Ethical case: In this case out of the three departments Person B has no interest in plumbing department. B wants to reallocate the company’s fixed cost of other two divisions to the plumbing divisions in order to improve the income. But it does not create any changes thereby, the board of directors suggested to close the plumbing department. To discuss: If a division is reporting losses, does that mean that it should be closed.

Question

Want to see the full answer?

Answer 1

Question

Chapter 7, Problem 7.6BYP

(a)

To determine

Ethical case:

In this case out of the three departments Person B has no interest in plumbing department. B wants to reallocate the company’s fixed cost of other two divisions to the plumbing divisions in order to improve the income. But it does not create any changes thereby, the board of directors suggested to close the plumbing department.

To discuss: If a division is reporting losses, does that mean that it should be closed.

(b)

To determine

Fixed Cost:

It is a cost which is constant in the short run, it is not related to any change in the production of goods or service, it will be fixed disregarding of increase or decrease in output. Fixed cost is generally incurred on fixed assets in long run.

To explain: Reallocation of fixed costs across the division was unethical.

(c)

To determine

To explain: What Person B should do?

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

Chapter 15 Homework 13 Saved Help Save & Exit Submit Part 1 of 2 0.83 points eBook Ask Required information Use the following information to answer questions. (Algo) [The following information applies to the questions displayed below.] Information on Kwon Manufacturing's activities for its first month of operations follows: a. Purchased $100,800 of raw materials on credit. b. Materials requisitions show the following materials used for the month. Job 201 Job 202 Total direct materials Indirect materials Total materials used $ 49,000 24,400 73,400 9,420 $ 82,820 c. Time tickets show the following labor used for the month. Print References Job 201 $ 40,000 Job 202 13,400 Total direct labor 53,400 25,000 $ 78,400 Indirect labor Total labor used d. Applied overhead to Job 201 and to Job 202 using a predetermined overhead rate of 80% of direct materials cost. e. Transferred Job 201 to Finished Goods Inventory. f. Sold Job 201 for $166,160 on credit. g. Incurred the following actual other…

quesrion 2

Anti-Pandemic Pharma Co. Ltd. reports the following information in its income statement: Sales = $5,250,000; Costs = $2, 173,000; Other expenses = $187,400; Depreciation expense = $79,000; Interest expense= $53,555; Taxes $76,000; Dividends $69,000. $136,700 worth of new shares were also issued during the year and long-term debt worth $65,300 was redeemed. a) Compute the cash flow from assets b) Compute the net change in working capital (325 marks)

Answer 2

Question

Chapter 7, Problem 7.6BYP

(a)

To determine

Ethical case:

In this case out of the three departments Person B has no interest in plumbing department. B wants to reallocate the company’s fixed cost of other two divisions to the plumbing divisions in order to improve the income. But it does not create any changes thereby, the board of directors suggested to close the plumbing department.

To discuss: If a division is reporting losses, does that mean that it should be closed.

(b)

To determine

Fixed Cost:

It is a cost which is constant in the short run, it is not related to any change in the production of goods or service, it will be fixed disregarding of increase or decrease in output. Fixed cost is generally incurred on fixed assets in long run.

To explain: Reallocation of fixed costs across the division was unethical.

(c)

To determine

To explain: What Person B should do?

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 3

Question

Chapter 7, Problem 7.6BYP

(a)

To determine

Ethical case:

In this case out of the three departments Person B has no interest in plumbing department. B wants to reallocate the company’s fixed cost of other two divisions to the plumbing divisions in order to improve the income. But it does not create any changes thereby, the board of directors suggested to close the plumbing department.

To discuss: If a division is reporting losses, does that mean that it should be closed.

(b)

To determine

Fixed Cost:

It is a cost which is constant in the short run, it is not related to any change in the production of goods or service, it will be fixed disregarding of increase or decrease in output. Fixed cost is generally incurred on fixed assets in long run.

