MANAGERIAL ACCOUNTING FOR MANAGERS
5th Edition
ISBN: 9781264196456
Author: Noreen
Publisher: MCG
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter P, Problem P.12E
Cognitive Bias and Decision Making
During World War II, the U.S. military was studying its combat-tested fighter planes to determine the parts of the plane that were most vulnerable to enemy fire. The purpose of the study was to identify the most vulnerable sections of each plane and then take steps to reinforce those sections to improve pilot safety and airplane durability. The data gathered by the U.S. military showed that certain sections of its combat-tested fighter planes were consistently hit more often with enemy fire than other sections of the plane.
Required:
- Would you recommend reinforcing the sections of the plane that were hit most often by enemy fire, or would you reinforce the sections that were hit less frequently by enemy fire? Why?
- Do you think cognitive bias had the potential to influence the U.S. military’s decision-making process with respect to reinforcing its fighter planes?
Source: Jerker Denrell, "Selection Bias and the Perils of Benchmarking,” Harvard Business Review, Volume 83, Issue 4, pp.114—119.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Should Classo
implement the new quality program?
attached in ss below
thanks
Can you Apply Philip Crosby's concept of quality vaccine to solve the problem given in this case ? (Make assumptions as required)
Environmental scientists David Pimentel, Rodolfo Zuniga, and Doug Morrison of Cornell University reviewed scientific estimates for the economic and ecological costs imposed by introduced and invasive species in the United States. They found that, as of 2005, approximately 50,000 species had been introduced in the United States and that these accountedfor over $120 billion in economic costs each year. These costs include direct losses and damage, as well as costs required to control the species. (The researchers did not quantify monetary estimates for losses of biodiversity, ecosystem services, and aesthetics, which they said would drive total costs several times higher.) Calculate values missing from the table to determine the number of introduced species of each type of organism and the annual cost that each imposes on our economy.
Organisms that damage crop plants are the most costlyof introduced species. Weeds, pathogenic microbes, andarthropods that attack crops together account…
Chapter P Solutions
MANAGERIAL ACCOUNTING FOR MANAGERS
Ch. P - Prob. P.1QCh. P - Pick any major television network and describe...Ch. P - If you had to decide whether to continue making a...Ch. P - Why do companies prepare budgets?Ch. P - Prob. P.5QCh. P - Why is managerial accounting relevant to...Ch. P - Prob. P.7QCh. P - Why do management accountants need to understand...Ch. P - Prob. P.9QCh. P - Pick three industries and describe how the risks...
Ch. P - Pick any large company and explain three ways that...Ch. P - Why do companies that implement Lean Production...Ch. P - Why are leadership skills important to managers?Ch. P - Why are leadership skills important to managers?Ch. P - Prob. P.16QCh. P - Prob. P.17QCh. P - Prob. P.18QCh. P - Why do companies take a physical count of their...Ch. P - Why do companies use sequential prenumbering for...Ch. P - Planning and Control Many companies use budgets...Ch. P - Prob. P.2ECh. P - Prob. P.3ECh. P - Ethics and the Manager Richmond, Inc., operates a...Ch. P - Prob. P.6ECh. P - Ethics In Business Consumers and attorney generals...Ch. P - Prob. P.8ECh. P - Prob. P.9ECh. P - Corporate Social Responsibility In his book...Ch. P - Prob. P.11ECh. P - Cognitive Bias and Decision Making During World...Ch. P - Ethics and Decision Making Assume that you just...
