Management Accouting Chapter 2

In: Business and Management

Submitted By dre913
Words 795
Pages 4
Assignment 2
Cost Terms, Concepts, and Classifications

P 2-21: Variable and Fixed Costs; Subtleties of Direct and Indirect Costs

P 2-24: Schedule of Cost of Goods Manufactured; Income Statement; Cost Behaviour

1.

*** Computations: Direct Labour = $675,000 - 270,000 - 340,000 = $65,000 Beg. WIP = $720,000 – 30,000 + 33,000 – 675,000 = $48,000 End. Finished Goods = $720,000 – 635,000 = $85,000

2.

3. Based on the assumption that the company expects to produce 50,000 units in the following year, the average cost per unit and total cost for direct materials and for rent on the factory building are as follows:

Direct materials: i) Since direct material is classified as a variable cost, the average cost per unit for direct materials is $9.00 ($450,000/50,000 units) ii) Total cost for direct materials = $9 x 50,000 units = $450,000

Rent on the factory building: i) Since rent on the factory building is classified as a fixed cost, the average cost per unit = $90,000/50,000 units = $1.80 per unit; ii) Total cost for rent on the factory building = $90,000 (no change)

4. When considering the differences in the average costs per unit between variable and fixed costs, it is important to highlight the impact that changes in the activity level have on direct materials (variable cost) and rent on the factory building (fixed cost). Specifically, when there is an increase in the units of production, total variable cost will also increase with respect to production and vice versa when production decreases. However, the average unit cost will not change, providing the change in activity level remains in the relevant range. Therefore, as illustrated above, the average variable unit cost will remain at $9.00, but the total variable cost will increase as production increases.

Conversely, rent on the factory building is classified as…...

Similar Documents

Human Resource Management Chapter 2

...Human Resource Management Week 2 Assignment August 30, 2012 Chapter 2 Learning Exercise 2 1. Small businesses comprise a major portion of the U.S. economy. Larger companies typically have more resources to hire staff dedicated to supporting the management of employees than do smaller companies, which often lack formal HR departments to provide similar support. This does not eliminate the need to attend to people issues in smaller companies; rather line managers or company owners must perform HR practices in addition to their other activities. Also, smaller businesses often do not have the resources to provide the same level of pay, benefits, and training opportunities to employees as larger companies. 2. Although small companies often do not have the same type or level of resources enjoyed by larger companies, the importance of effectively managing employees may be magnified in smaller companies. With a smaller staff, managers may expect employees to display greater autonomy and discretion. As a result, the types of knowledge, skills, and abilities that employees may need in small versus large companies, even for the same job, differ. Furthermore, in contrast to large operations, in a small company, the performance of each employee is likely to have a larger, more direct impact on company success. 3. Yes, it would influence my decision about how to manage my employees. The pressures of managing employees in a young, startup company are different......

Words: 793 - Pages: 4

Chapter 2

...Question Chapter 2 1. Both IT management and general management are responsible for implementation of information security that protects the organizations ability to function. Enforce policy. 2. No data, no record of transactions and no ability to deliver to its customers. Network and a secure infrastructure services. 3. Both IT and general management 4. More because business technology networks are now connected to the internet and other networks outside the organization. Makes it easier for people to gain access to the organizations networks. 5. Information extortion, an attacker steals information from a computer system and demands compensation for its return or agrees to not disclose it. If the hacker gains unauthorized use to a Military captain’s personal computer and discover obscene photos, he can blackmail the person in exchange for keeping photos undisclosed and equal loss of privacy and security for the captain. 6. Because employee mistakes can lead to the disclosure of classified data, entry of erroneous data, accidental deletion or modification of data and the storage of data in unprotected form and fail to follow procedures to protect data. 7. Avoid accessing confidential information while others are present, limit the # of times you access it, be aware of who is around you, shield paperwork or monitor from view. 8. Expert hackers have turned their attention to writing software. They are extremely talented individuals who usually devote a lot of time......

