Question:06 Identify the major problems in this situation and explain how they impact the organization. Consider both behavioral and analytical factors. Specifically, how might managerial accounting concepts, tools, or techniques be applied to help resolve this dilemma? What are possible consequences of applying the same to this dilemma? Briefly explain.Orange Electronics has been experiencing declining profit margins and has been looking for ways to increase operating income. It cannot raise selling prices for fear of losing business to its competitors. It must either cut costs or improve productivity. The company uses a standard cost system to evaluate the performance of the soldering department. It investigates all unfavorable variances at the end of the month. The soldering department rarely completes the operations in less time than the standard allows (which would result in a favorable variance).In most months, the variance is zero or slightly unfavorable. Reasoning that the application of lower standard costs to the products manufactured will result in improved profit margins, the production manager has recommended that all standard times for soldering operations be drastically reduced. The production manager has informed the soldering personnel that she expects the soldering department to meet these new standards. Occasionally, public accounting firms are engaged to report on specified elements, accounts, and items of financial statements. a. Discuss types of reports that may be provided for a nonpublic company for specified elements, accounts, and items of financial statements. b. Why should reports on the application of agreed-upon procedures to information be restricted to specified users? For the following scenario, evaluate whether the situation involves possible violations of the AICPA's Code of Professional Conduct. State: 1) The relevant rule or interpretation that applies to this scenario (Rule number and title); 2) Whether there is a violation of the Code (yes or no); and 3) The rationale in deciding whether there is a violation. A CPA firm has incorporated and started providing public accounting services. The only shareholders in the corporation are existing employees of the organization, including partners, staff who are CPAs, staff who are not CPAs, and administrative personnel.

Question:06 Identify the major problems in this situation and explain how they impact the organization. Consider both behavioral and analytical factors. Specifically, how might managerial accounting concepts, tools, or techniques be applied to help resolve this dilemma? What are possible consequences of applying the same to this dilemma? Briefly explain.Orange Electronics has been experiencing declining profit margins and has been looking for ways to increase operating income. It cannot raise selling prices for fear of losing business to its competitors. It must either cut costs or improve productivity. The company uses a standard cost system to evaluate the performance of the soldering department. It investigates all unfavorable variances at the end of the month. The soldering department rarely completes the operations in less time than the standard allows (which would result in a favorable variance).In most months, the variance is zero or slightly unfavorable. Reasoning that the application of lower standard costs to the products manufactured will result in improved profit margins, the production manager has recommended that all standard times for soldering operations be drastically reduced. The production manager has informed the soldering personnel that she expects the soldering department to meet these new standards. Occasionally, public accounting firms are engaged to report on specified elements, accounts, and items of financial statements. a. Discuss types of reports that may be provided for a nonpublic company for specified elements, accounts, and items of financial statements. b. Why should reports on the application of agreed-upon procedures to information be restricted to specified users? For the following scenario, evaluate whether the situation involves possible violations of the AICPA's Code of Professional Conduct. State: 1) The relevant rule or interpretation that applies to this scenario (Rule number and title); 2) Whether there is a violation of the Code (yes or no); and 3) The rationale in deciding whether there is a violation. A CPA firm has incorporated and started providing public accounting services. The only shareholders in the corporation are existing employees of the organization, including partners, staff who are CPAs, staff who are not CPAs, and administrative personnel.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter16: Statement Of Cash Flows

Section: Chapter Questions

Problem 3TP: Consider the dilemma you might someday face if you are the chief financial officer of a company that...

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