Day: April 26, 2018

1. When a computer company selects a mix of strategies in order to create sustainable competitive advantage, it is following a
a. focusing strategy.
b. low-cost strategy.
c. differentiation strategy.
d. strategic positioning strategy.

2. _______________ are those factors that drive the cost of day-to-day activities performed as a result of the structure and processes selected by the organization.
a. Organizational activities
b. Organizational cost drivers
c. Operational activities
d. Operational cost drivers

3. Which of the following are true about total quality control?
a. Total quality control is an approach to differentiate and reduce overall quality costs.
b. Total quality control demands production of defect-free products.
c. Total quality control links suppliers closely with the firm.
d. All of these statements are true about total quality control.

4. Which of the following is NOT a stage of the marketing viewpoint of the product life cycle?
a. decline
b. growth
c. maturity
d. production

5. At which stage of the consumable life-cycle is price sensitivity low?
a. introduction
b. growth
c. maturity
d. decline

6. Which of the following is part of the cost and process dimensions of the activity-based management model?
a. resources
b. driver analysis
c. activities
d. products and customers

7. _______________ focuses on non-value-added activities.
a. Activity sharing
b. Activity elimination
c. Activity selection
d. Activity reduction

8. Value-added costs equal standard quantity times
a. non-value-added costs.
b. currently attainable standards.
c. standard price.
d. actual price.

9. Each unit of product requires 16 pounds of material. Due to scrap and rework, each unit has been averaging 18 pounds of material. The material costs $6 per pound.

If the company wants to reduce non-value-added costs by 25 percent next year, the currently attainable standard for material would be
a. 16.00 pounds.
b. 16.80 pounds.
c. 17.50 pounds.
d. 18.00 pounds.

10. Sasha Cat Company sells one of its products for $100 each. Sales volume averages 750 units per year. Recently, its main competitor reduced the price of its product to $80. Sasha Cat Company expects sales to drop dramatically unless it matches the competitor’s price. In addition, the current profit per unit must be maintained. Information about the product (for production of 750) is as follows:

SQ AQ Actual Cost
Materials (pounds) 2,000 2,500 $25,000
Labor (hours) 450 500 12,500
Setups (hours) 0 600 7,500
Material handling (moves) 0 300 3,750
Warranties (number repaired) 0 200 15,000

The non-value-added cost per unit is
a. $41.67.
b. $43.33.
c. $40.47.
d. $38.33.

11. Which of the following is NOT an advantage of strategic-based responsibility accounting?
a. It includes perspectives that serve as a source of competitive advantage.
b. Change efforts are directed by the mission and strategy.
c. Responsibility is centralized within the organization.
d. All are advantages of strategic-based responsibility accounting.

12. Which of the following would be a nonfinancial measure?
a. customer profitability
b. employee capabilities
c. return on investment
d. cost per unit

13. Which of the following features make stretch targets feasible?
a. The targets are set in isolation by top management.
b. The measures are linked by causal relationships.
c. The measures are based on currently attainable standard costs.
d. The targets are set at desired levels for twenty years to ensure long-term performance.

14. In the Balanced Scorecard system, core objectives and measures
a. are common across all organizations.
b. are common across all scorecard perspectives.
c. are common across departments.
d. None of these are true.

At the beginning of 2010, Peters Company installed a JIT purchasing and manufacturing system. The following information has been gathered about one of the company’s products:

Theoretical annual capacity 2,000
Actual production 1,800
Production hours available 500
Actual conversion cost per hour $7

15. The theoretical velocity per hour is
a. 4.0 units.
b. 3.6 units.
c. 1.1 units.
d. 1.0 units.

16. An example of a prevention cost is
a. field testing.
b. quality audits.
c. reinspection.
d. repair costs.

17. Warranty work is a(n)
a. external failure cost.
b. internal failure cost.
c. appraisal cost.
d. prevention cost.

At the beginning of the year, Andrew Company initiated a quality improvement program. The program was successful in reducing scrap and rework costs. To help assess the impact of the quality improvement program, the following data were collected for the current and preceding years:
Preceding Year Current Year
Sales $2,400,000 $2,400,000
Quality training 30,000 48,000
Material inspections 7,000 8,000
Scrap 48,000 30,000
Rework 60,000 48,000
Product inspection 10,000 12,000
Product warranty 36,000 24,000

