Cost Accounting Chapter 2 Questions And Answers

[Santi Dubrova]

Belowis the uncorrected machine-read text of this chapter, intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text of each book. Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.

The TRB National Cooperative Highway Research Program's NCHRP Research Report 944: Guide to Calculating Ownership and Operating Costs of Department of Transportation Vehicles and Equipment: An Accounting Perspective provides a practical, logical, and transparent framework for conducting fleet cost accounting in state DOTs. The Guide focuses on the unique aspects of DOT fleets, although the principles in the Guide could be extended to any public fleet.

You're looking at OpenBook, NAP.edu's online reading room since 1999. Based on feedback from you, our users, we've made some improvements that make it easier than ever to read thousands of publications on our website.

Guided by skills requiredof new graduates and those outlined in the Evolution Model Curriculum presented by the AICPAand NASBA, we have expanded our focus on data analytics. New data visualizations are included withinthe text and new assignments are available in the end-of-chapter assignments.

As the title suggests, our new edition is enhanced with an expanded and well-integratedcoverage of Data Analytics. This update is in line with the rapid technological advances that we are experiencing in our academic settingsand in the global business environment. We believe that the integration of data analyticsprovides a more meaningful and effective learning platform and better prepares students for their next steps in a career in business. The visual display of data providesstudents a new way to more deeply grasp accounting concepts that may simply get lost in a paragraph of text. We are also excitedabout the increased opportunities for critical thinking that the analysisprovides for students.

Our market research indicates that students' preferred approach to learning has shifted from reading dense text to a more learn-by-doing approach. In response, we have enhanced our pedagogy this edition by making chapter demonstrations more focused: we now pose specific questions and show step-by-step solutions in demonstration problems for each chapter's learning objectives to facilitate active learning. What has not changed, however, is our unmatched, straightforward, and readable approach.

Cost accounting has been and remains a dynamic discipline that must respond to the evolving needs of managers. Along these lines, we have updated the organization and content of the text. We have rearranged some topics to provide a better progression of material, to highlight more relevant topics, and to provide a more logical grouping of related topics. We have also enhanced the content of the text through additional topics or the expansion of existing topics. Our redesign process resulted in the inclusion of two new chapters: Chapter 3 on cost behavior and estimation and Chapter 14 on pricing, sales variances, and customer profitability. We are excited to share these new changes with our current and future customers.

The eleventh edition of Cost Accounting with Data Analyticsprovides in-depthcoverage of current cost management concepts and procedures in a straightforward and reader-friendly framework. The clean, concise presentation of materials and the updated illustrations reinforce and clarify the topics that readers traditionally struggle with most. The following features have been retained and updated in this edition.

myBusinessCourse is an online learning and assessment program intended to complement your textbook and faculty instruction. Access to myBusinessCourse is FREE ONLY with the purchase of a new textbook, but can be purchased separately.

Dr. Raiborn received her Ph.D. from Louisiana State University in 1975. She has taught a wide variety of classes atboth the undergraduate level including cost, managerial, intermediate, andadvanced accounting as well as graduate courses in accounting policy and fraudprevention and detection. Her research interests include financial accounting,cost management, international, ethics, and fraud. Dr. Raiborn has published articlesin accounting, law, and ethics journals including Strategic Finance, Advancesin Management Accounting, Journal ofAccounting Case Research, Research onProfessional Responsibility and Ethics in Accounting, Labor Law Journal, and Journalof Business Ethics. In 1991, she received the AICPA/Louisiana CPA SocietyOutstanding Educator Award. Her interests outside the classroom includetraveling, reading, water activities, decorating, and cooking.

Our eBook is browser-based and it is our goal to support the widest selection of devices available, from desktops, laptops, tablets, and smartphones. We constantly test and work to improve our eBook compatibility on as many devices as possible. We recommend that you upgrade your browser to the latest version and we encourage you to test and preview our eBook on your device before purchasing.

Please ensure that your code is being entered correctly. A common issue is the confusion of certain characters. We tend to see capital "I's" as in Iowa confused with lowercase "l's" like leopard and/or the number "1".

