Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN: 9781305970663
Author: Don R. Hansen, Maryanne M. Mowen
Publisher: Cengage Learning
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Chapter 4, Problem 17E
To determine
Prepare an activity dictionary using five columns for bank G’s credit card department.
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Golding Bank is in the process of implementing an activity-based costing system. A copy of an interview with the manager of Golding's Credit Card Department follows:
QUESTION I: How many employees are in your department?
RESPONSE: There are eight employees, including me.
QUESTION 2: What do they do (please describe)?
RESPONSE: There are four major activities: supervising employees, processing credit card transactions, issuing customer statements, and answering customer questions.
QUESTION 3: Do customers outside your department use any equipment?
RESPONSE: Yes. Automatic bank tellers service customers who require cash advances.
QUESTION 4: What resources are used by each activity (equipment, materials, energy)?
RESPONSE: We each have our own computer, printer, and desk. Paper and other supplies are needed to operate the printers. Of course, we each have a telephone as well.
QUESTION 5: What are the outputs of each activity?
RESPONSE: Well, for supervising, I manage employees' needs…
Activity Bases for Service Department Charges
For each of the following service departments, select the activity base listed that is most appropriate for charging service expenses to responsible units. Your answer should include the number of the activity base only.
Activity bases to choose from:
Number of conference attendees
Number of computers
Number of employees trained
Number of cell phone minutes used
Number of purchase requisitions
Number of sales invoices
Number of payroll checks
Number of travel claims
Service Department
Activity Base
a. Accounts Receivable
fill in the blank 1
b. Central Purchasing
fill in the blank 2
c. Computer Support
fill in the blank 3
d. Conferences
fill in the blank 4
e. Employee Travel
fill in the blank 5
f. Payroll Accounting
fill in the blank 6
g. Telecommunications
fill in the blank 7
h. Training
fill in the blank 8
Ngai Nhung is the sales manager at Hung Technologies. At lunch with the company CEO, Ngai proudly announced that he had received a __ from a client. The client had just requested a large quantity of components from Hung.
A. purchase order
B. purchase requisition
C. back order
D. voucher
E. bill of lading
Chapter 4 Solutions
Cornerstones of Cost Management (Cornerstones Series)
Ch. 4 - What is a predetermined overhead rate? Explain why...Ch. 4 - Describe what is meant by under- and overapplied...Ch. 4 - Explain how a plantwide overhead rate, using a...Ch. 4 - What are non-unit-related overhead activities?...Ch. 4 - What is an overhead consumption ratio?Ch. 4 - Overhead costs are the source of product cost...Ch. 4 - What is activity-based product costing?Ch. 4 - What are the six steps that define the design of...Ch. 4 - Explain how the cost of resources is assigned to...Ch. 4 - Prob. 10DQ
Ch. 4 - Identify and define two types of activity drivers.Ch. 4 - What are unit-level activities? Batch-level...Ch. 4 - Prob. 13DQCh. 4 - Prob. 14DQCh. 4 - Prob. 15DQCh. 4 - Prob. 1CECh. 4 - Warner Company has the following data for the past...Ch. 4 - Lansing. Inc., provided the following data for its...Ch. 4 - Larsen, Inc., produces two types of electronic...Ch. 4 - Roberts Company produces two weed eaters: basic...Ch. 4 - Golding Bank provided the following data about its...Ch. 4 - Golding Bank provided the following data about its...Ch. 4 - Electan Company produces two types of printers....Ch. 4 - Patterson Company produces wafers for integrated...Ch. 4 - Selected activities and other information are...Ch. 4 - Ripley, Inc., costs products using a normal...Ch. 4 - Predetermined Overhead Rate, Application of...Ch. 4 - Craig Company uses a predetermined overhead rate...Ch. 4 - Departmental Overhead Rates Mariposa, Inc.,...Ch. 4 - McCourt Company produces two types of leather...Ch. 4 - Deoro Company has identified the following...Ch. 4 - Prob. 17ECh. 4 - Secondary Activities Refer to the interview in...Ch. 4 - Bob Randall, cost accounting manager for Hemple...Ch. 4 - Prob. 20ECh. 4 - Bob Randall, cost accounting manager for Hemple...Ch. 4 - Silven Company has identified the following...Ch. 4 - Silven Company has identified the following...Ch. 4 - Gee Manufacturing produces two models of camshafts...Ch. 4 - Cushing, Inc., costs products using a normal...Ch. 4 - Nonunit-level drivers are prominent in...Ch. 4 - Plata Company has identified the following...Ch. 4 - Assume that the inspection activity has an...Ch. 4 - Consider the information given on two products and...Ch. 4 - Primera Company produces two products and uses a...Ch. 4 - Fisico Company produces exercise bikes. One of its...Ch. 4 - Prob. 32PCh. 4 - Glencoe First National Bank operated for years...Ch. 4 - Autotech Manufacturing is engaged in the...Ch. 4 - The Bienestar Cardiology Clinic has two major...Ch. 4 - Reducir, Inc., produces two different types of...Ch. 4 - Refer to the data given in Problem 4.36 and...Ch. 4 - Escuha Company produces two type of calculators:...