18. For the current year, prevention costs are what percentage of sales?
a. 9.00%
b. 8.25%
c. 7.00%
d. 2.00%

19. Which of the following is NOT an example of a decision-making context when using quality cost information?
a. strategic pricing
b. flexible budget analysis
c. cost-volume-profit analysis
d. none of the above

20. _______________ is a predetermined amount of defective product that a company permits to be sold.
a. Acceptable quality level
b. Taguchi quality loss function
c. Zero defects
d. Kaizen

21. The productivity ratio used as a partial operational productivity measure is calculated as follows:
a. Output/Input
b. Input/Output
c. Input/Costs
d. Input/Sales

22. _______________ is an assessment of productive efficiency for all inputs combined.
a. Price recovery component
b. Profile measurement
c. Profit-linked productivity measurement
d. Total productivity measurement

Information about Jones Corporation is as follows:
2009 2010
Output (units) 120,000 130,000

Input quantities:
Materials (pounds) 37,500 40,000

Input prices:
Materials (per pound) $4 $6

23. What is the partial operational productivity measure for materials for 2009?
a. 0.3125
b. 0.6250
c. 3.2000
d. 3.2500

24. What is the partial operational productivity measure for materials for 2010?
a. 3.2000
b. 3.2500
c. 0.3077
d. 0.3125

Information about Cheng Corporation is as follows:
2009 2010
Output (units) 14,000 15,000
Selling price per unit $16 $16

Input quantities:
Materials (pounds) 1,750 1,900
Labor (hours) 1,400 1,525

Input prices:
Materials (per pound) $3 $4
Labor (per hour) $6 $7

25. By how much did profits change as a result of changes in productivity related to materials?
a. $600 decrease
b. $600 increase
c. $100 decrease
d. $100 increase

SECTION II ()

1. Prior to installing a JIT system, Johnson Company used machine hours to assign maintenance costs to its three products of 4-inch, 6-inch, and 8-inch plastic pipe.

The maintenance costs totaled $540,000 per year. The machine hours used by each product and the quantity produced of each product are as follows:
Machine Hours Quantity Produced
4-inch 10,000 3,750 rolls
6-inch 14,000 4,000 rolls
8-inch 21,000 5,000 rolls

After installing JIT, three manufacturing cells were created, and the cell workers were trained to perform maintenance. Maintenance costs for the three cells still totaled $540,000; however, these costs are now traceable to each cell.
Cell, 4-inch $ 90,000
Cell, 6-inch 160,000
Cell, 8-inch 290,000

Required:
a. Compute the maintenance cost per roll for each type of pipe before JIT is installed.
b. Compute the maintenance cost per roll for each type of pipe after JIT is installed.
c. Explain why the JIT maintenance cost per roll is more accurate than the cost per roll using the traditional approach.

2. Gibson, Inc., has developed ideal standards for four activities: labor, materials, inspection, and receiving.

Information is as follows:

Activity Activity Driver SQ AQ SP
Labor Hours 500 550 $ 32
Materials Pounds 2,000 2,500 48
Inspection Inspection hours 0 375 22
Receiving Orders 60 75 800

The actual prices paid per unit of each activity driver were equal to the standard prices.

Required:

Complete the following cost report.

Activity Value-Added Non-value-Added Actual

Labor $_____________ $_____________ $____________

Materials _____________ _____________ ____________

Inspection _____________ _____________ ____________

Receiving _____________ _____________ ____________

Totals $_____________ $_____________ $____________

3 Marshek Industries has the theoretical capability to produce 119,000 units per month but currently produces 102,000 units. The conversion cost for the month is $3,750,000. There are 8,500 production hours available within the plant per month. In addition to processing time, to produce a unit takes 15 minutes of move time and 10 minutes of wait time.

Required:
1. Compute the theoretical and actual velocities per hour
2. Compute the theoretical and actual cycle times (minutes per unit produced)
3. Compute the MCE

4. At the beginning of the year, John Corporation initiated a quality improvement program. The program was successful in reducing scrap and rework costs. To help assess the impact of the quality improvement program, the following data were collected for the current and preceding years:

2007 2008 2009 2010
Reilability engineering 8,000 10,000 15,000 25,000
Quality training 1,000 2,000 5,000 8,000
Packaging inspections 2,000 3,000 5,000 5,000
Product Acceptance 12,000 10,000 8,000 3,000
Rework 30,000 25,000 18,000 12,000
Reinspection 75,000 65,000 48,000 29,000
Customer complaints 100,000 85,000 62,000 51,000
Warranty and Repair 70,000 50,000 40,000 25,000

