...Handbook of Management Accounting Research Volume 3 Edited by CHRISTOPHER S. CHAPMAN Imperial College London, UK ANTHONY G. HOPWOOD University of Oxford, UK MICHAEL D. SHIELDS Michigan State University, USA AMSTERDAM – BOSTON – HEIDELBERG – LONDON – NEW YORK – OXFORD PARIS – SAN DIEGO – SAN FRANCISCO – SINGAPORE – SYDNEY – TOKYO Elsevier The Boulevard, Langford Lane, Kidlington, Oxford OX5 1GB, UK First edition 2009 Copyright © 2009 Elsevier Ltd. All rights reserved No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means electronic, mechanical, photocopying, recording or otherwise without the prior written permission of the publisher Permissions may be sought directly from Elsevier’s Science & Technology Rights Department in Oxford, UK: phone ( 44) (0) 1865 843830; fax ( 44) (0) 1865 853333; email: permissions@elsevier.com. Alternatively visit the Science and Technology Books website at www.elsevierdirect.com/rights for further information Notice No responsibility is assumed by the publisher for any injury and/or damage to persons or property as a matter of products liability, negligence or otherwise, or from any use or operation of any methods, products, instructions or ideas contained in the material herein. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging-in-Publication Data A catalog record for...
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...Seventh Edition Accounting for Decision Making and Control Jerold L. Zimmerman University of Rochester To: Conner, Easton, and Jillian ACCOUNTING FOR DECISION MAKING AND CONTROL, SEVENTH EDITION Published by McGraw-Hill, a business unit of The McGraw-Hill Companies, Inc., 1221 Avenue of the Americas, New York, NY 10020. Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved. Previous editions © 2009, 2006, and 2003. No part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written consent of The McGraw-Hill Companies, Inc., including, but not limited to, in any network or other electronic storage or transmission, or broadcast for distance learning. Some ancillaries, including electronic and print components, may not be available to customers outside the United States. This book is printed on acid-free paper. 1 2 3 4 5 6 7 8 9 0 DOW/DOW 1 0 9 8 7 6 5 4 3 2 1 0 ISBN MHID 978-0-07-813672-6 0-07-813672-5 Vice President & Editor-in-Chief: Brent Gordon Vice President of EDP: Sesha Bolisetty Editorial Director: Stewart Mattson Sponsoring Editor: Dick Hercher Marketing Manager: Sankha Basu Editorial Coordinator: Rebecca Mann Project Manager: Erin Melloy Design Coordinator: Brenda A. Rolwes Cover Designer: Studio Montage, St. Louis, Missouri Production Supervisor: Sue Culbertson Media Project Manager: Balaji Sundararaman Compositor: MPS Limited, A Macmillan Company...
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...Seventh Edition Accounting for Decision Making and Control Jerold L. Zimmerman University of Rochester To: Conner, Easton, and Jillian ACCOUNTING FOR DECISION MAKING AND CONTROL, SEVENTH EDITION Published by McGraw-Hill, a business unit of The McGraw-Hill Companies, Inc., 1221 Avenue of the Americas, New York, NY 10020. Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved. Previous editions © 2009, 2006, and 2003. No part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written consent of The McGraw-Hill Companies, Inc., including, but not limited to, in any network or other electronic storage or transmission, or broadcast for distance learning. Some ancillaries, including electronic and print components, may not be available to customers outside the United States. This book is printed on acid-free paper. 1 2 3 4 5 6 7 8 9 0 DOW/DOW 1 0 9 8 7 6 5 4 3 2 1 0 ISBN MHID 978-0-07-813672-6 0-07-813672-5 Vice President & Editor-in-Chief: Brent Gordon Vice President of EDP: Sesha Bolisetty Editorial Director: Stewart Mattson Sponsoring Editor: Dick Hercher Marketing Manager: Sankha Basu Editorial Coordinator: Rebecca Mann Project Manager: Erin Melloy Design Coordinator: Brenda A. Rolwes Cover Designer: Studio Montage, St. Louis, Missouri Production Supervisor: Sue Culbertson Media Project Manager: Balaji Sundararaman Compositor: MPS Limited, A Macmillan Company...
