代做ACCT 222 Department of Accounting and Information Systems代写数据结构程序

Department of Accounting and Information Systems

ACCT 222

REVISION FOR EXAM

STANDARD COSTS AND VARIANCE ANALYSIS

Do the assigned reading from Chapter 11.3-11.6 and look again at the tutorial and homework questions.

Portland Co.

The Portland Company’s Ironton Plant produces pre-cast ingots for industrial use. Carlos Santiago, who was recently appointed general manager of the Ironton Plant, has just been handed the plant’s income statement for October 20XX. The statement is shown below:

	Budgeted	Actual
Sales (5,000 ingots)	$250,000	$250,000
Less variable expenses: Variable cost of goods sold *	80,000	96,390
Variable selling expenses	20,000	20,000
Total variable expenses	100,000	116,390
Contribution margin	150,000	133,610
Less fixed expenses: Manufacturing overhead	60,000	60,000
Selling and administrative expenses	75,000	75,000
Total fixed expenses	135,000	135,000
Net income (loss)	$  15,000	$  (1,390)

* Contains direct materials, direct labour, and variable overhead.

Mr Santiago was shocked to see the loss for the month, particularly since sales were exactly as budgeted. He stated, “I sure hope the plant has a standard cost system in operation. If it doesn’t, I won’t have the slightest idea ofwhere to start looking for the problem.”

The plant does use a standard cost system, with the following standard variable cost per ingot:

Mr Santiago has determined that during the month of October the plant engaged in the following activity:

•   Purchased 25,000 kilograms of materials at a cost of $2.95 per kilogram.

•   Used 19,800 kilograms of materials in production. (Finished goods and work in process inventories are nominal and can be ignored.)

•   Worked 3,600 direct labour-hours at a cost of $8.70 per hour.

•   Incurred variable overhead costs of $1.20 per hour, or a total cost of $4,320 for the month.

Required:

1.    Compute the following variances for the month:

a.    Direct materials price and quantity variances.

b.    Direct labour rate and efficiency variances.

c.    Variable overhead spending and efficiency variances.

2.    Summarise the variances which you computed in (1) above, by showing the net overall favourable or unfavourable variance for the month. What impact did this figure have on the company’s income statement?

3.    Pick out the two most significant variances which you computed in (1) above. Explain to Mr Santiago the possible causes of these variances, so he will know where to concentrate his and his subordinates’ time.

RELEVANT COSTS FOR DECISION-MAKING

Part A

Heather Alburty purchased a previously owned, eight year old Subaru car for $8,900. Since purchasing the car, she has spent the following amounts on parts and labour:

New stereo system                         $1,200

Trick paint                                          400

New wide racing tyres                         800

Total                                                $2,400

Unfortunately, the new stereo doesn’t completely drown out the sounds of a grinding transmission. Apparently, the Subaru needs a considerable amount of work to make  it reliable transportation. Heather estimates that the needed repairs include the following:

Transmission overhaul                   $2,000

Water pump                                        400

Master cylinder work                        1,100

Total                                                $3,500

In a visit to a used car dealer, Heather has found a five-year-old Ford in mint condition for $9,400. Heather has advertised and found that she can sell the Subaru for only $6,400. If she buys the Ford, she will pay cash, but she would need to sell the Subaru.

Required:

1.    In trying to decide whether to restore the Subaru or buy the Ford, Heather is distressed because she already has spent $11,300 on the Subaru. The investment seems too much to give up. How would you react to her concern?

2.    Assuming that Heather would be equally happy with the Subaru or the Ford, should she buy the Ford, or should she restore the Subaru?

(Source: Hansen & Mowen (7th ed.): 17-6)

Part B

Randy Stone, the manager of Specialty Paper Products Company, was agonizing over an offer for an order requesting 5,000 calendars. Specialty Paper Products was operating at 70 percent of its capacity and could use the extra business; unfortunately, the order’s offering price of $4.20 per calendar was below the cost to produce the calendars. The controller, Louis Barns, was opposed to taking a loss on the deal.  However, the personnel manager, Yatika Martin, argued in favour of accepting the order even though a loss would be incurred; it would avoid the problem of layoffs and would help maintain the community image of the company. The full cost to produce a calendar follows:

Direct materials	$1.15
Direct labour	2.00
Variable overhead	1.10
Fixed overhead	1.00
Total	$5.25

Later that day, Louis and Yatika met over coffee. Louis sympathised with Yatika’s concerns and suggested that the two of them rethink the special-order decision. He offered to determine relevant costs if Yatika would list the activities to be affected by a layoff. Yatika eagerly agreed and came up with the following activities: notification costs to lay off approximately 20 employees ($25 per laid- off employee); increased costs of rehiring and retraining workers when the downturn was over ($150 per new employee).