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Similar questions
- Indicate whether the statement describes reporting by the financial accounting function or the managerial accounting function of an organization. The users of the report are managers who need a daily summary of work done each shift. The report is a job cost sheet for jobs completed in a 24-hour period. The annual report is released each year on the companys website. The report is audited by the companys certified public accountant firm. The report is prepared every day because the customer service manager needs information about inventory ready to be shipped to customers.arrow_forwardABC Bank would like to determine the price to charge for customer services and which classes of customers should be emphasized or de-emphasized. It has provided details of the activities and the cost drivers relating to those expenses that can be attributed to customers as follows: Activity Activity costs (R) Activity driver Activity volume Providing ATM services 400 000 Number of transactions 200 000 Computer processing 1 300 000 Number of transactions 2 500 000 Issuing Statements 1 100 000 Number of statements 500 000 Collections 160 000 Number of transactions 100 000 Customer inquiries 660 000 Telephone minutes 600 000 The following are annual information on the four types of customers: Personal Loans Cheque accounts Platinum accounts Savings accounts Number of product 7 000 28 000 12 000 2 000 ATM transactions 0 160 000 18 000 20 000 Computer transactions 210 000…arrow_forwardThe Soap Manufacturing Company has three employees who work in the warehouse. All of the warehouse workers are authorized to order inventory when it falls below the reorder level. The workers complete a purchase order and mail it to the supplier of their choice. The inventory is delivered directly to the warehouse. The workers send a memo to accounts payable clerk, reporting the receipt of inventory. Accounts payable clerk, compares the warehouse memo to the supplier’s invoice. Accounts payable clerk, prepares a check which the treasurer signature. What internal control improvements needed on this set up? Discribe at least 5 or more.arrow_forward
- Miss Maria has recently joined the accounting department of SISHGC Limited as an assistant accountant. During her first meeting with the accounting department, the head of the department has elaborated her the responsibilities related to the general ledger and subsidiary ledger. Miss Maria uses the source documents such as purchase orders, sales invoices, and suppliers’ invoices to prepare journal vouchers for general ledger entries. At the end of each working day, she posts the journal vouchers to the general ledger and the related subsidiary ledgers. At the end of each month, Miss Maria reconciles the subsidiary accounts to their control accounts in the general ledger to ensure that there is no difference in these accounts. Required: Discuss the internal control weaknesses and risks associated with the above process.arrow_forwardThe following situations describe scenarios that could use managerial accounting information: a. The manager of High Times Restaurant wants to determine the price to charge for various lunch plates. b. By evaluating the cost of leftover materials, the plant manager of a precision tool facility wants to determine how effectively the plant is being run. c. The division controller of West Coast Supplies needs to determine the cost of products left in inventory. d. The manager of the Maintenance Department of a large manufacturing company wants to plan next years anticipated expenditures. For each situation, discuss how managerial accounting information could be used.arrow_forwardThe Northwest regional manager of Logan Outdoor Equipment Company has conducted a study to determine how her store managers are allocating their time. A study was undertaken over three weeks that collected the following data related to the percentage of time each store manager spent on the tasks of attending required meetings, preparing business reports, customer interaction, and being idle. The results of the data collection appear in the following table: a. Create a stacked-bar chart with locations along the vertical axis. Reformat the bar chart to best display these data by adding axis labels, a chart title, and so on. b. Create a clustered-bar chart with locations along the vertical axis and clusters of tasks. Reformat the bar chart to best display these data by adding axis labels, a chart title, and the like. c. Create multiple bar charts in which each location becomes a single bar chart showing the percentage of time spent on tasks. Reformat the bar charts to best display these data by adding axis labels, a chart title, and so forth. d. Which form of bar chart (stacked, clustered, or multiple) is preferable for these data? Why? e. What can we infer about the differences among how store managers are allocating their time at the different locations?arrow_forward
