ACC 312H – Spring 2012
Fundamentals of Managerial Accounting-Honors
Instructor – Will O’Hara (copyright 2009 © John Wiley & Sons)
Thursday, January 19, 2012
Chapter 2 – Indentifying and Estimating Costs and Benefits
|2.45 |Controllability and relevance (LO1). Rams Ramachandran is considering the wisdom of reducing the number of suppliers |
| |his firm uses. Currently, Rams uses 25 suppliers to purchase goods worth $2,500,000 per year. To manage the orders and |
| |coordinate with suppliers, Rams employs one manager and two clerical staff. The manager earns $65,000 per year and each|
| |clerical staff person earns $35,000 per year. (As VP, Rams earns $175,000 annually.) Reducing the number of suppliers |
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The 25 supplier option requires two. |
| |The difference is $35,000 in favor of the 6 supplier option. |
| |iii. Manager’s Salary- controllable but not relevant – for both options one manager is required, therefore, the same |
| |salary of $65,000 is paid by each option. The difference is 0. |
| |iv. Service quality cost savings – Controllable and relevant – With the 6 supplier option the company saves $100,000 in|
| |cost as opposed to no extra savings through the 25 supplier option. The difference is $100,000 in favor of the 6 |
| |supplier option. |
| |v. Rams’ salary- not controllable and not relevant- Ram’s decision does not have an immediate impact on his salary. As |
| |vice president, I would assume that this salary does not play a role in this decision therefore it is not controllable |
| |nor relevant. |
| | |
| |b) Relevant
computer was in operation. Salaries of the programming staff that provided service to clients and
This paper will discuss the reasons why CEOs are not being overpaid. It will apply the utilitarian ethical principle to many a few aspects to CEO compensation and whether or not it is justifiable for such pay. The paper will look at whether or not their performance is justifiable for the pay because they play such a big role in the livelihood of the company along with the principle agency theory and how it is being addressed for the benefit of the shareholders and others involved with the company, the supply and demand of the CEOs, and the paper will describe the comparison of other professions to help link the idea of CEOs being fairly compensated.
Can the performance cycle be improved through the use of the 25 percent and 15 percent suppliers? What trade-offs must be made to use these suppliers?
Analysis: Now that this information has been reviewed State Bank determined that salaries would need to be modified or moving forward the salary structure would need to be modified for the tellers, according to the competitive data and based on what the ladder in salary was for all
To begin with, the writer points out that the changeable salary of the president could fluctuate the decision of the president since the Congress could always lower the wages to coerce him to follow their determination, and eventually render him a sinecure. So the salary of the president should be fixed during his tenure. Additionally, it is undeniable that the president is possible to be nonchalant about the adjusted salary, however, it is not warrantable in all the circumstance.
The allocation of the cost of CYSL salaries should also be revised. The 15% of Rivaldo's salary($6300) should not be allocated as
Harvey Finley did a quick double take when he caught a glimpse of the figure representing Ms. Brannen’s salary on the year-end printout. A hurried call to payroll confirmed it. Yes, his receptionist had been paid $127 614.21 for her services last year. As he sat in stunned silence, he had the sudden realization that since his firm was doing so well this year, she would earn at least 10 to 15 percent more money during the current fiscal year. This was a shock, indeed.
Small State University is facing the dilemma of how to allocate the $17,400 that the state agreed to give to the management department. Each qualified candidate’s employment information is given to help determine the merit raise decision. Before the decision can finalize, research and analysis will be conducted. A case solution will include the implementation of management approval, budget recommendations, communication and essential steps of the new policy to the university, and fair distribution of merit raise.
Help wanted: Looking for qualified administrative personnel who is willing to work under undefined job duties. Benefits include unlimited overtime at a fixed salary of $23,661. You’ll gain experience much faster here due to the total number of hours you will be putting in.
The salary structure is inconsistent with people carrying out identical jobs having pay differences of up to £3,000 pa. This may cause friction within the team. Even when the company promotes an incentive bonus scheme for the production staff, the targets have not been met. And so the bonuses have never been paid. We do not know from the information given whether the targets are unrealistic or the workers do not see the scheme as being worthwhile. The production workers seem to be on a different path to the company’s.
1. What is the competitive situation faced by Wilkerson? The critical product in term of market competition is the pumps of Wilkerson Company. The pumps are Wilkersons major product line with a production of about 12,500 units per month. Pumps currently have the lowest gross margin among all products, because competitors had been reducing prices on pumps and Wilkerson adopted its prices in order to remain competitive and to maintain the volume. 2. Given some apparent problems with Wilkersons cost system, should executives abandon overhead assignment to products entirely by adopting a contribution margin approach in which manufacturing overhead is treated as a period expense? Our conclusion is, that they should not adopt
Bob Moore Construction Company establishes that they spend more money on employee education and computer technology than marketing or entertainment. Each employee is rewarded with
Moreover, by using InphoniteVoice, they estimate an annual saving with a 50% no-show drop of $318,750.00, which can generate a daily savings of $1,325.00; a monthly saving of $28,156.25; and a total savings yearly of $337,875.00. Since we will not have to recruit, hire or pay for any additional staffing, there will not be any further labor costs, if we choose full vendor
Riordan Manufacturing’s salary administration program was created “to achieve consistent pay practices, comply with federal and state laws, mirror our commitment to Equal Employment Opportunity, and offer competitive salaries within our labor market” (University of Phoenix, 2004, p. 11). Employee compensation is based on several factors including but not limited to job analysis, evaluations, the duties and responsibilities of the job, and salary survey data on pay practices of other organizations in
with a number of strategic issues facing a capital-intensive, mature industry. Their product costing system was