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...Kanthal Case Analysis Dr. Joseph Szendi Managerial Accounting 640 Yega Tita Company Background /History……………………………………............………2 Current System………………………………………………………………………..4 Dilemma ……………………………………………………………………………….4 Options/Solutions………………………………………………………………….….5 Analysis…………………………………………………………………………………6 Competitive Forces……………………………………………………………………6 Porters Five Forces …………………………………………………………………...7 SWOT Analysis………………………………………………………………………..8 Strengths ……………………………………………………………………………...8 Weaknesses…………………………………………………………………………..…8 Opportunities…………………………………………………………………………...8 Threats………………………………………………………………………………..…8 Recommendations/Conclusion………………………………………………………9 References……………………………………………………………………………...10 Company background: Sandvik Materials Technology, of which Kanthal is a brand, is a world-leading developer and manufacturer of products in advanced stainless steels and special alloys for the most demanding environments, as well as products and systems for industrial heating. Kanthal is the largest of the six divisions in Sweden. There are currently 7,300 employees. Kanthal specializes in production and sales of electrical resistance heating elements. Kanthal heating Technology supplies manufacturers of electrical appliances and heating systems with wire that generates heat through electric...
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...MA360 EXAM SOLUTIONS – 2011 SECTION A Question 1 (a) |Selling Price per|Year 1 Sales Units |Year 1 Year End Stock units |Year 2 Unit Sales |Sales Revenue Year 1 | |Unit (£) | | | |(£) | |20,000 |800,000 |400,000 |500,000 |(100,000) | |40,000 |1,600,000 |800,000 |500,000 |300,000 | |60,000 |2,400,000 |1,200,000 |500,000 |700,000 | |80,000 |3,200,000 |1,600,000 |500,000 |1,100,000 | |100,000 |4,000,000 |2,000,000 |500,000 |1,500,000 | (5 Profit calculations x 1 marks each = 5 marks) [5] Building Division |Output (Units) |Total Revenues |Var.Costs (£15/unit) |Transfer In Costs (£40 /m2) |Fixed Costs |Total Profit / (Loss)| |20,000 |2,200,000 |300,000 |800,000 |1,200,000 ...
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...1. Responsibility accounting in modern health care organization is a type of management accounting which collects and reports both planned and actual accounting information in terms of responsibility centers about the inputs and outputs of responsibility accounting. A growing trend in the structure of health care organizations is decentralization. Decentralization is the degree of dispersion of responsibility within a health care organization. In a decentralized organization, decision making is not confined to a few Top Executives but rather spread throughout the organization, with managers at various levels making key operating decisions within their sphere of responsibility. Health care organizations are divided into responsibility centers, organizational units in which a manager is responsible for operations and evaluates the unit's performance. For example, a nurse manager may be responsible for an inpatient pediatric unit, the manager for a home-care program is responsible for all home-care services that are delivered, and the manager of a housekeeping department is responsible for the cleanliness of the facility. Every program and department in a health care organization can be classified as a responsibility center. Responsibility accounting provides the information necessary to assist a manager in operating a responsibility center. Responsibility accounting is defined as the classification of financial and statistical data according to the organizational unit that produces...
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...Lecture 5: Cost-Volume-Profit Analysis In this module, we are going to discuss a simple concept yet a powerful financial planning and decision-making tool for managers. This concept is called CVP analysis or cost volume profit relationship. Profits are the difference between revenues and costs. Both revenue and cost depend on the volume of operations. So, in the short run whether you make a profit or a loss depends upon the volume of sales you make. What is the unknown for a manager when he or she tries to project profits for future? The managers know the costs and the selling price. So the only unknown is the volume of sales. The importance of CVP analysis flows from the fact that it emphasizes the inter-relationship between costs, volume of sales, and selling price, and therefore it represents a unified picture of all financial information in a simple framework. What effect on profit can American Airlines expect when it adds a new flight on the Dallas Chicago route? How many patient days of care must Dallas Children’s hospital provide in order to cover all of its operating costs? How will the profits for Texas Instruments change if it sells 10% more of its DLP chips? Each of the above questions concerns the effect on cost and revenues when an organization’s activity changes. CVP analysis summarizes the effects of changes in organization’s volume of activities on its costs, revenue and therefore profit. Although the word profit appears in CVP analysis, this...
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...Costing Methods: Super Bakery, Inc. George Mancuso ACC/561 Accounting March 18, 2013 Lisa Parker Abstract Super Bakery, Inc., a virtual corporation is a supplier of mineral-, vitamin-, and protein-enriched doughnuts and other baked goods to institutional food distribution centers nationwide (Kimmel, Weygandt, & Kieso, 2009). The company has grown at an average rate of 20% annually since 1990 but persistent challenges of identifying opportunities for cost efficiency in using traditional costing methods requires new strategy. Desire for new “system that would more accurately assign the costs of each order” (Kimmel, Weygandt, & Kieso, 2009, pg. 865), Super Bakery is exploring activity-based costing (ABC) management. Super Bakery, Inc. In 1990, former Pittsburg Steeler’s player Franco Harris incorporated the Supper Bakery, a nationwide supplier of mineral-, vitamin-, and protein-enriched bakery goods to the institutional food market (Kimmel, Weygandt, & Kieso, 2009). As a virtual corporation, Super Bakery’s core business functions are maintained within the company. Other business functions such as “selling, manufacturing, warehousing, and shipping—are outsourced to a network of external companies… to add maximum value to the company while making the minimum investment in permanent staff, fixed assets, and working capital” (Kimmel, Weygandt, & Kieso, 2009, pg. 865). Currently the company is using a traditional costing method that does not identify the accurate...
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...9-6 Case 1. Assume that $300,000 of the fixed overhead cost can be reduced (avoided). The revised cost sheet will be as follows: Direct materials ($40 per robot) $800,000 Direct labor ($30 per robot) 600,000 Variable overhead ($6 per robot) 120,000 Allocated fixed overhead 200,000 Total $1,720,000 Cost of purchase from Chen Inc. $1,800,000 Saving in production at our place $80,000 Hence, the robots should not be purchased from Chen Inc. Case 2. Assume that none of the fixed overhead can be reduced (avoided). However, if the robots are purchased from Chen Inc., SY Tele can use the released productive resources to generate additional income of $300,000. The revised cost sheet will be as follows: Direct materials ($40 per robot) $800,000 Direct labor ($30 per robot) 600,000 Variable overhead ($6 per robot) 120,000 Allocated fixed overhead 500,000 Total $2,020,000 Cost of purchase from Chen Inc. $1,800,000 Saving in purchase from Chen Inc. $ 220,000 Add: Additional income generated $300,000 Total saving to SY Tele $520,000 Hence, the robots should be purchased from Chen Inc. E9-11 Yes, The current machine should be replaced, because the maintaining expenses are high, when we | compared with the new machine maintaining expenses. | | | | Work sheet : | | | | | | | Details | | | Current machine | | New machine | | | Original purchase cost | $15,000 | | $25,000 | | | Less: Accumulated Depreciation | 6,000 | | - | | | Book...
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...Week 15 Distance Student File 1 of 35 Problem 7 – Job Order Costing Jessica Company started operations on January 2, 20x6. The company manufactures custom products and uses a job order system. Overhead is allocated to jobs based on direct labour costs. The budgeted manufacturing overhead for 20x6 was $396,900 and the direct labour costs were budgeted at $567,000. At the end of 20x6, there were two jobs in work in process: Direct material cost Direct labour cost Job A605 $20,000 12,000 Job A608 $36,000 38,000 Actual manufacturing overhead for the year amounted to $350,000 and total direct labour charges for the year amounted to $550,000. The year-end finished good inventory balance was $175,000 and included direct labour costs of $48,000. Cost of goods sold for the year amounted to $1,750,000. Required 1. 2. 3. Prepare a schedule showing the detailed cost of the ending work-in-process, and finished goods inventory. Compute the over/under –applied overhead for the year. Allocate the balance in the manufacturing overhead account using each of the 4 approaches discussed in class. CMA Accelerated Program 2011 © CMA Ontario, 2011 Week 15 Distance Student File 2 of 35 Problem 6 – Process Costing Deterra, Inc., uses three departments to produce a detergent. The Finishing Department is the third and last step before the product is transferred to storage. All materials needed to give the detergent its final composition are added at the beginning of the process in...
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...The main uses of cost accounting as follows: 1. Helps in Ascertainment of Cost: Cost Accounting helps in the ascertainment of cost of each product, process, job, contract, activity etc. by using different methods of costing such as Job Costing and Process Costing. 2. Helps in Control of Cost: It helps in the control of material costs, labour costs and overheads by using different techniques of control such as Standard Costing and Budgetary Control. 3. Helps in Decision making: It helps the management in making various decisions such as – (a) Whether to make or buy a component (b) Whether to retain or replace an existing machine (c) Whether to process further or not (d) Whether to shut down or continue operations (e) Whether to accept orders below cost or not (f) Whether to expand or not (g) How much reduction in the selling price should be made in case of depression? 4. Helps in fixing Selling Prices: It helps the management in fixing selling prices of products or services by providing detailed cost information. 5. Helps in Inventory Control: It helps in inventory by using various techniques such as ABC analysis, Economic Order Quantity, Stock levels, Perpetual Inventory system and Continuous Stock Taking, Inventory Turnover Ratio etc. 6. Helps in Cost reduction: It helps in the introduction of cost reduction programme and finding out new and improved method to reduce costs. 7. Helps in measurements of Efficiency: It helps in measurements...
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...Introduction This case deals mostly with the different types of operational challenges that Albatross Anchor is currently facing. The pricing is not a huge issue for the organization and it is able to sell its products at a consistent market rate; however it is unable to realize its full profit potential due to the presence of a lot of operational inefficiencies. It is clear that if the firm is able to overcome all of these challenges, it can make the same level of profits as that of other competitors and can also direct their future growth exponentially. We have reached a conclusion regarding the benefits the company can reap by using the strategies in their operational management plan. Question One Based on the information presented in the scenario/case study discuss Albatross Anchor’s competitiveness in relation to (please address all items in the below list and provide support for your conclusions): 1. Cost a) Cost of Production: Due to the presence of operational inefficiencies, Albatross Anchor is unable to reduce their costs as a result of which they have a lower profit margin. Therefore, they have a cost of production disadvantage as compared to their competitors. b) Economies of Scale in material purchasing. They can enjoy Economies of Scale when it comes to purchasing materials. Buying in bulk means they can get discounts from the suppliers on their purchase c) Cost of Raw Materials Sitting Idle in the Warehouse: The increased amount of goods stored...
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...Snap Fitness, a fitness business based in Minnesota, offers franchise opportunities. The opportunity comes with a start-up fee ranging from $60,000 to $184,000. The following items are included in the start-up fee: 1. Franchise Fee 2. Grand Opening Marketing 3. Leasehold Improvements 4. Utility and Rent Deposits 5. Training Many people dream of owning a business as opposed to working for another business. The benefits of owning a franchise is priceless if ran properly. This paper will show an estimate amount of variable costs and monthly sales in members and dollars for Snap Fitness. Also included are five examples of variable costs and a summary about purchasing a franchise and the decisions that come along with it. Estimate Amount of Variable Costs A Snap Fitness franchise is estimated to incur fixed operating costs of $4,000 and $2,000 to lease fitness equipment. A newspaper article providing details about fitness centers like Snap Fitness states this form of business may only require 300 members to reach its break-even point. The cost-volume-profit, also known as CVP, analysis will assist Snap Fitness in determining the effects of changes of volume and costs on the business’ profits. The CVP analysis will help the new franchise apply appropriate profit planning. The CVP analysis determines profit by subtracting total revenue from total costs. The equation separates costs into variable and fixed. The equation coverts to profit = total revenue -...
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...George T. Neale ACC 350 – Assignment 1 Professor Wencel May 28, 2013 The purpose of my research paper focuses on the features of the Nike, Inc. Nike is a company that has thoroughly embedded itself into the psyche of people around the world. It's a company that started with humble origins from selling footwear in the basement to becoming the behemoth in the athletic industry. Bill Bowerman, University of Oregon track & field coach, and Phil Knight, middle-distance runner under Bowerman co-founded Nike. Nike was first established as Blue Ribbon Sports in 1964 as a partnership and the name Nike was officially adopted on May 30, 1978. The infamous Nike Logo - Swoosh, was created for a fee of $35 by Carolyn Davidson, a graphics design student. In 1980, Nike became a publicly traded company with the completion of its Initial Public Offering of 2,377,000 shares of Class B Common Stock on New York Stock Exchange with the stock symbol NKE. Today, Nike employs over 38,000 people across the globe, and has net revenue in excess of $21 billion (Nike, Inc., 2011). Nike is a consumer products company, the relative popularity of various sports and fitness activities and changing design trends affect the demand for our products. Nike must therefore respond to trends and shifts in consumer preferences by adjusting the mix of existing product offerings, developing new products, styles and categories, and influencing sports and fitness preferences through aggressive marketing. Failure...
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...Cost Management Laura M. Davis BUS630: Managerial Accounting (NAH1226A) Professor John Kuhn August 7, 2012 Cost Management There are many aspects of accounting that are important to the functions of a company. I believe that one of the most important is cost management. Cost management is when you manage the cost within a company by tracking all cost that is involved in all of the day to day processes. This allows for the company to keep the cost of the company lower by managing those cost within the company to keep them as low as possible and to be able to explain and understand why a cost may rise or how to decrease a cost. Cost management is an aspect of managerial accounting. “Managerial accounting is concerned with providing information to managers-that is, the people inside an organization who direct and control its operations. In contrast, financial accounting is concerned with providing information to stockholders, creditors, and others who are outside the organization.” (Noreen, Brewer, Garrison (2011)). From the inception of a business idea cost management is implemented. When considering opening a business the very first activity that is performed is a cost analysis of what the cost will be to open a business. From there a revenue projection is completed in detail of a certain time period to determine if there will be profit after the cost of the business. By using managerial accounting the Controllers and Cost Accountants within a company are...
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