- Solve all questions. a. The Soap Manufacturing Company has three employees who work in the warehouse. All of the warehouse workers are authorized to order inventory when it falls below the reorder level. The workers complete a purchase order and mail it to the supplier of their choice. The inventory is delivered directly to the warehouse. The workers send a memo to accounts payable reporting the receipt of inventory. Accounts payable compares the warehouse memo to the supplier’s invoice. Accounts payable prepares a check which the treasurer signs. a. Based on your point of view, discuss and explain each of them include examples FIVE (5) internal controls that being needed for improvements to the Soap Manufacturing Company. b. briefly discuss and explain the documents related to the purchasing cycle in above case study with any situationarrow_forwardThe Tennis Club Company makes custom tennis rackets. The manufacturing supervisor interviews people who have specialized manufacturing skills for recruitment, and he informs payroll when an employee is hired. The employees punch a card to a time clock to record the hours they work. The employees are also required to keep a record of the time they spend working on each order. The supervisor approves all time cards. The accountant analyzes the job tickets and prepares a labor distribution summary. Payroll prepares the payroll register and paychecks. The supervisor distributes the paychecks to the employees. Payroll informs cash disbursement of the funds required to cover the entire payroll amount. The cash disbursements clerk ensures that there are adequate funds in the company's regular checking account to cover the payroll. Required: 1. Identify and discuss three internal control weaknesses. 2. Suggest an improvement to internal control for each weakness.arrow_forwardThe following situations describe decision scenarios that could use managerial accounting information: The manager of High Times Restaurant wishes to determine the price to charge for various lunch plates. By evaluating the cost of leftover materials, the plant manager of a precision tool facility wishes to determine how effectively the plant is being run. The division controller of West Coast Supplies needs to determine the cost of products left in inventory. The manager of the Maintenance Department of a large manufacturing company wishes to plan next year’s anticipated expenditures. For each situation, discuss how managerial accounting information could be used. b) What are the major differences between managerial accounting and financial accounting?arrow_forward
- The following situations describe decision scenarios that could use managerial accounting information:1. The manager of High Times Restaurant wants to determine the price to charge for various lunch plates.2. By evaluating the cost of leftover materials, the plant manager of a precision tool facility wants to determine how effectively the plant is being run.3. The division controller of West Coast Supplies needs to determine the cost of products left in inventory.4. The manager of the Maintenance Department of a large manufacturing company wants to plan next year’s anticipated expenditures.For each situation, discuss how managerial accounting information could be used.arrow_forwardCamptown Togs, Inc., a children’s clothing manufacturer, has always found payroll processing to becostly because it must be done by a clerk. The numberof piece–goods coupons received by each employeeis collected and the types of tasks performed by eachemployee are calculated. Not long ago, an industrialengineer designed a system that partially automatesthe process by means of a scanner that reads thepiece–goods coupons. Management is enthusiasticabout this system, because it utilizes some personalcomputer systems that were purchased recently. It isexpected that this new automated system will save$45,000 per year in labor. The new system will costabout $30,000 to build and test prior to operation. Itis expected that operating costs, including incometaxes, will be about $5,000 per year. The system willhave a five-year useful life. The expected net salvagevalue of the system is estimated to be $3,000.(a) Identify the cash inflows over the life of theproject.(b) Identify the cash outflows…arrow_forwardThe Soap Manufacturing Company has three employees who work in the warehouse. All of the warehouse workers are authorized to order inventory when it falls below the reorder level. The workers complete a purchase order and mail it to the supplier of their choice. The inventory is delivered directly to the warehouse. The workers send a memo to accounts payable reporting the receipt of inventory. Accounts payable compar es the warehouse memo to the supplier’s invoice. Accounts payable prepares a check which the treasurer signs. a)Based on your point of view, d iscuss FIVE (5) internal controls that being needed for improvements to the Soap Manufacturing Company. b)Discuss the documents related to the purchasing cycle in above case study.arrow_forward
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