Required:

1.    Assume that the company would accept the order only if it increases total profits. Should the company accept or reject the order? Provide supporting computations.

2.    Consider the new information of activity costs associated with the layoff. Should the company accept or reject the order? Provide supporting computations.

(Source: Hansen & Mowen (7th ed.): 17-11)

Part C

Orly Company produces two models of an industrial product that require the use of a laser-operated drilling machine. The laser-operated drilling machines owned by the firm provide a total of 12,000 hours per year. Model A-4 requires six hours of machine time, and Model M-3 requires three hours of machine time.   Model A-4 has  a  contribution margin of $24 per unit, and Model M-3 has a contribution margin of $15.

Required:

1.    Calculate the optimal number of units of each model that should be produced, assuming that an unlimited number of each model can be sold.

2.    Calculate the optimal number of units of each model that should be produced, assuming that no more than 2,500 units of each model can be sold.

(Source: Hansen & Mowen (7th ed.): 17-17)

STRATEGY, PRICING AND REVENUE MANAGEMENT

Do the assigned reading and look again at the lectures slides and the tutorial questions.

FINANCIAL PERFORMANCE MEASUREMENT

Do the assigned readings from Section 14.4 and Chapter 18 and look again at your lecture notes and the tutorial and homework questions.

Automobile Products

The manager of a division that produces add-on products for the automobile industry has just been presented the opportunity to invest in two independent projects.  The first is an air conditioner for the back seats of vans and minivans.  The second is a turbocharger.  Without the investment, the division will have average assets for the coming year of $28.9 million and before-tax income of $3.179 million.  The outlay required for each investment and the expected operating incomes are as follows:

Air Conditioner       Turbocharger

Before-tax operating income	$ 67,500	$ 89,700
Outlay	$750,000	$690,000

Corporate headquarters will borrow up to $1.5 million for the automotive add-on division for further investments. The amount borrowed will be through unsecured bonds at a rate of 12 percent. The marginal tax rate is 25 percent.

Required:

1.    Compute the Return on Investment (ROI) for each investment project.

2.    Compute the budgeted divisional ROI for each of the following four alternatives:

a.    The air conditioner investment is made.

b.    The turbocharger investment is made.

c.    Both investments are made.

d.    Neither additional investment is made.

Assuming that divisional managers are evaluated and rewarded on the basis of ROI performance, which alternative do you think the divisional manager will choose?

3.    Compute the Residual Income (RI) for each investment project.   Based on RI, which projects should the managers choose?

4.    Suppose that the borrowing must be for the entire $1.5 million. Calculate the EVA of the two investments taken as a package. Based on EVA, are the investments profitable?

TRANSFER PRICING

A. Mano Enterprises

The Box Division of Mano Enterprises produces boxes that can be sold externally or internally to Mano's candy division. Sales and cost data on the most popular box are given below:

Unit selling price	$0.95
Unit variable cost	$0.60
Unit fixed costa	$0.15
Practical capacity	500 000 units

a$75 000/500 000

During the coming year, the Box Division expects to sell 350 000 units of this box.  The Candy Division currently plans to buy 150 000 units of the box on the outside market for $0.95 each: Neil Hansen, manager of the Box Division, has approached Martha Rasmussen, manager of the Candy Division, and offered to sell the 150 000 boxes for $0.94 each. Neil explained to Martha that he can avoid selling costs of $0.02 per box and that he would split the savings by offering a $0.01 discount on the usual price.

Required:

1.    What is the maximum transfer price that the Candy Division would be willing to pay? What is the minimum transfer price that the Box Division would be willing to accept? Should an internal transfer take place? What would be the benefit (or loss) to the firm as a whole if the internal transfer takes place?

2.    Suppose Martha knows that the Box Division has idle capacity. Do you think that she would agree to the transfer price of $0.94? Suppose she counters with an offer to pay $0.85. If you were Neil, would you be interested in this price? Explain with supporting computations.

B.   Jacox Company

Jacox Company's Can division produces a variety of cans that are used for food processing.  The Nut Division of Jacox buys nuts, shells, roasts, and salts them, and places them in cans.  It sells the cans of roasted nuts to various retailers.   The most frequently used can is the 500g size.   In the past, the Nut Division has purchased these cans from external suppliers for $0.60 each.  The manager of the Nut Division has approached the manager of the Can Division and has offered to buy 200 000 500g cans each year.  The Can Division currently is producing at capacity and produces and sells 300 000 500g cans to outside customers for $0.60 each.

Required:

1.    What is the minimum transfer price for the Can Division?  What is the maximum transfer price for the Nut division?  Is it important that transfers take place internally?  If transfers do take place, what should the transfer price be?

2.    Now assume that the Can division incurs selling costs of $0.04 per can that could be avoided if the cans are sold internally.  Identify the minimum transfer price for the Can Division and the maximum transfer price for the Nut Division.   Should internal transfers take place? If so, what is the benefit to the firm as a whole?

