Management accounting guidelines. For each of the following items, identify which of the management accounting guidelines applies: cost–benefit approach, behavioral and technical considerations, or different costs for different purposes. 1. Analyzing whether to produce a component needed for the end product or to outsource it. 2. Deciding whether to compensate the sales force by straight commission or by salary. Adding the cost of store operations to merchandise cost when deciding on product pricing, but only including the cost of freight and the merchandise itself when calculating cost of goods sold on the income statement. 3. Considering the desirability of purchasing new technology. 4. Weighing the cost of increased inspection against the costs associated with customer returns of defective goods. 5. Deciding whether to buy or lease an existing production facility to increase capacity. 6. Estimating the loss of future business resulting from bad publicity related to an environmental disaster caused by a company’s factory in the Philippines, but estimating cleanup costs for calculating the liability on the balance sheet.
1. Analyzing whether to produce a component needed for the end product or to outsource it.
2. Deciding whether to compensate the sales force by straight commission or by salary. Adding the cost of store operations to merchandise cost when deciding on product pricing, but only including the cost of freight and the merchandise itself when calculating cost of goods sold on the income statement.
3. Considering the desirability of purchasing new technology.
4. Weighing the cost of increased inspection against the costs associated with customer returns of defective goods.
5. Deciding whether to buy or lease an existing production facility to increase capacity.
6. Estimating the loss of future business resulting from bad publicity related to an environmental disaster caused by a company’s factory in the Philippines, but estimating cleanup costs for calculating the liability on the
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