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2. What is the delivery cycle time for this order?
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- The Managerial ProcessEach of the following scenarios requires the use of accountinginformation to carry out one or more managerial accounting objectives.a. Laboratory Manager: An HMO approached me recently andoffered us its entire range of blood tests. It provided a price listrevealing the amount it is willing to pay for each test. In manycases, the prices are below what we normally charge. I need toknow the costs of the individual tests to assess the feasibility ofaccepting its offer and perhaps suggest price adjustments on someof the tests.b. Operating Manager: This report indicates that we have 30% moredefects than originally targeted. An investigation into the cause hasrevealed the problem. We were using a lower-quality material thanexpected, and the waste has been higher than normal. Byswitching to the quality level originally specified, we can reducethe defects to the planned level. c. Divisional Manager: Our market share has increased because ofhigher-quality products. Current…The management of Wheeler Company has decided to develop cost formulas for its major overhead activities. Wheeler uses a highly automated manufacturing process, and power costs are a significant manufacturing cost. Cost analysts have decided that power costs are mixed; thus, they must be broken into their fixed and variable elements so that the cost behavior of the power usage activity can be properly described. Machine hours have been selected as the activity driver for power costs. The following data for the past eight quarters have been collected: Required: 1. Prepare a scattergraph by plotting power costs against machine hours. Does the scatter-graph show a linear relationship between machine hours and power cost? 2. Using the high and low points, compute a power cost formula. 3. Use the method of least squares to compute a power cost formula. Evaluate the coefficient of determination. 4. Rerun the regression and drop the point (20,000; 26,000) as an outlier. Compare the results from this regression to those for the regression in Requirement 3. Which is better?d) Discuss how allocation of customer-related overhead cost can lead to better decision making within firms with reference to the case below. 'An insurance company, A-Insure Limited, decided to use CPA to identify profitable and non-profitable customers after it grew concerned about the poor financial performance of one of its policy options. A-Insure collected customer data through original policy proposal forms which were stored electronically in a customer database. It was able to conduct a complex cross correlation between known cost drivers and the demographic and other characteristics of policy holders. The cost drivers were: • commission payments to financial advisers who sold the policy early surrender of the policy by the policy holder changing of bank details and consequent chasing of missed premiums responding to customer queries. The analysis identified that the policy was unprofitable when sold to recently retired clients but was profitable when sold to other client…
- Which of the following practices is incompatible with a just-in-time management system? A. reliance on contracts with suppliers to deliver raw materials when needed B. ordering large quantities of raw materials in order to obtain volume discounts C. pursuing frequent deliveries of defect-free materials from suppliers D. completing work in self-contained work cellsD. The Hilal Company uses a responsibility reporting system to measure the performance of its three investment centers: A, B, and C. Segment performance is measured using a system of responsibility reports and return on investment calculations. The allocation of resources within the company and the segment managers' bonuses are based in part on the results shown in these reports. Recently, the company was the victim of a computer virus that deleted portions of the company's accounting records. This was discovered when the current period's responsibility reports were being prepared. The printout of the actual operating results appeared as follows. A Service revenue 24 $450,000 $ ? Variable costs 5,000,000 320,000 Contribution margin 180,000 380,000 Controllable fixed costs 1,500,000 Controllable margin 70,000 176,000 Average operating assets 25,000,000 1,600,000 Return on investment 12% 10% Instructions Determine the missing pieces of information above.These are measures not found in the chart of accounts, such as customer satisfaction scores or product quality measures. A. Quality measures B. Non-financial measures C. Financial Measures D. Balanced Scorecard A manager would like to see reduction of the following operational measures, except: A. Spoilage B. Number of customer complaints C. Queue time D. Manufacturing Efficiency
- Required information [The following information applies to the questions displayed below.] Data Performance, a computer software consulting company, has three major functional areas: computer programming, information systems consulting, and software training. Carol Bingham, a pricing analyst, has been asked to develop total costs for the functional areas. These costs will be used as a guide in pricing a new contract. In computing these costs, Carol is considering three different methods of the departmental allocation approach to allocate overhead costs: the direct method, the step method, and the reciprocal method. She assembled the following data from the two service departments, information systems and facilities: a. b. Budgeted overhead (base) Information Systems (computer hours) Facilities (square feet) C. Service Departments Information Systems $ 368,000 240 Direct Method Step Method (Information Systems Goes First) Step Method (Facilities Goes First) Reciprocal method Computer…The owner of Nia Systems suspects her allocation of indirect costs could be giving misleading results, so she decides to develop an ABC system. She identifies three activities: documentation preparation, information technology support, and training. She figures that documentation costs are driven by the number of pages, information technology support costs are driven by the number of software applications used, and training costs are driven by the number of direct labor hours worked.Estimates of the costs and quantities of the allocation bases follow: Activity Estimated Costs Allocation Base Estimated Quantity of Allocation Base Documentation preparation $47,400 Pages 1,530 pages Information technology support $120,600 Applications 700 applications Training $354,800 Direct labor hours 3,240 hours Total Indirect costs $522,800 1. Compute the predetermined overhead allocation rate for each activity. Round to the nearest dollar. Activity Total estimated overhead…Arklan Production is upgrading its manufacturing process from a manual process to a highly automated system. Management believes that the new system will result in greater efficiencies and a better finished product. Arklan is also working on a plan to downsize staff after the implementation of the new system. Arklan has used a traditional absorption costing system to calculate unit product costs for external financial reporting. In the past, Arklan has allocated its manufacturing overhead costs using a predetermined plant-wide overhead rate based on direct labor hours. The controller realizes that the new system may require changing the overhead allocation process. Management plans to take the opportunity to reconsider other improvements to the costing system. Identify and explain three benefits of using departmental overhead rates to allocate overhead costs. Explain the difference between absorption costing and variable costing. Identify which is more suitable for internal…
- Variance analysis can be useful in nonmanufacturing entities, especially when tasks are repetitive in nature. This allows management to analyze costs and make decisions to avoid higher expenses. In addition to the previous example involving housekeeping and hotels, can you think of any service-type repetitive tasks that could benefit from management analysis? Please respond to at least one classmate and cite at least one reference (can use your book as one reference).How should a responsibility-accounting system handle each of the following scenarios? 1. Department A manufactures a component, which is then used by Department B. Department A recently experienced a machine breakdown that held up production of the component. As a result, Department B was forced to curtail its own production, thereby incurring large costs of idle time. An investigation revealed that Department A’s machinery had not been properly maintained.2. Refer to the scenario above, but suppose the investigation revealed the machinery in Department A had been properly maintained.Data Performance, a computer software consulting company, has three major functional areas: computer programming, information systems consulting, and software training. Carol Bingham, a pricing analyst, has been asked to develop total costs for the functional areas. These costs will be used as a guide in pricing a new contract. In computing these costs, Carol is considering three different methods of the departmental allocation approach to allocate overhead costs: the direct method, the step method, and the reciprocal method. She assembled the following data from the two service departments, information systems and facilities: Service Departments Production Departments Information Systems Facilities Computer Programming Information Systems Consulting Software Training Total Budgeted overhead (base) $ 368,000 $ 184,000 $ 736,000 $ 874,000 $ 575,000 $ 2,737,000 Information Systems (computer hours) 600 1,200 300 900 3,000 Facilities (square feet) 240 960 600 600…