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
- In response to Intense foreign competition, Florex Company has taken steps to improve the quality of its products. A summary of its quality costs (in thousands) over the past two years is given below: Inspection Quality engineering Depreciation of test equipment Rework labor Statistical process control Cost of field servicing Supplies used in testing Systems development Warranty repairs Net cost of scrap Prevention costs: Total prevention costs Appraisal costs Total appraisal costs Internal failure costs: Product testing Product recalls Disposal of production defects Sales have been flat over the past few years, at $84,000,000 per year. Required: 1. Prepare a quality cost report for this year and last year. Note: Enter amount values in thousands. Round your percentage answers to 2 decimal places (l.e 0.1234 should be entered as 12.34). Total internal failure costs External failure costs: Costs (in thousands) Last Year This Year $ 840 $1,218 $ 420 $ 630 $ 630 $ 420 $ 1,260 Total…arrow_forwardA defense department assigned its highest priority to develop an advanced aircraft using materials not previously used and untested technologies. A firm fixed-price contract was awarded to a qualified vendor. Controls were in place at all levels, and progress reports- noting challenges-were sent to top officials. Top officials reported that progress was excellent, but the project failed due to enormous expenditures with no aircraft developed. Which risks were not adequately considered? I. Because the requirements were not specific, the use of a firm fixed-price contract made the project risky. II. The personnel at many levels sent false reports forward on cost incurred and progress made. III. The contractor lacked adequate technical skills to deal with technology that was stll evolving. IV. Top procurement officials did not act on "red flags" due to a "can do" mentality on a high priority of the program. O l onlyarrow_forwardThe fundamental concept behind strategic performance measurement systems is that an organizations strategy can be represented by a set of performance measures. This basic concept of representing a complex idea (like strategy) with something more tangible (like a measure) goes back hundreds, even thousands of years. Platos Allegory of the Cave provides perhaps the first evidence of this concept. In the allegory, Plato describes a hypothetical scenario in which a group of prisoners is chained to a wall inside a cave, locked in a position facing away from the cave opening. Plato explains that the prisoners have been in this condition their entire lives so their knowledge of the outside world is limited to what they are able to perceive in their current state staring only at the cave wall. Plato then describes how sunlight from the outside casts shadows of anything that passes by the cave opening into the cave. These shadows appear on the wall that the prisoners are facing, and sounds from the outside echo off the shadowed wall. Plato explains that, to the prisoners, reality is not outside the cave but the shadows are reality. To them, sounds dont come from the outside but rather from the shadows on the wall before them. Plato then goes on to discuss the status of a prisoner freed from this bondage and his initial reaction to exposure to a different reality. Plato says, Will he not fancy that the shadows which he formerly saw are truer than the objects which are now shown to him? This allegory illustrates that reality can really only be indirectly perceived via imperfect representations of reality. That is what accounting is all about. Accounting measures are imperfect representations of economic ideas that cannot be seen directlyjust like Platos shadows in the cave. Accounting measures are merely reflections of more interesting and important concepts. Consider financial statements and answer the following: Why do people care about what is on a firms balance sheet or income statement? Are they really interested in the financial statements in and of themselves, or do they use the financial statements to learn something about the issues they really care about? What are some of those issues?arrow_forward
- In response to intense foreign competition, Florex Company has taken steps to improve the quality of its products. A summary of its quality costs (in thousands) over the past two years is given below: Inspection Quality engineering Depreciation of test equipment Rework labor Statistical process control Cost of field servicing Supplies used in testing Systems development Warranty repairs Prevention costs: Total prevention costs Appraisal costs Total appraisal costs Internal failure costs: Costs (in thousands) Last Year Total internal failure costs External failure costs: $630 $ $ $ 420 $588 1,050 $0 1,260 $ 42 $840 $ 4,200 $420 $840 $ 2,520 $630 Net cost of scrap Product testing Product recalls Disposal of production defects. Sales have been flat over the past few years, at $84,000,000 per year. Total external failure costs Total quality cost This Year $ 1,008 Required: 1. Prepare a quality cost report for this year and last year. Note: Enter amount values in thousands. Round your…arrow_forwardIn a manufacturing process the assembly line speed (feet per minute) was thought to affect the number of defective parts found during the inspection process. To test this theory, managers devised a situation in which the same batch of parts was inspected visually at a variety of line speeds. They collected the following data: Develop a scatter chart with line speed as the independent variable. What does the scatter chart indicate about the relationship between line speed and the number of defective parts found? Use the data to develop an estimated regression equation that could be used to predict the number of defective parts found, given the line speed. What is the estimated regression model? Test whether each of the regression parameters β0 and β1 is equal to zero at a 0.01 level of significance. What are the correct interpretations of the estimated regression parameters? Are these interpretations reasonable? How much of the variation in the number of defective parts found for the sample data does the model you estimated in part (b) explain?arrow_forwardRichins Company is considering the acquisition of a computerized manufacturing system. The new system has a built in quality function that increases the control over product specifications. An alarm sounds whenever the product falls outside the programmed specifications. An operator can then make some adjustments on the spot to restore the desired product quality. The system is expected to decrease the number of units scrapped because of poor quality. The system is also expected to decrease the amount of labor inputs needed. The production manager is pushing for the aquisition because he believes that productivity will be greatly enhanced - particularly when it comes to labor and material inputs. Output and input data follow. The data for the computerized system are projections. Current System Computerized System Output (units)…arrow_forward
