MANAGERIAL ACCOUNTING >C<
3rd Edition
ISBN: 9781259948503
Author: Whitecotton
Publisher: MCG CUSTOM
expand_more
expand_more
format_list_bulleted
Question
Chapter 2, Problem 24E
To determine
(a)
Concept introduction:
Sustainability Standards:
These standards define characteristics of a provided organization that focuses on the environmental performance and set a benchmark for them. Nowadays, it is usually preferred to adopt the sustainability related measures.
Whether the company is achieving its sustainability standards or not.
To determine
(b)
Concept introduction:
Sustainability Standards:
These standards define characteristics of a provided organization that focuses on the environmental performance and set a benchmark for them. Nowadays, it is usually preferred to adopt the sustainability related measures.
The ways in which the managers can improve the sustainability with the use of information.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
King Bathroom Fixtures (KBF) makes faucets, basins, and so on primarily for home use and sold through major retail chains. The design team at KBF has been working on a unique design to provide reasonable pressure while still conserving water. The market is quite competitive and KBF analysts believe that the fixture could sell for a unit price of $36.40.
The cost accounting team at KBF has estimated the following manufacturing costs for the new design.
Direct materials
$ 19.75
Direct labor
5.90
Manufacturing overhead
8.85
Total
$ 34.50
An operating profit of 12 percent of manufacturing costs is required for all new products at KBF without the explicit consent of the top executive team. At KBF, operating margin is defined as revenues less manufacturing costs, all divided by manufacturing costs).
Required:
a. Suppose KBF uses cost-plus pricing, setting the price equal to manufacturing costs plus 12 percent of manufacturing costs. What price should it charge for the…
What challenges might managers at SES encounter in achieving the target cost and how might they overcome these challenges?
Classifying quality costs and using these costs to make decisions
Clason, Inc. manufactures door panels. Suppose Clason is considering spending the following amounts on a new total quality management (TQM) program:
Requirements
Classify each cost as a prevention cost, an appraisal cost, an internal failure cost, or an external failure cost.
Should Clason implement the new quality program? Give your reason.
Chapter 2 Solutions
MANAGERIAL ACCOUNTING >C<
Ch. 2 - What is the difference between job order and...Ch. 2 - What types of companies are likely to use job...Ch. 2 - What types companies are likely to use process...Ch. 2 - Many service industries use job order costing to...Ch. 2 - Prob. 5QCh. 2 - Prob. 6QCh. 2 - Prob. 7QCh. 2 - Prob. 8QCh. 2 - Prob. 9QCh. 2 - Prob. 10Q
Ch. 2 - Prob. 11QCh. 2 - Prob. 12QCh. 2 - Prob. 13QCh. 2 - Prob. 14QCh. 2 - Prob. 15QCh. 2 - Prob. 16QCh. 2 - Prob. 17QCh. 2 - Prob. 18QCh. 2 - Prob. 19QCh. 2 - Prob. 20QCh. 2 - Prob. 21QCh. 2 - Prob. 1MCCh. 2 - Prob. 2MCCh. 2 - Prob. 3MCCh. 2 - Prob. 4MCCh. 2 - Prob. 5MCCh. 2 - Prob. 6MCCh. 2 - Prob. 7MCCh. 2 - Applied overhead costs are recorded a. On the left...Ch. 2 - Prob. 9MCCh. 2 - Prob. 10MCCh. 2 - Identifying Companies That Use Job Order versus...Ch. 2 - Prob. 2MECh. 2 - Prob. 3MECh. 2 - Prob. 4MECh. 2 - Prob. 5MECh. 2 - Prob. 6MECh. 2 - Prob. 7MECh. 2 - Prob. 8MECh. 2 - Prob. 9MECh. 2 - Prob. 10MECh. 2 - Prob. 11MECh. 2 - Calculating Over- or Underapplied Overhead Costs...Ch. 2 - Prob. 13MECh. 2 - Prob. 14MECh. 2 - Prob. 15MECh. 2 - Calculating Direct Materials Used in Production...Ch. 2 - Calculating Missing Amounts and Cost or Goods...Ch. 2 - Prob. 19MECh. 2 - Prob. 1ECh. 2 - Preparing Journal Entries Refer to the information...Ch. 2 - Prob. 3ECh. 2 - Preparing Journal Entries Refer to the information...Ch. 2 - Prob. 5ECh. 2 - Finding Unknown Values in the Cost of Goods...Ch. 2 - Prob. 7ECh. 2 - Prob. 8ECh. 2 - Prob. 9ECh. 2 - Prob. 10ECh. 2 - Calculating the Cost of Finished and Unfinished...Ch. 2 - Computing Overhead Rate and Billing Rate for...Ch. 2 - Prob. 13ECh. 2 - Prob. 14ECh. 2 - Prob. 15ECh. 2 - Prob. 16ECh. 2 - Prob. 17ECh. 2 - Prob. 18ECh. 2 - Prob. 19ECh. 2 - Prob. 20ECh. 2 - Prob. 21ECh. 2 - Preparing Journal Entries Floyds Auto Repair Shop...Ch. 2 - Applying Job Order Costing in a Service Setting...Ch. 2 - Prob. 24ECh. 2 - Prob. 1.1GAPCh. 