility reportingarrow_forwardIn light of the research you've done, identify two major takeaways that may be applied to your chosen costing method in today's businesses.arrow_forwardAs a start-up / ‘new’ manufacturer, one of your tasks as the Operations Manager is to identify the behaviour of manufacturing costs to develop a production cost budget. You know three methods can be used to identify cost behaviour from past data, but past data are not available because this is a start-up. Identify and compare the three known methods of measuring cost behaviour.arrow_forward
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