- 10.2 Explain how independent performance evaluation procedures are either violated or ef- fectively applied in each of the following situations. Identify the problem and suggest the check required (or applied) to prevent the identified problem from occurring. a. The manager who oversees the corporate fleet vehicles signed off on the purchase of 15 luxury SUVs to expand the company's fleet of cars. As soon as this was done, he instructed that the payment be made. b. At a newly opened local restaurant, waiters work six-hour shifts. There are three six- hour shifts per day, with each shift overlapping the next. The restaurant currently has two cash registers and these can be operated by any one of the waiters during a shift without them requiring any form of identification. The new manager has decided that the cash in the cash register box will be checked once every 24 hours, i.e., in the mornings before the new shift for the day begins. c. A company's financial clerk does a spot check of…arrow_forwardOne of the main concerns in the coronavirus outbreak is the spreadof the virus during air travel. To avoid the risk of spreadingvirusand eliminate concernsduring air travel, airlines started to circulate fresh air in the airplane cabins every 3 minutes. For this purpose, air needs to be compressedfrom outside to inside the airplane cabinand conditioned for passenger comfort and safety. Calculate the average cost of this new implementation to Turkish Airlines for one of its national flights assuming that the energy costs 2 Turkish liras (TL) per kW hr?arrow_forwardPart of your company's accounting database was destroyed during a ransomware attack. You have been able to gather the following data from your files. Reconstruct the remaining information using the available data. All of the raw material purchased during the period was used in production. Note: Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "O" for no effect (i.e., zero variance). Round "Standard Quantity per Unit of Output" to 2 decimal places. Direct Labor Direct Material bok Standard price or rate per unit of input per hour $ 7.00 per pound Standard quantity per unit of output hours per unit pounds per unit Actual quantity used per unit of output 1.80 hours pounds per unit int Actual price or rate per unit of input $ 11.00 per hour $ 6.00 per pound rences Actual output Direct-material price variance Direct-material quantity variance 5,000 units 5,000 units $ 34,000 F $ 14,000 U Total direct-material variance $ 20,000 F…arrow_forward
- Productivity and Quality: Prospective Analysis Analytic Company is considering the acquisition of a computerized manufacturing system. The new system has a built-in quality function that increases the control over product specifications. An alarm sounds whenever the product falls outside the programmed specifications. An operator can then make some adjustments on the spot to restore the desired product quality. The system is expected to decrease the number of units scrapped because of poor quality. The system is also expected to decrease the amount of labor inputs needed. The production manager is pushing for the acquisition because he believes that productivity will be greatly enhanced—particularly when it comes to labor and material inputs. Output and input data follow. The data for the computerized system are projections. Current System Computerized System Output (units) 30,000 30,000 Output selling price $40 $40 Input quantities: Materials 120,000…arrow_forwardPart of your company's accounting database was destroyed during a ransomware attack. You have been able to gather the following data from your files. Reconstruct the remaining information using the available data. All of the raw material purchased during the period was used in production. Note: Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "0" for no effect (i.e. zero variance). Round "Standard Quantity per Unit of Output" to 2 decimal places. Standard price or rate per unit of input Standard quantity per unit of output Actual quantity used per unit of output Actual price or rate per unit of input Actual output Direct-material price variance Direct-material quantity variance Total direct-material variance Direct-labor rate variance Direct-labor efficiency variance Total direct-labor variance $ $ $ Direct Labor per hour hours per unit 3.50 hours 21.00 per hour 5,500 units 30,000 F 10,750 F $ $ $ $ Direct Material 8.00 per pound…arrow_forwardA seminar was recently attended by the Managing Director of XYZ Manufacturing Company Limited located at Sheffield. The focus of the seminar was “optimising scarce resources utility in a manufacturing setting with particular reference to linear programming”. On his return to his base, he called for a meeting with the Management to share his experience from the seminar and the impact this will have on the decision by the Board to produce two major products in the years ahead. A group of external research experts had previously been commissioned and the following represents information from the research carried out by them The expected products are “Best” and “Smart” with expected costs statistics as follows: Best £ Smart £ Material costs (5kg@£50/kg) 250 (3kg@£50/kg) 150 Labour costs Machinery time (4 hours @£15/Hr) 60 (2hours @£15/Hr) 30 Other Processing Time (4 hours @£10/hr) 40 (5hours@£10/Hr) 50 The applicable pricing…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Cornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage Learning
Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub
Financial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,
Essentials of Business Analytics (MindTap Course ...StatisticsISBN:9781305627734Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. AndersonPublisher:Cengage Learning
Cornerstones of Cost Management (Cornerstones Ser...
Accounting
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Cengage Learning
Managerial Accounting
Accounting
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:South-Western College Pub
Financial And Managerial Accounting
Accounting
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:Cengage Learning,
Essentials of Business Analytics (MindTap Course ...
Statistics
ISBN:9781305627734
Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson
Publisher:Cengage Learning
8 Common Investor Biases (And How to Overcome Them); Author: Next Level Life;https://www.youtube.com/watch?v=7btv02RgCzo;License: Standard Youtube License