3.    Suppose you are the manager of the Can Division.  Selling costs of $0.04 per can are avoidable if the cans are sold internally. Would you accept an offer of $0.58 from the manager of the other division? How much better off (or worse off) would the Can Division be if this price is accepted?

C.   Adler Industries

Adler Industries is a vertically integrated firm with several divisions that operate as decentralised profit centres.  Adler's Systems Division manufactures scientific instruments and uses the products of two of Adler's other divisions.  The Board Division manufactures printed circuit boards (PCBs). One PCB model is made exclusively for the Systems Division using proprietary designs, while less complex models are sold in outside markets.  The products of the Transistor Division are sold in a well-developed competitive market; however, one transistor model is also used by the Systems Division.  The costs per unit of the products used by the Systems Division are presented below:

	PCB	Transistor
Direct material	$2.50	$0.80
Direct labour	4.50	1.00
Variable overhead	2.00	0.50
Fixed overhead	0.80	0.75
Total cost	$9.80	$3.05

The Board Division sells its commercial product at full cost plus a 25 percent mark-up and believes the proprietary board made for the Systems Division would sell for $12.25 per unit on the open market.  The market price of the transistor used by the Systems Division is $3.70 per unit.

Required:

1.    What is the minimum transfer price for the Transistor Division?  What is the maximum transfer price of the transistor for the Systems Division?

2.    Assume the Systems Division is able to purchase a large quantity of transistors from an outside source at $2.90 per unit.  Further assume that the Transistor Division has excess capacity.  Can the Transistor Division meet this price?

3.    The Board and systems divisions have negotiated a transfer price of $11 per printed circuit board.

Discuss the impact this transfer price will have on each division.

NON-FINANCIAL PERFORMANCE MEASUREMENT

Do the assigned reading from Chapter 19 and look again at the lecture, tutorial and homework questions.

A. Balanced scorecard measures

Listed below are a number of balanced scorecard measures.

a.    Number of new customers

b.    Percentage of customer complaints resolved with one contact

c.    Unit product cost

d.    Cost per distribution channel

e.     Suggestions per employee

f.     Quality costs

g.    Product functionality ratings (from surveys)

h.    Cycle time for solving a customer problem

i.     Strategic job coverage ratio

j.     On-time delivery percentage

k.    Percentage of revenues from new products

Required:

1.    Classify each performance measure according to the following:

•   perspective (e.g. customer or learning and growth)

•   financial or nonfinancial

•   subjective or objective

•   external or internal, and

•   lead or lag

2.    Discuss why it is sometimes difficult to classify these measures as lead or lag.  Now, pick any two measures where you have difficulty explaining whether they are lead or lag, and explain when they would be lead and when they would be lag measures.

B. Lee Corporation's Balanced Scorecard

Lee Corporation manufactures various types of colour laser printers in a highly automated facility with high fixed costs. The market for laser printers is competitive. The various colour laser printers on the market are comparable in terms of features and price. Lee believes that satisfying customers with products of high quality at low costs is key to achieving its target profitability. For 20XY, Lee plans to achieve higher quality and lower costs by improving yields and reducing defects in its manufacturing operations. Lee will train workers and encourage and empower them to take the necessary actions. Currently, a significant amount of Lee’s capacity is used to produce products that are defective and cannot be sold. Lee expects that higher yields will reduce the capacity that Lee needs  to  manufacture  products.   Lee  does  not  anticipate  that  improving  manufacturing  will automatically lead to lower costs because Lee has high fixed costs. To reduce fixed costs per unit, Lee could lay off employees and sell equipment, or it could use the capacity to produce and sell more of its current products or improved models of its current products. Lee’s balanced scorecard for the just completed fiscal year 20XX follows:

Required:

1.    Was Lee successful in implementing its strategy in 20XX? Explain your answer.

2.    Is Lee’s balanced scorecard useful in helping the company understand why it did not reach its target market share in 20XX? If it is, explain why. If it is not, explain what other measures you might want to add under the customer perspective and why these measures are necessary.

3.    Would you have included some measure of employee satisfaction in the learning and growth perspective and new product development in the internal business process perspective? That is, do you think employee satisfaction and development of new products are critical for Lee to implement its strategy? Why or why not? Explain.

4.    Is there a cause-and-effect linkage between improvement in the measures in the internal business process perspective and the measure in the customer perspective? Why or why not? Explain.

5.    What problems, if any, do you see in Lee improving quality and significantly downsizing to eliminate unused capacity?

SUSTAINABILITY & MANAGEMENT ACCOUNTING

You will have been told in class and on Learn which readings are important and necessary - read them and take some summary notes.  Also read through the lecture notes and think about the issues discussed in class.