2 - Prob. 1.2GAPCh. 2 - Prob. 1.3GAPCh. 2 - Prob. 1.4GAPCh. 2 - Prob. 1.5GAPCh. 2 - Preparing Journal Entries Refer to the information...Ch. 2 - Prob. 3.1GAPCh. 2 - Prob. 3.2GAPCh. 2 - Prob. 3.3GAPCh. 2 - Prob. 3.4GAPCh. 2 - Prob. 3.5GAPCh. 2 - Prob. 4.1GAPCh. 2 - Prob. 4.2GAPCh. 2 - Prob. 4.3GAPCh. 2 - Prob. 5.1GAPCh. 2 - Prob. 5.2GAPCh. 2 - Recording Manufacturing Costs and Analyzing...Ch. 2 - Prob. 5.4GAPCh. 2 - Prob. 6GAPCh. 2 - Prob. 7.1GAPCh. 2 - Prob. 7.2GAPCh. 2 - Prob. 7.3GAPCh. 2 - Prob. 7.4GAPCh. 2 - Prob. 7.5GAPCh. 2 - Prob. 8.1GAPCh. 2 - Prob. 8.2GAPCh. 2 - Prob. 8.3GAPCh. 2 - Prob. 8.4GAPCh. 2 - Prob. 8.5GAPCh. 2 - Prob. 1.1GBPCh. 2 - Prob. 1.2GBPCh. 2 - Prob. 1.3GBPCh. 2 - Prob. 1.4GBPCh. 2 - Prob. 1.5GBPCh. 2 - Prob. 2GBPCh. 2 - Prob. 3.1GBPCh. 2 - Prob. 3.2GBPCh. 2 - Prob. 3.3GBPCh. 2 - Prob. 3.4GBPCh. 2 - Prob. 3.5GBPCh. 2 - Prob. 4.1GBPCh. 2 - Prob. 4.2GBPCh. 2 - Prob. 4.3GBPCh. 2 - Recording Manufacturing Costs and Analyzing...Ch. 2 - Recording Manufacturing Costs and Analyzing...Ch. 2 - Recording Manufacturing Costs and Analyzing...Ch. 2 - Prob. 5.4GBPCh. 2 - Prob. 6GBPCh. 2 - Prob. 7.1GBPCh. 2 - Prob. 7.2GBPCh. 2 - Prob. 7.3GBPCh. 2 - Prob. 7.4GBPCh. 2 - Prob. 7.5GBPCh. 2 - Prob. 8.1GBPCh. 2 - Prob. 8.2GBPCh. 2 - Prob. 8.3GBPCh. 2 - Prob. 8.4GBPCh. 2 - Prob. 8.5GBP
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Jolene Askew, manager of Feagan Company, has committed her company to a strategically sound cost reduction program. Emphasizing life-cycle cost management is a major part of this effort. Jolene is convinced that production costs can be reduced by paying more attention to the relationships between design and manufacturing. Design engineers need to know what causes manufacturing costs. She instructed her controller to develop a manufacturing cost formula for a newly proposed product. Marketing had already projected sales of 25,000 units for the new product. (The life cycle was estimated to be 18 months. The company expected to have 50 percent of the market and priced its product to achieve this goal.) The projected selling price was 20 per unit. The following cost formula was developed: Y=200,000+10X1 where X1=Machinehours(Theproductisexpectedtouseonemachinehourforeveryunitproduced.) Upon seeing the cost formula, Jolene quickly calculated the projected gross profit to be 50,000. This produced a gross profit of 2 per unit, well below the targeted gross profit of 4 per unit. Jolene then sent a memo to the Engineering Department, instructing them to search for a new design that would lower the costs of production by at least 50,000 so that the target profit could be met. Within two days, the Engineering Department proposed a new design that would reduce unit-variable cost from 10 per machine hour to 8 per machine hour (Design Z). The chief engineer, upon reviewing the design, questioned the validity of the controllers cost formula. He suggested a more careful assessment of the proposed designs effect on activities other than machining. Based on this suggestion, the following revised cost formula was developed. This cost formula reflected the cost relationships of the most recent design (Design Z). Y=140,000+8X1+5,000X2+2,000X3 where X1=MachinehoursX2=NumberofbatchesX3=Numberofengineeringchangeorders Based on scheduling and inventory considerations, the product would be produced in batches of 1,000; thus, 25 batches would be needed over the products life cycle. Furthermore, based on past experience, the product would likely generate about 20 engineering change orders. This new insight into the linkage of the product with its underlying activities led to a different design (Design W). This second design also lowered the unit-level cost by 2 per unit but decreased the number of design support requirements from 20 orders to 10 orders. Attention was also given to the setup activity, and the design engineer assigned to the product created a design that reduced setup time and lowered variable setup costs from 5,000 to 3,000 per setup. Furthermore, Design W also creates excess activity capacity for the setup activity, and resource spending for setup activity capacity can be decreased by 40,000, reducing the fixed cost component in the equation by this amount. Design W was recommended and accepted. As prototypes of the design were tested, an additional benefit emerged. Based on test results, the post-purchase costs dropped from an estimated 0.70 per unit sold to 0.40 per unit sold. Using this information, the Marketing Department revised the projected market share upward from 50 percent to 60 percent (with no price decrease). Required: 1. Calculate the expected gross profit per unit for Design Z using the controllers original cost formula. According to this outcome, does Design Z reach the targeted unit profit? Repeat, using the engineers revised cost formula. Explain why Design Z failed to meet the targeted profit. What does this say about the use of unit-based costing for life-cycle cost management? 2. Calculate the expected profit per unit using Design W. Comment on the value of activity information for life-cycle cost management. 3. The benefit of the post-purchase cost reduction of Design W was discovered in testing. What direct benefit did it create for Feagan Company (in dollars)? Reducing post-purchase costs was not a specific design objective. Should it have been? Are there any other design objectives that should have been considered?arrow_forwardThe Conti Company is decentralized, and divisions are considered investment contors. Con has one division that manufactures oak dining room chairs with upholstered seat cushions. The Chair Division cuts, assembles, and finishes the cak chairs and then purchases and attaches the seat cushions (Click the icon to view additional information) Read the requirements Requirement 3. Assume the Chair Division purchases the 900 cushions needed from the Cushion Division at its current variable cost. What is the total contribution margin for each division and the company? (Enter "0" for any zero amounts) Number of units Contribution margin per unt Total contribution margin Cushion Division Total Requirement 4. Review your answers for Requirements 1, 2, and 3. What is the best option for Con Company? The best option for Cois in total contribution margin than if the duson purchanchons inveraly By having the Chair Division purchase the cushions from a in outside vendor, the company would get…arrow_forwardActivity-Based Costing; Customer Group Cost Analysis Franklin Furniture Inc. (FFI) manufactures bedroom furniture in sets (a set includes a dresser, two queen-size beds, and one bedsidetable) for use in motels and hotels. FFI has three customer groups, which it calls the value, quality,and luxury groups. The value products are targeted to low-price motels that are looking for simplefurniture, while the luxury furniture is targeted to the very best hotels. The value line is attractive toa variety of hotels and motels that appreciate the combination of quality and value. Currently therehas been a small increase in the quality and value lines, and an appreciable increase in demand in theluxury line, reflecting cyclical changes in the marketplace. Luxury hotels are now in more demandfor business travel, while a few years ago, the value segment was the most popular for business travelers. FFI wants to be able to respond to the increased demand with increased production but worriesabout the…arrow_forward
- Life-Cycle Costing Kate Stephens, the COO of BioDerm, has asked her cost management team for a product-line profitability analysis for her firm’s two products, Xderm and Yderm. The two skin care products require a large amount of research and development and advertising. After receiving the following statement from BioDerm’s accountants, Kate concludes that Xderm is the more profitable product and that perhaps cost-cutting measures should be applied to Yderm: 1.Suppose that 75% of the R&D and selling expenses are traceable to Xderm. Using this assumption, compute the life-cycle income for each product and the return on sales for each product. See attachment. Please explain. Thanks!arrow_forwardLife-Cycle Costing Kate Stephens, the COO of BioDerm, has asked her cost management team for a product-line profitability analysis for her firm’s two products, Xderm