To explain: Reallocation of fixed costs across the division was unethical.

(c)

To determine

To explain: What Person B should do?

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 4

Question

Chapter 7, Problem 7.6BYP

(a)

To determine

Ethical case:

In this case out of the three departments Person B has no interest in plumbing department. B wants to reallocate the company’s fixed cost of other two divisions to the plumbing divisions in order to improve the income. But it does not create any changes thereby, the board of directors suggested to close the plumbing department.

To discuss: If a division is reporting losses, does that mean that it should be closed.

(b)

To determine

Fixed Cost:

It is a cost which is constant in the short run, it is not related to any change in the production of goods or service, it will be fixed disregarding of increase or decrease in output. Fixed cost is generally incurred on fixed assets in long run.

To explain: Reallocation of fixed costs across the division was unethical.

(c)

To determine

To explain: What Person B should do?

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 5

Chapter 7, Problem 7.6BYP

(a)

To determine

Ethical case:

In this case out of the three departments Person B has no interest in plumbing department. B wants to reallocate the company’s fixed cost of other two divisions to the plumbing divisions in order to improve the income. But it does not create any changes thereby, the board of directors suggested to close the plumbing department.

To discuss: If a division is reporting losses, does that mean that it should be closed.

(b)

To determine

Fixed Cost:

It is a cost which is constant in the short run, it is not related to any change in the production of goods or service, it will be fixed disregarding of increase or decrease in output. Fixed cost is generally incurred on fixed assets in long run.

To explain: Reallocation of fixed costs across the division was unethical.

(c)

To determine

To explain: What Person B should do?

Answer 6

Chapter 7, Problem 7.6BYP

(a)

To determine

Ethical case:

In this case out of the three departments Person B has no interest in plumbing department. B wants to reallocate the company’s fixed cost of other two divisions to the plumbing divisions in order to improve the income. But it does not create any changes thereby, the board of directors suggested to close the plumbing department.

To discuss: If a division is reporting losses, does that mean that it should be closed.

Answer 7

Chapter 7, Problem 7.6BYP

(a)

To determine

Ethical case:

In this case out of the three departments Person B has no interest in plumbing department. B wants to reallocate the company’s fixed cost of other two divisions to the plumbing divisions in order to improve the income. But it does not create any changes thereby, the board of directors suggested to close the plumbing department.

To discuss: If a division is reporting losses, does that mean that it should be closed.

Answer 8

(b)

To determine

Fixed Cost:

It is a cost which is constant in the short run, it is not related to any change in the production of goods or service, it will be fixed disregarding of increase or decrease in output. Fixed cost is generally incurred on fixed assets in long run.

To explain: Reallocation of fixed costs across the division was unethical.

Answer 9

(b)

To determine

Fixed Cost:

It is a cost which is constant in the short run, it is not related to any change in the production of goods or service, it will be fixed disregarding of increase or decrease in output. Fixed cost is generally incurred on fixed assets in long run.

To explain: Reallocation of fixed costs across the division was unethical.

Answer 10

(c)

To determine

To explain: What Person B should do?

Answer 11

(c)

To determine

To explain: What Person B should do?

Answer 12

Expert Solution & Answer

Answer 13

Expert Solution & Answer

Answer 14

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 15

Ch. 7 - What steps are frequently involved in managements...Ch. 7 - Prob. 2Q Ch. 7 - Incremental analysis involves the accumulation of...Ch. 7 - Sydney Greene asks for your help concerning the...Ch. 7 - What data are relevant in deciding whether to...Ch. 7 - Prob. 6Q Ch. 7 - Prob. 7Q Ch. 7 - Prob. 8Q Ch. 7 - What are joint products? What accounting issue...Ch. 7 - Prob. 10Q

Solution Summary: The author explains that if a division is reporting losses, it does not mean that it should be closed.

Videos

To explain: What Person B should do?

Want to see the full answer?

Chapter 7 Solutions