Required:
a. Prepare a multiple-year trend report for overall costs of quality
b. Prepare a multiple-year trend report for each category of quality costs

5. At the end of 2009, Wilson Company implemented a new labor process and redesigned its product with the expectation that input usage efficiency would increase. Now, at the end of 2010, the president of the company wants an assessment of the changes on the company’s productivity. The data needed for the assessment are as follows:
2009 2010
Output 20,000 24,000
Output prices $20 $20
Materials (lbs.) 16,000 16,800
Materials unit price $6 $8
Labor (hrs.) 10,000 9,600
Labor rate per hour $10 $10
Power (kwh) 4,000 6,000
Price per kwh $2 $3

Required:
a. Compute the partial operational measures for each input for both 2009 and 2010. What can be said about productivity improvement?
b. Prepare an income statement for each year and calculate the total change in profits.
c. Calculate the profit-linked productivity measure for 2010. What can be said about the productivity program?
d. Calculate the price-recovery component. What does this tell you?

On December 31, 2008 Tie One On reported net income for the year $265,000 and the following account balances

Cash $175,000
Accounts Receivable 21,000
Prepaid rent 6,000
Equipment & Furnishings 230,000
Accumulated Depreciation- equipment & Furnishings (43,000)
Accounts Payable 39,000
Wages payable 13,000
Owners equity(including net income of $265,000) 337,000

After this information was prepared, the book-keeper discovered that they failed to prepare two adjusting entries. These were not reflected in the balances shown. Here is the information on these two entries

1. The prepaid rent account was paid on April 1, 2008, for one year for $6,000. The account has not been adjusted since.
2. A bill received in January 2009 for utilities incurred in December 2008 for $1,400 was mistakenly not entered into the system.

Please calculate the year-end corrected balances for the following three accounts: assets, liabilities, and equity. You can enter your answer in the following format

For example:

Assets = $X (show your work in parentheses, numbers only, no titles necessary.

Read the “Decision Point” section on page 425 (See Below) of the text (When Does Financial Support Become a Kickback). There are three bulleted questions at the end of the short excerpt. Answer all questions listed. Remember to restate the question, and then give your reply. I include the three questions I would like answered please.
.
Consider the case of what is referred to as “soft money” within the securities industry. According to critics, a common practice in the securities industry amounts to little more than institutionalized kickbacks. “Soft money” payments occur when financial advisors receive payments from a brokerage firm to pay for research and analyst services that, in theory, should be used to benefit the clients of those advisors. Such payments can benefit clients if the advisor uses them to improve the advice offered to the client. Conflicts of interest can arise when the money is used for the personal benefit of the advisor. In 1998, the Securities and Exchange Commission released a report that showed extensive abuse of soft money. Examples included payments used for office rent and equipment, personal travel and vacations, memberships at private clubs, and automobile expenses. If you
learned that your financial advisor received such benefits from a brokerage, could you continue to trust the financial advisor’s integrity or professional judgement?

1. What facts do you need to know to better judge this situation?

2. What values are at stake in this situation? Who gets harmed if a financial advisor accepts payments from a brokerage? What are the consequences?

3. For whom does a financial advisor work? To whom does she have a professional duty? What are the sources of these obligations?

Requirement 1:
Prepare an income statement in the contribution margin format. (Omit the “$” sign in your response.)

Requirement 2:
Calculate the contribution margin per unit and the contribution margin ratio. (Round your answers to 1 decimal place. Omit the “$” and “%” signs in your response.)

Requirement 3:
(a) Calculate the firm’s operating income (or loss) if the volume changed from 20,000 units to 25,000 units. (Input the amount as positive value. Omit the “$” sign in your response.)
(b) Calculate the firm’s operating income (or loss) if the volume changed from 20,000 units to 11,000 units. (Input the amount as positive value. Omit the “$” sign in your response.)

Requirement 4:
Refer to your answer to requirement 1 when total revenues were $160,000.
(a) Calculate the firm’s operating income (or loss) if unit selling price and variable expenses do not change, and total revenues increase by $18,000. (Input the amount as positive value. Omit the “$” sign in your response.)
(b) Calculate the firm’s operating income (or loss) if unit selling price and variable expenses do not change, and total revenues decrease by $12,000. (Input the amount as positive value. Omit the “$” sign in your response.)

Andover Consulting, Inc. at March 31, 2012, during the year Lori Andover, the only stockholder, bought $10,200 in the business.

1. Identify each as an asset, liability, revenue or expense.

Office Furniture A
Utilities Expense E
A/P L
N/P L
Service Revenue R
A/R A
Supplies Expense E
Rent Expense E
Cash A
Office Supplies A
Salaries Expense E
Salaries Payable L
Property Tax Expense E
Equipment A

2. Prepare and Income Statement for the year ended March 31, 2012

Andover Consulting, Inc.
Income Statement
For the year ending March 31, 2012

Revenue:
Service Revenue $155,000

Expenses:
Utilities 7600
Supplies 3600
Rent 25000
Salaries 51000
Property Tax 3000

Total Expenses 90,200

Net income (loss) 64800

What is the result of operations for 2012?
Net Income of 64800

3. Assuming the balance in retained earnings on March 31, 2012 was $34,800 what was the amount of
dividends during the year? Prepare a statement of retained earnings to solve for the dividends. The business has no beginning balance for retained earnings.

Andover Consulting, Inc.
Retained Earnings
For the Year Ending March 31, 2012

Retained earnings, March 31, 2012 24600
Add: Net Income 64800
89400
Less: Dividends 54800 (?)
Retained earnings, March 31, 2012 34600

I need assistance with the “Units Completed and Transferred out (Cost of Goods Manufactured)”.

1. Data for Osaka Corporation for the month of June 20xx are as follows:
Beginning work in process inventory: Operations for the month of June:
Units – 800 Units started- 14,000
Direct materials – 100% complete Direct materials costs – $57,400
Conversion costs – 70% complete Conversion costs – $50,122
Direct materials costs – $2,860 Conversion costs – $2,150
Ending work in process inventory:
Units – 1,500
Direct materials – 100% complete
Conversion costs – 30% complete

Assume the company uses average costing method.
Prepare a process cost report for June.

a.
Osaka Corporation
Process Cost Report: Average Costing Method
For the Month Ended June 30, 20xx

[See attachment parts 1 & 2.]

2. n’2. Plastics, Inc., manufactures a line of office desk accessories. The company’s newest and most popular product is a plastic paper holder for holding the paper up while working at the computer. Production began on February 1, 20xx. Plastic is poured into molds to form the product, and the entire process takes place in the Molding Department. After the liquid plastic is poured (signifying the beginning of the process), the molds must be cooled slowly before the paper holder is separated from the mold. Statistics for 20xx are shown below.

Beginning inventory 0
Units started 77,000
Costs: Direct materials costs $246,400
Conversion costs $334,840
Units completed and transferred to the
Packaging Department 72,500

Ending work in process inventory: All direct materials were added at the beginning of the process, and the average stage of completion of these units as to conversion costs is 80 percent.
No units were lost or spoiled during the year.

a. Prepare a process cost report using the FIFO costing method for the Molding Department using five steps. Include T accounts to recap both costs and units for the Work in Process Inventory account.
b. Identify the amount to be transferred out of Work in Process Inventory and prepare the necessary entry in journal form to do so.
a. Plastics Inc. Process Cost Report (FIFO)

[See attachments parts 3 & 4]

b. Transfer $_________ to __________ and prepare the necessary journal entry in good form to make the transfer

Gabel Company spent money to train its employees so that they can be productive workers. Such expenditures are often referred to as investments in human capital.

Required:

a. Do you think that Gabel Company’s trained employees meet the definition of an asset? Explain. In your answer, discuss the characteristics of an asset and whether you think they meet each of those characteristics.

b. Most accountants would say that human capital is valuable, but that it is difficult, or even impossible, to measure the value of human capital. Given that you cannot determine an amount to place a value on the Gabel Company’s employees, but you think that they are assets, what would SFAC No. 5 tell you to do? Should you report them as an asset in the company’s balance sheet? Explain.

c. If a value can be estimated for Gabel Company’s trained employees,
i. Would that value be more relevant or more reliable to a prospective investor? Explain.
ii. Would the company’s assets reported in its balance sheet be more representationally faithful if they include the human capital than they would be without reporting an amount for the employees? Explain.

I need the most direction on answering part c.

(a) Calculate the change that occurred in cash during the month. You may assume that the change in each balance sheet amount is due to a single event (for example, the change in the amount of production equipment is not the result of both a purchase and sale of equipment). (Hints: What is the purpose of the statement of cash flows? How is this purpose accomplished?) Because the retained earnings section of the balance sheet is, in and of itself, an analysis of the change in the retained earnings account for the month, the row for net income and dividends should be entered as the February amount and not the change. Use the space to the right of the January 31 data to enter the difference between the February 28 and January 31 amounts of each balance sheet item. (Negative amount should be indicated by a minus sign. Leave no cells blank – be certain to enter “0” wherever required.Omit the “$” sign in your response.)