and Yderm. The two skin care products require a large amount of research and development and advertising. After receiving the following statement from BioDerm’s accountants, Kate concludes that Xderm is the more profitable product and that perhaps cost-cutting measures should be applied to Yderm: Required Explain why Kate may be wrong in her assessment of the relative performance of the two products. Suppose that 75% of the R&D and selling expenses are traceable to Xderm. Using this assumption, compute the life-cycle income for each product and the return on sales for each product. Consider your answers to requirements 1 and 2 with the following additional information: R&D and selling expenses are substantially higher for Xderm because it is a new product. Kate has strongly supported development of the new…arrow_forwardQ.Identify the cost hierarchy level for each cost categoryarrow_forward
- Which costs of quality category are managers focusing on? Why?arrow_forwardMidwest Home Furnishings Corporation (MHFC) manufactures a variety of housewares for the consumer market in the Midwest. The company’s three major product lines are cooking utensils, tableware, and flatware. MHFC implemented activity-based costing four years ago and now has a well-developed ABC system in place for determining product costs. Only recently, however, has the ABC system been systematically used for the purposes of activity-based management. As a pilot project, MHFC’s controller asked the ABC project team to do a detailed activity analysis of the purchasing activity. The following specific activities were identified. 1. Receipt of parts specifications from the Design Engineering Department. 2. Follow-up with design engineers to answer any questions. 3. Vendor (supplier) identification. 4. Vendor consultations (by phone or in person). 5. Price negotiation. 6. Vendor selection. 7. Ordering (by phone or mail). 8. Order follow-up. 9. Expediting (attempting to speed up…arrow_forwardActivity-Based Supplier Costing Clear sound 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 68,100 15,000 15,000 Failed…arrow_forward
- . The firm You are employed by Maddie's Corp. an Accounting Firm based in Houston has recently been asked by a client, a medium-sized manufacturing company in California to provide advice and recommendations to improve the company's existing costing system. The CEO of the manufacturing company is keen to implement standard costing. Requirement: Draft a report for your client that: a. b. Outlines the purposes of standard costing Explains the operating mechanisms of the standard costing system The company is also looking to expand and wishes to understand the scope, structure and purpose of transfer pricing. Requirement: Draft a report for your client that: C. Explains how transfer pricing worksarrow_forwardPlease do not give solution in image format thankuarrow_forwardChoosing cost drivers, activity-based costing, activity-based management. Pastel Bags (PB) is a designer of high-quality backpacks and purses. Each design is made in small batches. Each spring, PB comes out with new designs for the backpack and for the purse. The company uses these designs for a year and then moves on to the next trend. The bags are all made on the same fabrication equipment that is expected to operate at capacity. The equipment must be switched over to a new design and set up to prepare for the production of each new batch of products. When completed, each batch of products is immediately shipped to a wholesaler. Shipping costs vary with the number of shipments. Budgeted information for the year is as follows:arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Excel Applications for Accounting PrinciplesAccountingISBN:9781111581565Author:Gaylord N. SmithPublisher:Cengage LearningCornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage Learning
Excel Applications for Accounting Principles
Accounting
ISBN:9781111581565
Author:Gaylord N. Smith
Publisher:Cengage Learning
Cornerstones of Cost Management (Cornerstones Ser...
Accounting
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Cengage Learning
Relevant Costing Explained; Author: Kaplan UK;https://www.youtube.com/watch?v=hnsh3hlJAkI;License: Standard Youtube License