1.
To explain: The qualitative reasons behind discontinuance of product GS.
2.
To explain: The factors that would be relevant to a restaurant that is considering whether to make its own dinner rolls or to purchase dinner rolls from a local bakery.
3.
That how would outsourcing change a company’s cost structure.
To conclude: The change in cost structure help or harm a company’s competitive position by outsourcing.
4.
To explain: Opportunity cost and list possible opportunity costs associated with a make-or-buy decision.
5.
To explain: The undesirable result that can arise from allocating common fixed costs to product lines.
6.
The reason that could make a manager be justified in ignoring fixed costs when making a decision about a special order.
To explain: The situation when would fixed costs be relevant when making a decision about a special order
7.
The difference between segment margin and contribution margin.
To explain: The condition when segment margin and contribution margin is used.
8.
To explain: That if joint costs affect a sell as is or process further decision with reasons.
9.
That how “make-or-buy” concepts be applied to decisions at a service organization.
To explain: The types of make-or-buy decisions that might a service organization face.
10.
The constraints for company O, which builds outdoor furniture using a variety of woods and plastics.
To explain: At least four possible constraints at company O.
11.
To explain: The carbon offset and carbon footprint. Interest of company in selling carbon offset.
12.
To explain: The quantitative and qualitative factors for outsourcing its services.
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Managerial Accounting (5th Edition)
- In The Trouble with Outsourcing, a Schumpeter column in The Economist, there is a statement of advice to companies, who outsource products or services: they need to think harder about what is their core business, and what is peripheral. What types of problems do you think they are talking about? In your answer, present at least five (5) problems that companies should consider when outsourcing products or services.arrow_forwardIn the decision by a grocery company that is trying to decide whether to keep or drop the bakery department in its grocery stores, what would the bakery managers salary be in relationship to the decision if the manager will be laid off?arrow_forwardwhat revenues and costs are probably differential for the decision to close the Cornwall Street storearrow_forward
- Requirement 1: A diversified food company is considering the closing of its condiment division. What qualitative factors should be considered before discontinuing a division or product line? Requirement 2: An automobile manufacturer has decided to allow outside suppliers to bid on all parts necessary to make its vehicles. What qualitative factors should be considered by management in deciding whether or not to turn over the production of a part to an outside supplier?arrow_forwardHEB grocery How can the contribution margin be used to determine the profitability of HEB grocery company products and how could it be used to make the operations more profitable?arrow_forwardDiscuss how, as warehouse manager for Vinnies Vinyls, you view the different rate of allocated costs the warehouse is being charged compared to the West store. Describe the implications of this. What steps could you take to solve this discrepancy? What alternatives would you consider, assuming management is willing to consider making changes in the rate?arrow_forward
- Cost Behavior, High-Low Method, Pricing Decision Fonseca, Ruiz, and Dunn is a large, local accounting firm located in a southwestern city. Carlos Ruiz, one of the firms founders, appreciates the success his firm has enjoyed and wants to give something back to his community. He believes that an inexpensive accounting services clinic could provide basic accounting services for small businesses located in the barrio. He wants to price the services at cost. Since the clinic is brand new, it has no experience to go on. Carlos decided to operate the clinic for 2 months before determining how much to charge per hour on an ongoing basis. As a temporary measure, the clinic adopted an hourly charge of 25, half the amount charged by Fonseca, Ruiz, and Dunn for professional services. The accounting services clinic opened on January 1. During January, the clinic had 120 hours of professional service. During February, the activity was 150 hours. Costs for these two levels of activity usage are as follows: Required: 1. Classify each cost as fixed, variable, or mixed, using hours of professional service as the activity driver. 2. Use the high-low method to separate the mixed costs into their fixed and variable components. (Note: Round variable rates to two decimal places and fixed amounts to the nearest dollar.) 3. Luz Mondragon, the chief paraprofessional of the clinic, has estimated that the clinic will average 140 professional hours per month. If the clinic is to be operated as a nonprofit organization, how much will it need to charge per professional hour ? How much of this charge is variable? How much is fixed? (Note: Round answers to two decimal places.) 4. CONCEPTUAL CONNECTION Suppose the accounting center averages 170 professional hours per month. How much would need to be charged per hour for the center to cover its costs ? Explain why the per-hour charge decreased as the activity output increased. (Note: Round answers to two decimal places.)arrow_forwardWhich of the following is relevant to Limited's decision to accept a special order at a lower price?the shipping costs to the customer CEO's salary Limited's investment its warehouse the cost of its furniture and fixturesarrow_forwardGeraldine, the COO of a gourmet food truck business that specializes in Spanish cuisine such as paella and tapas, has been asked to present her company with an evaluation of strong prospects for attractive profits. What would she normally not include in her analysis? Multiple Choice whether or not food truck industry profitability will be impacted by the prevailing driving forces whether or not the food truck industry is impacted by changes in the macro-environment whether or not her gourmet food truck company can deliver on the industry's key success factors whether or not the food truck industry's opportunities for international expension ore promising whether or not the company occuples a stronger market position than rivalsarrow_forward
- Prepare a schedule showing the change in revenues and expenses and the impact on the company’s overall net operating income that would result if the North Store were closed. Assuming that the store space can’t be subleased, what recommendation would you make to the management of Superior Markets, Inc.? Disregard requirement 2. Assume that if the North Store were closed, at least one-fourth of its sales would transfer to the East Store, due to strong customer loyalty to Superior Markets. The East Store has enough capacity to handle the increased sales. You may assume that the increased sales in the East Store would yield the same gross margin as a percentage of sales as present sales in that store. What effect would these factors have on your recommendation concerning the North Store? Show all computations to support your answer.arrow_forwardWhich of the following is not an application of cost-volume-profit analysis? Setting prices for products and services. Performing strategic “what-if” analyses. Deciding whether to cut a product line. Determining the short-term cost or profit implications of many decisions. Deciding whether to make or buy a given product or service.arrow_forwardWhat benefits and drawbacks are there for a business that uses a Standard/Traditional Costing model? What benefits and drawback are there for a business that uses an Activity Based Costing (ABC) model? If you owned a small manufacturing business with relatively high volume and multiple product lines, would it be good for you to implement an ABC model? Why? What are the benefits and the risks - or how could you adapt it to get the best of both?arrow_forward
- Managerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage LearningPrinciples of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax College