3217 DECEMBER 9, 2008 WILLIAM E. BRUNS SHARON M. BRUNS SUSAN HARMELING Merrimack Tractors and Mowers, Inc.: LIFO or FIFO? Ricardo “Rick” Martino, president and chief operating officer of Merrimack Tractors and Mowers, Inc., of Nashua, New Hampshire, felt that his job had grown much more complicated during 2007 and 2008. Merrimack was a major regional manufacturer and seller of large commercial grass mowers based on a design developed by his grandfather in the years after World War II. The
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pricing. 3. Management and Operational Control. Cost management information is needed to provide a fair and effective basis for identifying inefficient operations and to reward and motivate the most effective managers. 4. Preparation of Financial Statements. Cost management information is needed to provide accurate accounting for inventory and other assets, in compliance with reporting requirements, for the preparation of financial reports and for use in the three other management functions. 3. Explain
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ROBERT S. KAPLAN Wilkerson Company The decline in our profits has become intolerable. The severe price cutting in pumps has dropped our pre-tax margin to less than 3%, far below our historical 10% margins. Fortunately, our competitors are overlooking the opportunities for profit in flow controllers. Our recent 10% price increase in that line has been implemented without losing any business. Robert Parker, president of the Wilkerson Company, was discussing operating results in the latest
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match revenues with the use of the asset. Question 11-3 The process of cost allocation for plant and equipment and finite-life intangible assets requires that three factors be established at the time the asset is put into use. These factors are: 1. Service (useful) life — The estimated use that the company expects to receive from the asset. 2. Allocation base — The value of the usefulness that is expected to be consumed. 3. Allocation method — The pattern in which the usefulness is
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straightforward and honest in all professional and business relationships. In this case, as managerial accountants, when suspecting our immediate superior of wrongdoing, we should report and support the related information to appropriate department. [3] What's more, a managerial accountant ought to be objectivity, which means we should not allow bias, conflict of interest or undue influence of others to override professional or business judgments. Though he or she is our immediate superior, when
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Cost of new plant and equipment: $ 7,900,000 Shipping and installation costs: $ 100,000 Unit sales: Year Units Sold 1 70,000 2 120,000 3 140,000 4 80,000 5 60,000 Sales price per unit: $300/unit in years 1–4 and $260/unit in year 5. Variable cost per unit: $180/unit Annual fixed costs: $200,000 per year Working capital requirements:
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vice-president of finance. • The president of Robbin Industries. (b) The ethical issues in this situation pertain to correct accounting principles. Any kinds of violation of generally accepted accounting principles in order to satisfy a practical short-term personal or company need and create misleading financial statement is wrong. Selecting one acceptable method of accounting and reporting among other acceptable methods is not necessarily unethical. (c) Ethically, the management of Robbin Industries
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BRIEFING FOR MEMBERS MEASURING SOCIAL VALUE What do we mean by measuring social value? Over the last twenty years there has been increasing importance attached to measuring the social value and social impact that various organisations create. The demand for measuring this value comes from all sides: funders who want to direct their money to the most effective projects, policy makers and government officials have to account for their spending decisions, and social organisations need to demonstrate
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about 180,000 units. Meanwhile, Jianye Ma, the plant controller requested a summary of monthly operations for August as soon after the end of the month as possible. 2.0 MAIN ISSUE Danshui Plant manager Wentao Chen was anxious about the third month of a 12-month contract to assemble the Apple iPhone 4. The contract called for Danshui to assemble 2.4 million iPhone in the period of 1 June 2010 until 31 May 2011, but now in the third month of the contract, production was only 180,000 units per month
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The role of management accounting in the organisation has become so much more that the reporting of the score to managers (Hansen, Mouritsen 2006). In the wake of the decline of Western Manufacturing and the relevance crisis of management accounting to modern business as outlined by Kaplan and Johnson in ‘Relevance Lost’, the traditional cost accounting approach has been largely replaced by alternative methodologies (Kee, Schmidt 2000). The role of the management accounting in the modern firm is not
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