1.Eliminating a non-value-added activity2.Determining how much it costs to perform a heart transplantCalculating the cost of inspecting components from an outsidesupplier3.4.Developing and using a budgeted income statement for a divisionEliminating the need to inspect by improving the quality of prod-ucts and processes5.Determining whether selling a product at split-off is more prof-itable than processing it further before selling it6.7.Calculating the cost of producing an e-bookUsing a trend report on quality costs to assess the effectiveness of aquality improvement program8.9.Determining the units that must be sold to break even10.Calculating the cost to perform a tooth extraction11.Determining the total cost of moving goods12.Using JIT purchasing and manufacturing to significantly reduceinventories13.Using unit product cost to help develop a bid priceRequired:Classify the above actions as being associated with one of the following ob-jectives of a cost management information system:1. Costing of products, services, and other objects of interest2. Planning and control3. Decision making

In order to perform the task effectively and efficiently, the management is required to make the…

Answered: 1. Eliminating a non-value-added…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Carizick Co manufactures gaming products. It has created a new games console called the QpBox which is about to be launched. Demand for the QpBox is anticipated to be high. The product life cycle of the QpBox is expected to be three years with 300,000 units forecast to be sold during its first year. Sales volumes are expected to decrease by 75,000 units in each subsequent year. Production volumes will be based on expected demand levels. The following costs for the QpBox have been determined: Design and development Pre-launch advertising Advertising in Year 2 Packaging Manufacturing cost $120m $0.5m $0.4m $3 per unit $80 per unit At a recent board meeting, the finance director said that Carizick Co should look to maximise the profitability of the QpBox over its life cycle. The marketing director made the comment that Carizick Co should focus on extending the maturity phase of the life cycle only as this stage is where the QpBox is most profitable. Contract with Zone Co Carizick Co has…
Activity-Based Supplier Costing Clearsound uses Alpha Electronics and La Paz Company to buy two electronic components used in the manufacture of its cell phones: Component 125X and Component 30Y. Consider two activities: testing components and reordering components. After the two components are inserted, testing is done to ensure that the two components in the phones are working properly. Reordering occurs because one or both of the components have failed the test and it is necessary to replenish component inventories. Activity cost information and other data needed for supplier costing are as follows: I. Activity Costs Caused by Suppliers (testing failures and reordering as a result) Activity Costs Testing components $1,200,000 Reordering components 300,000 II. Supplier Data Alpha Electronics La Paz Company 125X 30Y 125X 30Y Unit purchase price $10 $26 $12 $28 Units purchased 120,000 80,300 15,000 15,000 Failed tests 1,300 780 10 10 Number of reorders 60 40 Required: Determine the…
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The manager of the manufacturing unit of a company is responsibie for the costs of the manufacturing unit. The president is in the process of deciring whether to evaluate the manager af the manutacturing unit by the average cost per unit or the vartable cost per unit Quality and urmely delivery would be used in corunction with the cust mesure lo rewerd the maneger Required: a What problems are associated with using the average cost per unit as a pertormance measure b. What problems are associated with using the variable cost per unit as a performance measure?
Making outsourcing decisions Priscilla Smiley manages a fleet of 250 delivery trucks for Daniels Corporation. Smiley must decide whether the company should outsource the fleet management function. If she outsources to Fleet Management Services (FMS), FMS will be responsible for maintenance and scheduling activities. This alternative would require Smiley to lay off her five employees. However, her own job would be secure; she would be Daniels’s liaison with FMS. If she continues to manage the fleet, she will need fleet-management software that costs $9,500 per year to lease. FMS offers to manage this fleet for an annual fee of $300,000. Smiley performed the following analysis: Requirements Which alternative will maximize Daniels’s short-term operating income? What qualitative factors should Daniels consider before making a final decision?
How would the classification of costs as direct or indirect change when the cost object shifts from the Cleveland airport sock vending machine to the overall sock product line at Stance?
Value- and Nonvalue-Added Costs Waterfun Technology produces engines for recreational boats. Because of competitive pressures, the company was makong an effort to reduce costs. A part of this effort, management implemented an activity-based management system and began focusing its attention an procetses and activties. Receiving was among the processes (activities) that were carefully studied. The study revealed that the number of receiving orders was a good dnver fur receiving costs. During the last year, the company incurred fixed receiving costs of $630,000 (salaries of 10 empleyees). These fxed costa provide a capacity of processing 72,000 receiving orders (7,200 per employee at practical capacity). Management decided that the efficient level for receiving should use 36,000 receiving orders. Requiredi 1. Explain why receiving would be viewed as a value-added activity. Which of these are possible reasons that explain why the demand for receiving is more than the efficient level of…
The following table contains selected data concerning the operation of the MHA Medical Center. Use the break-even formula and fill the missing information.
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a) Using incremental analysis, determine if the component should be purchased from the outside supplier? Would your decision in part a) change if the company has the opportunity to rent out its facilities that it currently uses to manufacture the component for $5,500 ? Show full computations Why “Opportunity Costs” are not recorded in the financial books but are considered a relevant cost.
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