Words: 555 - Pages: 3

Chapter 2

...CHAPTER ONE: GLOBALIZATION AND INTERNATIONAL BUSINESS I. INTRODUCTION As people, firms, and other organizations have expanded their access to resources, goods, services, and markets across wider geographical areas, they have also become more deeply affected (positively and negatively) by conditions outside their home countries. Globalization refers to the broadening set of interdependent relationships among people from different parts of a world that happens to be divided into nations. A. What is International Business? International business involves all commercial transactions—private and governmental—between parties of two or more countries. Global events and competition affect almost all firms—large or small. However, the international environment is more complex and diverse than a firm’s domestic environment. II. THE FORCES DRIVING GLOBALIZATION Globalization is a difficult concept to measure. Currently, about 25 percent of world production is sold outside of its country of origin, restrictions on imports continue to decline, the foreign ownership of assets as a percent of world production continues to increase, and world trade continues to grow more rapidly than world production. Recessionary contraction in recent years has at least temporarily reversed this trend. That said, on a value basis, only a few countries (mainly very small nations) either sell more than half of their production abroad or source more than half of their consumption from foreign countries.......

Words: 2050 - Pages: 9

Database Management Chapter 2

...1. Besides redundancy, what other problems are associated with the nondatabase approach to processing data? Another problem with the nondatabase approach is accessing related data. In order to access data that is related to one another, you would have to open multiple spreadsheets, nondatabase systems also have way less security features than a database system. 2. What is a relationship? A one to many relationship? A relationship is an association between entities. A one-to-many relationship is a relationship where one entity is related to a group of entities, and everything in that group of entities is related to the first entity but they are not related to each other. 3. How do you create a one-to-many relationship in a database system? To create a one-to-many relationship in a database you will first need to create an entity, this entity should have something in common with the entities that it is related to, meaning they need to have at least one attribute in common. 4. What is a DBMS? DBMS stands for database management system, which is a program, or collection of programs, through which users interact with a database. 5. What is a form? A form is screen object used to maintain, view, and print data from a database. 6. What is meant by the sharing of data? Sharing data allows many different users to have access to the same data, if one user changes or updates that data the changes will be visible to all users. 7. How does consistency result......

Words: 416 - Pages: 2

Chapter 2

...Management Accounting | 15 Management Accounting and Decision-Making Management accounting writers tend to present management accounting as a loosely connected set of decision‑making tools. Although the various textbooks on management accounting make no attempt to develop an integrated theory, there is a high degree of consistency and standardization in methodology of presentation. In this chapter, the concepts and assumptions which form the basis of management accounting will be formulated in a comprehensive management accounting decision model. The formulation of theory in terms of conceptual models is a common practice. Virtually all textbooks in business administration use some type of conceptual framework or model to integrate the fundamentals being presented. In economic theory, there are conceptual models of the firm, markets, and the economy. In management courses, there are models of organizational structure and managerial functions. In marketing, there are models of marketing decision‑making and channels of distribution. Even in financial accounting, models of financial statements are used as a framework for teaching the fundamentals of basic financial accounting. The model, A = L + C, is very effective in conveying an understanding of accounting. Management accounting texts are based on a very specific model of the business enterprise. For example, all texts assume that the business which is likely to use management accounting is a manufacturing business. Also,...

Words: 4659 - Pages: 19

Case for Critical Analysis Chapters 1 & 2 (Understanding Management: 8th Edition)

...Gabriel Almack CHAPTER 1: CFCA 1.) Their problems seem to have all developed form each other. Low employee morale may have stemmed from the company’s lack of new and innovative ideas, and the low morale doesn’t help in motivating the employees to come up with new ideas. This lack of new ideas has caused the company to fall behind the competitive foreign and domestic competition, leading to an obvious decline in market share. In order to reduce these problems, I believe it is important to start with the consumer. What products are the customers demanding? Time spent researching consumer products related to what they are producing could help them come up with new ideas, increasing morale and consumer spending, and allowing them to stay competitive with their foreign and domestic competitors. It also appears that leadership in the company is lacking. Their idea of appointing group leaders to help come up with new ideas was good, but these people also seem to have little experience in such roles. Perhaps some sort of training of top and middle managers would help them to better understand the role they are being places into, giving them a chance to better lead their group members. The confidence and experience they would gain from training would help them in motivating their employees. 2.) I understand Martin Griffin was trying to accomplish in breaking each department up into teams; appointing a long-time employee as the group leader, facilitating brainstorming sessions,......

Words: 1323 - Pages: 6

Project Management Chapter 2 Case Study Solution

...1. How do we create a partnership between the project manager and line managers when project manager focuses only on the best of his/her project and the line manager is expected to make impartial company decision? I think the most important point is that project manager and line manager should stand on the same level, which means each of them should have same formal authority, line manager should manage right people to project manager, and project manager should arrange right people to the right position, for the best interest of company, this is a partnership they should establish. 2. Who should have more of a say during negotiations for the resource manager or the line manager. I think it depends on what size the company is, for case one, line manager have more of a say during negotiations for resource, during the context, line manager control several key staff, while project manager have to work with the one he does not want to work with. Ideally, project manager should have a say in the assembly of his project team and his resource, which will help him to gain their personal commitment, support and required quality of service. 3. How should irresolvable conflicts over staffing between the project and line managers be handle? Basically, for this kind of conflict should be handle by sponsor, it is the sponsor who support the project, if there is a conflict between the project manager and line manager, sponsor should evaluate the situation to decide who should go...

Words: 429 - Pages: 2

Chapter#2

...Chapter 2/Fundamental Economic Concepts Chapter 2 Fundamental Economic Concepts Solutions to Exercises 1. The number of checked bags should fall, as individuals internalize the external cost of added weight. However, the average weight should rise, as those checking bags would in all likelihood pack as much as possible to make up for the cost. 2. The wage in the market for oil spill cleanup efforts should rise, thanks to an increase in demand for labor. The wage in the market for similarly-skilled labor should also fall, as the relevant labor supply falls in response to the previous increase in wage. We would expect an increase in migration, as long as the wage of the home market was less than the wage that could be received in the Gulf region. 3. Projects A, C, G and B require a total of $875 million in investment. Project B, the lowest return project of this group is expected to generate an 18 percent rate of return. Ajax can raise up to $1,050 million, with the highest cost being 18 percent for the last $200 million. If Ajax were to choose any project beyond A, C, G, and Bsuch as project D (the next best project after B)that project would generate a marginal rate of return (16 percent), which is less than the marginal cost of funds needed to finance it, in this case 18 percent for the last $200 million up to a total of $1,050. Thus, the optimal capital budget is to invest in projects A, C, G, B, for a total of $875 million. 4. This question examines expected......

Words: 1045 - Pages: 5

Cost Management Chapter 2 Solution

...Chapter 2 The Cost Function LEARNING OBJECTIVES Chapter 2 addresses the following questions: Q1 What are different ways to describe cost behavior? Q2 What is a learning curve? Q3 What process is used to estimate future costs? Q4 How are the engineered estimate, account analysis, and two-point methods used to estimate cost functions? Q5 How does a scatter plot assist with categorizing a cost? Q6 How is regression analysis used to estimate a mixed cost function? Q7 What are the uses and limitations of future cost estimates? These learning questions (Q1 through Q7) are cross-referenced in the textbook to individual exercises and problems. COMPLEXITY SYMBOLS The textbook uses a coding system to identify the complexity of individual requirements in the exercises and problems. Questions Having a Single Correct Answer: |No Symbol |This question requires students to recall or apply knowledge as shown in the textbook. | |e |This question requires students to extend knowledge beyond the applications shown in the textbook. | Open-ended questions are coded according to the skills described in Steps for Better Thinking (Exhibit 1.10): ( Step 1 skills (Identifying) ( Step 2 skills (Exploring) ( Step 3 skills (Prioritizing) ( Step 4 skills (Envisioning) QUESTIONS 2.1 This function has both fixed costs and variable costs. ...

Words: 8844 - Pages: 36

Database Management Chapter 1 & 2

...Chapter 1: (10 points each) 1. Give an example of two related tables other than one in the textbook. Use the STUDENT and GRADE tables in Figure 1-1 of the textbook as an example pattern for your tables. Name the tables and columns using the conventions in the textbook. * I used MysqL workbench to create 2 tables 1- Customers that has customers with some of their information(primary key is “Customer ID”) * CREATE TABLE IF NOT EXISTS `mydb`.`Customer` ( * `CustomerID` INT NOT NULL, * `Name` VARCHAR(45) NULL, * `Email` VARCHAR(45) NULL, * PRIMARY KEY (`CustomerID`), * UNIQUE INDEX `Email_UNIQUE` (`Email` ASC)) * ENGINE = InnoDB 2- Purchases that has number of purchases that has been done by the customers(Pkey is PurchaseID, and foreign key is “CustomerID” from Customer table. * CREATE TABLE IF NOT EXISTS `mydb`.`Purchases` ( * `PurchasesID` INT NOT NULL, * `productID` INT NULL, * `PricePaid` INT NULL, * PRIMARY KEY (`PurchasesID`)) * ENGINE = InnoDB * * *note I made the customerID as the foreign key and the relationship is (1 to many) * * * Figure1 the Customer and Purchases tables’ relationship. * 2. For the tables you created in Question 1, what are the primary keys of each table? Do you think that any of these primary keys could be surrogate keys? * In Customer table the Primary key is CustomerID * In the Purchases table the primary key is......

Words: 1949 - Pages: 8

Chapter 2

...Solutions to Accompany Information Technology Project Management, Seventh Edition ISBN-10: 1133526853 ISBN-13: 978-1133526858 Course Technology MIS Series Kathy Schwalbe, Ph.D., PMP Created November 27, 2012 Table of Contents CHAPTER 1 2 CHAPTER 2 4 CHAPTER 3 6 CHAPTER 4 7 CHAPTER 5 14 CHAPTER 6 20 CHAPTER 7 25 CHAPTER 8 30 CHAPTER 9 33 CHAPTER 10 36 CHAPTER 11 38 CHAPTER 12 41 CHAPTER 13 43 APPENDIX A 44 APPENDIX B 49 APPENDIX C 50 List of solution files available and referenced in this document, in alphabetical order: CHAPTER 1 Introduction to Project Management DISCUSSION QUESTIONS 1. Why is there a new or renewed interest in the field of project management? More and more projects are being done by a variety of organizations. The projects are more complex and often involve the use of new technologies. Organizations are struggling to find better ways to manage their projects. 2. What is a project, and what are its main attributes? How is a project different from what most people do in their day-to-day jobs? What is the triple constraint? What other factors affect a project? A project is “a temporary endeavor undertaken to create a unique product, service, or result” (PMBOK Guide, 2012). In addition to being temporary and unique, other attributes of projects are that they are developed using progressive elaboration, require resources from various areas, should have a primary customer or sponsor,......

Words: 17532 - Pages: 71

Chapter 2 Essay Questions Strategic Management

...Chapter 2 Application Questions 1. Imagine yourself as the CEO of a large firm in an industry in which you are interested. Please (1) identify major trends in the general environment, (2) analyze their impact on the firm, and (3) identify major sources of information to monitor these trends. (Use Internet and library resources.)As I am striving to work in the Funeral or Death Industry as a Funeral Director, I am observing the change in our industry from traditional burial to cremation. This shift in the industry which reduces the price of a funeral by three or four thousand dollars depending on the demographic area, these trends can be followed in Funeral Industry standards such as the NAFD, a Funeral Directors Organization 2. Analyze movements across the strategic groups in the U.S. retail industry. How do these movements within this industry change the nature of competition?The retail industry is driven by young consumers. These consumers make decisions for their group by purchasing the goods and services that they want. Making the decisions changing competiton for everyone. 3. What are the major trends in the general environment that have impacted the U.S. pharmaceutical industry?More easily accessible drug information. Help with drug costs through programs from the pharmacy and the drug companies. Rewards programs. 4. Go to the Internet and look up www.kroger.com. What are some of the five forces driving industry competition that are affecting the......

