COST ACCOUNTING
16th Edition
ISBN: 9781323694008
Author: Horngren
Publisher: PEARSON C
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Question
Chapter 14, Problem 14.1Q
To determine
To explain: The given statement.
Expert Solution & Answer
Answer to Problem 14.1Q
The comment of the division president is a disagree comment. A president will not only focus on the customer but also see the cost allocation issues with the accountant.
Explanation of Solution
Costing:
Costing is a technique used in cost accounting to determine the cost of a product. With the optimum use of costing a company can reduce the cost burden and increase the profit margin.
- Only focus on the customer and not on the cost allocation issues it affect the business decision adversely.
- The cost accounting information is very important for the cost planning and also for the cost reduction.
- With the figures of cost accounting the company can ascertain the amount spend on the manufacturing of product so that make and buy decision can easily take.
Thus, the statement given by the division president is not correct.
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Students have asked these similar questions
Elmhurst Corporation is considering changes to its responsibility accounting system. Which of the following statements is/are correct for a responsibility accounting system.
i. In a cost center, managers are responsible for controlling costs but not revenue.
ii. The idea behind responsibility accounting is that a manager should be held responsible for those items that the manager can control to a significant extent.
iii. To be effective, a good responsibility accounting system must help managers to plan and to control.
iv. Costs that are allocated to a responsibility center are normally controllable by the responsibility center manager.
1. I and II only are correct.
2. II and III only are correct.
3. I, II, and III are correct.
4. I, II and IV are correct.
Which of the following statements is true?
A cost center is a responsibility center.
The basic objective of responsibility accounting is to charge each manager with those costs and/or revenues over which he has control.
Under a responsibility accounting system, fewer expenses are charged against managers; the higher one moves upward in an organization.
Responsibility centers. Elmhurst Corporation is considering changes to its responsibility accounting system. Which of the following statements is/are correct for a responsibility accounting system.
In a cost center, managers are responsible for controlling costs but not revenue.
The idea behind responsibility accounting is that a manager should be held responsible for those items that the manager can control to a significant extent.
To be effective, a good responsibility accounting system must help managers to plan and to control.
Costs that are allocated to a responsibility center are normally controllable by the responsibility center manager.
I and II only are correct.
II and III only are correct.
I, II, and III are correct.
I, II and IV are correct.
Chapter 14 Solutions
COST ACCOUNTING
Ch. 14 - Prob. 14.1QCh. 14 - Why is customer-profitability analysis an...Ch. 14 - Prob. 14.3QCh. 14 - A customer-profitability profile highlights those...Ch. 14 - Give examples of three different levels of costs...Ch. 14 - What information does the whale curve provide?Ch. 14 - A company should not allocate all of its corporate...Ch. 14 - What criteria might managers use to guide...Ch. 14 - Once a company allocates corporate costs to...Ch. 14 - A company should not allocate costs that are fixed...
Ch. 14 - How should a company decide on the number of cost...Ch. 14 - Show how managers can gain insight into the causes...Ch. 14 - How can the concept of a composite unit be used to...Ch. 14 - Explain why a favorable sales-quantity variance...Ch. 14 - How can the sales-quantity variance be decomposed...Ch. 14 - Flexible-budget variance, sales-quantity,...Ch. 14 - Sales-volume, sales-mix, and sales-quantity...Ch. 14 - Cost allocation in hospitals, alternative...Ch. 14 - Customer profitability, customer-cost hierarchy....Ch. 14 - Customer profitability, service company. Instant...Ch. 14 - Customer profitability, distribution. Best Drugs...Ch. 14 - Cost allocation and decision making. Reidland...Ch. 14 - Cost allocation to divisions. Rembrandt Hotel ...Ch. 14 - Cost allocation to divisions. Bergen Corporation...Ch. 14 - Prob. 14.25ECh. 14 - Variance analysis, working backward. The Hiro...Ch. 14 - Variance analysis, multiple products. Emcee Inc....Ch. 14 - Market-share and market-size variances...Ch. 14 - Click here to open your MyFinanceLab Study Plan...Ch. 14 - Customer profitability. Bracelet Delights is a new...Ch. 14 - Customer profitability, distribution. Green Paper...Ch. 14 - Customer profitability in a manufacturing firm....Ch. 14 - Customer-cost hierarchy, customer profitability....Ch. 14 - Allocation of corporate costs to divisions. Cathy...Ch. 14 - Cost allocation to divisions. Forber Bakery makes...Ch. 14 - Prob. 14.36PCh. 14 - Cost-hierarchy income statement and allocation of...Ch. 14 - Variance analysis, sales-mix and sales-quantity...Ch. 14 - Market-share and market-size variances...Ch. 14 - Variance analysis, multiple products. The Robins...Ch. 14 - Customer profitability and ethics. KC Corporation...
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