Managerial Accounting: Creating Value in a Dynamic Business Environment
11th Edition
ISBN: 9781259569562
Author: Ronald W Hilton Proffesor Prof, David Platt
Publisher: McGraw-Hill Education
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Textbook Question
Chapter 5, Problem 38E
Since you have always wanted to be an entrepreneur, invent your own product and describe at least five steps used in its production.
Required: Explain how you would go about identifying non-value-added costs in the production process.
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Finally, you should reflect on the results of your activity-based
costing exercise, by:
a) explaining how costs are categorised.
b) identifying those cost areas that have the greatest impact
on the profitability of the product that you have investigated.
c) evaluating the reasons for producing an activity-based cost
model.
d) explain how ABC model used to improve profitability.
A research and problem solving project to explore the costs associated
with engineering activities and to complete an activity-based cost model
for a product.
d
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?
Chapter 5 Solutions
Managerial Accounting: Creating Value in a Dynamic Business Environment
Ch. 5 - Briefly explain how a traditional, volume-based...Ch. 5 - Prob. 2RQCh. 5 - Explain how an activity-based costing system...Ch. 5 - What are cost drivers? What is their role in an...Ch. 5 - List and briefly describe the four broad...Ch. 5 - How can an activity-based costing system alleviate...Ch. 5 - Prob. 7RQCh. 5 - How is the distinction between direct and indirect...Ch. 5 - Explain the concept of a pool rate in...Ch. 5 - Briefly explain two factors that tend to result in...
Ch. 5 - List three factors that are important in selecting...Ch. 5 - Prob. 12RQCh. 5 - Explain why a new product-costing system may be...Ch. 5 - Prob. 14RQCh. 5 - Are activity-based costing systems appropriate for...Ch. 5 - Explain why maintaining their medical-services...Ch. 5 - How could the administration at Immunity Medical...Ch. 5 - Prob. 18RQCh. 5 - Prob. 19RQCh. 5 - What is meant by the term activity analysis? Give...Ch. 5 - Prob. 21RQCh. 5 - What is meant by customer-profitability analysis?...Ch. 5 - Explain the relationship between customer profit...Ch. 5 - What is a customer profitability profile?Ch. 5 - Describe the use of practical capacity in a TDABC...Ch. 5 - Tioga Company manufactures sophisticated lenses...Ch. 5 - Urban Elite Cosmetics has used a traditional cost...Ch. 5 - Kentaro Corporation manufactures Digital Video...Ch. 5 - Kentaro Corporation manufactures Digital Video...Ch. 5 - Prob. 31ECh. 5 - Refer to the description given for Wheelco, Inc....Ch. 5 - Prob. 33ECh. 5 - United Technologies Corporation implemented...Ch. 5 - Redwood Company sells craft kits and supplies to...Ch. 5 - Non-value-added costs occur in nonmanufacturing...Ch. 5 - Since you have always wanted to be an...Ch. 5 - Prob. 39ECh. 5 - Prob. 42ECh. 5 - Big Apple Design Company specializes in designing...Ch. 5 - Prob. 44ECh. 5 - Borealis Manufacturing has just completed a major...Ch. 5 - Ontario, Inc. manufactures two products, Standard...Ch. 5 - Kitchen Kings Toledo plant manufactures three...Ch. 5 - Prob. 48PCh. 5 - Maxey Sons manufactures two types of storage...Ch. 5 - Prob. 50PCh. 5 - John Patrick has recently been hired as controller...Ch. 5 - The controller for Tulsa Medical Supply Company...Ch. 5 - Prob. 53PCh. 5 - Prob. 54PCh. 5 - Prob. 55PCh. 5 - World Gourmet Coffee Company (WGCC) is a...Ch. 5 - Knickknack, Inc. manufactures two products: Odds...Ch. 5 - Prob. 58PCh. 5 - Marconi Manufacturing produces two items in its...Ch. 5 - Gigabyte, Inc. manufactures three products for the...Ch. 5 - Refer to the new target prices for Gigabytes three...Ch. 5 - Prob. 62PCh. 5 - Better Bagels, Inc. manufactures a variety of...Ch. 5 - Midwest Home Furnishings Corporation (MHFC)...Ch. 5 - Fresno Fiber Optics, Inc. manufactures fiber optic...Ch. 5 - Refer to the information given in the preceding...Ch. 5 - Whitestone Company produces two subassemblies,...Ch. 5 - Morelli Electric Motor Corporation manufactures...Ch. 5 - Refer to the product costs developed in...Ch. 5 - Morelli Electric Motor Corporations controller,...
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- If 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_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_forwardFrom the choices presented in parentheses, choose the appropriate term for completing each of the following sentences: a. A product, sales territory, department, or activity to which costs are traced is called a (direct cost, cost object). b. Advertising costs are usually viewed as (period, product) costs. c. Factory overhead costs combined with direct labor costs are called (prime, conversion) costs. d. Feedback is often used to (improve, direct) operations. e. A sacrifice made to obtain some benefit is a (cost, expense). f. The balance sheet of a manufacturer would include an account for (cost of goods sold, work in process inventory). g. The implementation of automatic, robotic factory equipment normally (increases, decreases) the direct labor component of product costs.arrow_forward
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- Can you provide samples/examples of tasks for developing the costing and profitability model for a new product? Should include the following: o A table showing the list of the parameters used in your model o A breakdown of the expected production costs and profitability o Calculation of the NPV of expected sales/ profitability o A sensitivity analysis that accounts for changes in any three (3) parameters of your model. o At least two trade-off rules you developed for your product developmentarrow_forwardRaider Corporation is planning to introduce a new product to its product line. 1. You are tasked with conducting a Cost - Volume - Profit (CVP) analysis for the new product. 2. Discuss the key components of CVP analysis, including the breakeven point, contribution margin, and margin of safety. 3. Additionally, explain how CVP analysis can assist Raider Corporation in making strategic decisions related to pricing, sales volume, and overall profitability for the new product. 4. Discuss any assumptions or limitations associated with CVP analysis that management should be aware of when using this tool for decision-making. 5. Finally, suggest potential strategies that Raider Corporation could employ to improve its CVP metrics and enhance the financial performance of the new product.arrow_forwardKwami Williams and Emily Cunningham of MoringaConnect must understand manufacturing costs to effectively operate and succeed as a profitable and efficient business. Required 1. What are the three main categories of manufacturing costs Kwami and Emily must monitor and control? Provide examples of each. 2. What are four goals of a total quality management process? Hint: The goals are listed in a margin “Point.” How can MoringaConnect use TQM to improve its business activities?arrow_forward
- 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.arrow_forward3. Provide the justification why more companies are refining their costing systemby using Activity Based Costing. explain the answers with proper examples. Thank you.arrow_forwardIdentify, by clicking on the boxes in the table below, whether each of the statements about life-cycle costing is true or false. The aim of life-cycle costing is to enable overhead costs to be allocated more accurately to individual product units By identifying a product's profitability over its full life, life-cycle costing helps management to decide whether to develop a product The purpose of life-cycle costing is to assess the total costs of a product over its entire life Life-cycle costing is only useful for organisations which develop products with long life-cycles TRUE TRUE TRUE TRUE FALSE FALSE FALSE FALSEarrow_forward
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