Answered: Cost accounting logic can lead managers…

Name: Cost accounting logic can lead managers to keep their resources busy a
Uploaded: 2024-03-20T06:32:49.000Z
Channel: Bartleby
Description: Cost accounting logic can lead managers to keep their resources busy all the time, increasing productivity with no regard to demand. What is the negative result of this effect?

Business

Accounting

Cost accounting logic can lead managers to keep their resources busy all the time, increasing productivity with no regard to demand. What is the negative result of this effect?

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter10: Decentralization: Responsibility Accounting, Performance Evaluation, And Transfer Pricing

Section: Chapter Questions

Problem 6DQ: What are two disadvantages of ROI? Explain how each can lead to decreased profitability.

See similar textbooks

Similar questions

Using the revenue per employee ratio as an indicator for productivity will lead to outsourcing of personnel, even when it increases cost.True or false? And why?
Managers often assume a strictly linear relationship between cost and the level of activity.How can this practice be defended in light of the fact that many costs are curvilinear?
Managers often assume a strictly linear relationship between cost and volume. How can thispractice be defended in light of the fact that many costs are curvilinear?
Explain how absorption costing can enable a manager to increase production solely for the purpose of inflating profit but prevents a manager from doing this if variable costing is used.
Knowing how costs behave to change in the level of activity is useful to management for all the following reasons except for: predicting customer demand. predicting profits as sales and production volumes change. estimating costs. changing an existing product production.
activity-based costing systems have a tendency to distort product costs. True or False?
What of the following is NOT a Benefit of Activity Based Management? a.It assists in the budgeting process. b.It aids management in cost cutting and/or cost control and inferentially in product profitability. c.It causes managers to identify non-value added activities and therefore encourages thinking of means of reducing such activities. d.Is more complex than traditional accounting system because it uses multiple cost application rates, one for each activity or cost pool.
1)What is cost behavior analysis? and Why is cost behavior analysis important to management? 2)“Break-even analysis is of limited use to management because a company cannot survive by just breaking even.” Do you agree? Agree or not agree, please describe your line of reasoning.
Prime indicators of problems with a conventional costing system include company profits being eroded and production managers not being able to make sense of product costs. Prime indicators of problems with a conventional costing system include company profits being eroded and production managers not being able to make sense of product costs. True False
Why might relevant costs analysis be bad for a company if used too frequently? Multiple Choice It overemphasizes short-term goals and neglects long-term goals. It complicates the job of managers. It focuses too much on strategy and not enough on financial measures. It could lead to a permanent change in the production process of the company. It overemphasizes long-term goals and neglects short-term goals.
What are two disadvantages of ROI? Explain how each can lead to decreased profitability.
Critics of absorption costing have increasingly emphasized its potential for leading to undesirable incentives for managers. Give an example.