This indicates that information on file with an issuing credit card company does not match what is entered. We typically see this occur with individuals who have moved recently or individuals using a school address instead of a home address.

The RRR Group (RRR) provides roof repair, refurbishment and renewalservices to individual customers on a nationwide basis. RRR operates alarge number of regional divisions, each of which offers a similar rangeof services.

Table A shows actual results for Alpha division for the yearsending 30 November 20X7 and 30 November 20X8, together with datarepresenting an average of a number of similar competitor companydivisions.

RRR has given Alpha division a budgeted profit requirement of $20mfor the year to 30 November 20X9. The management of Alpha division hasprepared the strategy shown in Table B as the framework for theachievement of the budget profit requirement for the year to 30 November20X9.

(b)Apply the KPI performance appraisal processshown and explained in Table C, using actual data for 20X7 and 20X8 inorder to show the bonus (as a % of salary) that would have been achievedby Alpha division for the year ending 30 November 20X8;

Hawk Leathers Ltd ("Hawk") is a company based in the UK thatemploys around 60 people in the manufacture and sale of leather jackets,jeans, one and two piece suits, and gloves. These are aimed primarilyat motorcyclists, although a few items are sold as fashion garments.

Hawk sells 65% of its output to large retail chains such asMotorcycle City and Carnells, exports 25% to the USA and Japan, andsells the remaining 10% to individuals who contact the company directly.The latter group of customers specify their requirements for a made tomeasure suit (they are often professional racers whose suits must beapproved by the authorities such as the Auto Cycle Union). The largeretailers insist on low margins and are very slow to settle their debts.

There are around a dozen companies in the UK who make similarproducts to Hawk, plus very many other companies who compete with muchlower prices and inferior quality. Hawk's typical selling price for aonepiece suit is 1,000, whereas the low quality rivals' suits retailat around 400. As Hawk say in their literature "if you hit thetarmac,there's no substitute for a second skin from Hawk". Syntheticmaterials are waterproof, unlike leather, but do not currently offersufficient protection in an accident.

Sales of leathers in the UK are growing rapidly, mainly due to aresurgence of biking from more mature riders of large, powerfulmachines. Such riders are often wealthy and have family and financialcommitments. Currently Hawk, and its rivals for quality leathers arefinding it hard to keep up with demand. However, Government policy andEU emissions controls are likely to limit motorcycle performance, andsome experts predict that these regulations will cause sales of largemotorcycles to level off.

Whilst supplies of leather from Asia, Scandinavia and the UK areplentiful, a key problem is recruiting and training machinists to stitchand line the garments. Hawk has been able to invest in modern machineryto help production but the process is still labour intensive. Hawk hasfound that the expertise, reputation and skilled labour needed tosucceed in the industry takes years to build up.

Although the industry is fairly traditional, there are some newdevelopments such as a website for individual customers to browse andspecify requirements, and new colours such as metallics for leathers,and a small but growing demand from non bikers who are interested in'recreational' and 'club wear' items.

A survey by economic consultants was commissioned and has foundthat the demand for the product is elastic with an estimated priceelasticity of demand of 1.5. This means that volume will fall by one anda half times the rate of real price increase.

NN Ltd manufactures and markets a range of electronic officeequipment. The company currently has a turnover of $40 million perannum. The company has a functional structure and currently operates anincremental budgeting system. The company has a budget committee that iscomprised entirely of members of the senior management team.

Each member of the senior management team has enjoyed an annualbonus of between 10% and 20% of their annual salary for each of the pastfive years. The annual bonuses are calculated by comparing the actualcosts attributed to a particular function with budgeted costs for thatfunction during the twelve month period ended 31 December in each year.

A new Finance Director, who previously held a senior managementposition in a 'not for profit' health organisation, has recently beenappointed. Whilst employed by the health service organisation, the newFinance Director had been the manager responsible for the implementationof a zero-based budgeting system which proved highly successful.

3a8082e126