(b) Prepare a statement of cash flows that explains above changes? (Negative amount should be indicated by a minus sign.Omit the “$” sign in your response.)

AJack Partnership manufactures jackhammers. AJack Partnership is looking for guidance in the variances of its standard cost system. It would like you to assist in understanding material price, material quantity, rate, efficiency, and overhead variances.

The standard cost card information for unit of product is below:
– Direct materials: 4 pounds at $9.00 per pound of steel = $36.00
– Direct labor: 2.0 direct labor hours at $20.00 per hour = 40.00
– Variable overhead: 100% of a direct labor hour at $10.00 per hour = 20.00
– Fixed overhead: 100% of a direct labor hour at $20.00 per hour = 40.00
– Standard cost per unit = $136.00

The following information is available in the year just finished:

AJack Partnership manufactured 10,000 jackhammers during the year.
The total purchases of steel in the year at a cost of $8.75 per pound were 45,000 pounds.
All of the material was used to manufacture the 10,000 jackhammers.
There was no beginning or ending inventory.
The material was purchased on January 15, 20XX
AJack Partnership incurred 21,000 direct labor hours at $19.50 per hour.
During the year, one production order was issued on February 15 20XX, number 789, for 10,000 jackhammers.
Actual variable overhead was $210,000.
Actual fixed overhead was $405,000.

Assignment Guidelines:

A. Material
1. Compute the material price variance for Jan 15, 20XX.
2. Provide the accounting entry for the price variance.

B. Labor
1. Compute the labor rate variance.
2. Compute the labor efficiency variance.
3. Provide the accounting entry for the labor rate and efficiency variances.

C. Overhead
1. Compute the variable overhead rate variance.
2. Compute the variable overhead efficiency variance.
3. Provide the accounting entry for the overhead rate and efficiency variances.

1. The opening paragraph of an accounting textbook says “Managers need accounting information and need to know how to use it” Critically evaluate this statement.

2. Parkview Hospital Case Study
Parkview hospital, a regional hospital, serves a population of 400,00 people. The next closest hospital is 50 miles away. Parkview “s accounting system is adequate for patient billing. The system reports revenues generated per department but does not break down revenues by unit within departments. For example, Parkview knows patient revenue for the entire psychiatric department but does not know revenues in the child and adolescent unit, the chemical dependence unit, or the neuropsychiatric unit.

Parkview receives revenue from three principal sources, the federal govt(Medicare) the state govt(Medicaid), and the private insurance company (blue cross blue shield). Until recently, the private insurance companies continued to pay Parkview increasing cost and assed these on to the firm through higher premiums for their employees health insurance.

Last year Trans Insurance (TI) entered the market and began offering lower cost health insurance to local firms. TI cut benefit offered and told Parkview that it would pay only a fixed dollar amount per patient. A typical firm could cut its health insurance premium by 20% by switching to TI. TI was successful at taking 45% of Blue Cross Blue Shield customers. These firms faced stiff competition and sought to cut their health care costs.

Parkview management estimated that its revenue would fall 6%, or $3.2 million, next year because TI’s lower reimbursement. Struggling with how to cope with lower revenues Parkview began complex process of deciding what programs to cut, how to shift the delivery of services from impatient to outpatient clinics and what programs to open to offset the revenue loss (for example open an outpatient depression clinic).Management can forecast some of the costs of the proposed changes, but many of its cost and revenue (such as the cost of admissions office) have never been tracked on the individual clinical unit.
A) Was Parkview’s accounting system adequate 10 years ago?
B) Is Parkview’s accounting system adequate today?
C) What changes should Parkview make in its accounting system?

3. Darien Industries
Darien industries operate a cafeteria for its employees. The operation of the cafeteria require fixed cost of $4,700 per month and variable cost of 40% of sales. Cafeteria sales are currently averaging $1,200.00 per month.

Darien has an opportunity to replace the cafeteria with vending machines. Gross customer spending at the vending machine is estimated to be 40% greater than current sales because the machines are available at all hours. By replacing the cafeteria with vending machines, Darien would receive 16% of the gross customer spending and avoid all cafeteria costs. How much does monthly operating income change if Darien replaces the cafeteria with vending machine?

4. Negative Opportunity Cost
Can opportunity costs be negative? Give an example.