Words: 321 - Pages: 2

Chapter 2

...CHAPTER 2 REVIEW OF RELATED LITERATURE AND STUDIES This chapter discusses foreign and local that can be attributed in the success of this undertaking. Difference and similarities with the previous studies are presented in this chapter. The following researches and studies greatly influence on the conduct of this study; the researchers have made consideration in drawing the final conclusion in the study. Foreign Literature Facebook is an evolutionary technology of the 21st century that changed social relationships, provides opportunity for individuals to share their ideas and opinions, and establishes and maintains relationships with others. Facebook allows a user to create a profile, display personal information, upload pictures, access other users profile, display personal information, accumulate friends, and interact with friends via messages and gifts. An average time of 30 minutes to 2 hours is spent on Facebook daily. Only recently are studies beginning to examine the effects of Facebook on physical, mental, and family health. Current studies conducted in college campuses reveal that Facebook can cause similar symptoms to drug addiction, effect familial systems and patterns contribute to upper respiratory infection, cause feelings of loneliness, depression, and narcissism, and can lead to less body satisfaction and worse time management according to Kalpidou, Costin and Morris (2011). Facebook was founded by Mark Zuckerberg and his roommates at Harvard University......

Words: 3462 - Pages: 14

Chapter 2

...Chapter 2 Review 1. Planning is the process of developing, creating, and implementing strategies. 2. The three levels of planning are, Strategic planning, Tactical planning, and Operational planning. 3. A stakeholder is a person(s) who have a vested interest in the aspects of planning. It is important to consider stakeholders view/opinions, because a lot of decision making affects their stake in a company. 4. A values statement is a formal set of organizational principles. A vision statement is an expression of what an organization wishes to become. A mission statement is an organization’s identity card. 5. Strategy is a plan of action or policy designed to achieve an overall goal. 6. InfoSec Governance s the set of multi-disciplinary structures, policies, procedures, processes and controls implemented to manage information at an enterprise level, supporting an organization's immediate and future regulatory, legal, risk, environmental and operational requirements. 7. Inculcating a culture that recognizes the criticality of information and infoSec to the organization. Verifying that management’s investment in InfoSec is properly aligned with organizational strategies and organization’s risk environment. Demanding reports from the various layers of management on the InfoSec program’s effectiveness and adequacy. 8. Strategic Alignment, Risk management, Resource management, Performance measurement, and Value delivery. 9. Top-down strategic......

Words: 543 - Pages: 3

Chapter 2

...Chapter 2 Quiz 1.Which of the following is a component of Porter's competitive environment? Suppliers 2.Why is understanding an organization's environment important? Without this understanding, organizations tend to miss opportunities or make poor decisions. 3.Differences in the way people dress and act, their interactions with each other and with customers, and what qualities are expected and appreciated by their managers and company are examples of the _____. organization culture 4. Which of the following is a controllable environmental factor that can affect an organization? Cost leadership strategy 5. Pluto Inc. is computer technology corporation that has been manufacturing laptops for the last five years. Recently, in the face of sinking market share, Pluto reduced its dependency on laptops by venturing into tablets and smartphones. This is an example of _____. diversification 6. In competition, a substitute is best described as a(n): alternative to a product. . 7. Which of the following is a demographic factor of an organization's macroenvironment? Employees' age 8.Complexity and dynamism in the environment result in: environmental uncertainty. 9. Raw materials, services, equipment, capital, and information are _____ for an organization. inputs 10. Which of the following is a dominant attribute of a hierarchical culture? Rules and regulations 11. Which of the following refers to the immediate environment...

Words: 6552 - Pages: 27