At a recent seminar you attended, the invited speaker was discussing some of the advantages and disadvantages of standard costs interms of evaluating performance and motivating goal-congruent behavior on the part of employees. One criticism of standard costs inparticular caught your attention: The use of conventional standard costs may not provide appropriate incentives for improvementsneeded to compete effectively with world-class organizations. The speaker then discussed so-called continuous-improvementstandard costs. Such standards embody systematically lower costs over time. For example, on a monthly basis, it might be appropriateto budget a 1.0% reduction in per-unit direct labor cost.Assume that the standard wage rate into the foreseeable future is $24 per hour. Assume, too, that the budgeted labor-hour standardfor October of the current year is 2.10 hours and that this standard is reduced each month by 1%. During December of the current yearthe company produced 8,500 units of XL-10, using 18,000 direct labor hours. The actual wage rate per hour in December was $27.00.Required:1. Prepare a table that contains the standard labor-hour requirement per unit and standard direct labor cost per unit for the 4 months,October through January.2. Compute the direct labor efficiency variance for December. Was this variance favorable or unfavorable?Complete this question by entering your answers in the tabs below.Required 1Required 2Prepare a table that contains the standard labor-hour requirement per unit and standard direct labor cost per unit for the 4months, October through January. (Do not round intermediate calculations. Round your "Standard Direct Labor Cost/Unit"answers to 2 decimal places and "Standard Labor-Hour Requirement/Unit" answers to 5 decimal places.)StandardStandard Labor-HourMonthDirect LaborCost/UnitRequirement/UnitOctoberhour per unitNovemberhour per unitDecemberhour per unitJanuaryhour per unitRequired 1Required 2 >

1. Month Previous Standard Reduction New Standard(hr./unit) Standard Direct Labor…

Answered: ms of evaluating pert -ticular caught…

ms of evaluating pert -ticular caught your a eded to compete eff ndard costs. Such sta budget a 1.0% reduct sume that the standa October of the curre

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter11: Differential Analysis And Product Pricing

Section: Chapter Questions

Problem 1TIF: Aaron McKinney is a cost accountant for Majik Systems Inc. Martin Dodd, Vice President of Marketing,...

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4 At a recent seminar you attended, the invited speaker was discussing some of the advantages and disadvantages of standard costs in terms of evaluating performance and motivating goal-congruent behavior on the part of employees. One criticism of standard costs in particular caught your attention: The use of conventional standard costs may not provide appropriate incentives for improvements needed to compete effectively with world-class organizations. The speaker then discussed so-called continuous-improvement standard costs. Such standards embody systematically lower costs over time. For example, on a monthly basis, it might be appropriate to budget a 1.0% reduction in per-unit direct labor cost. Assume that the standard wage rate into the foreseeable future is $26 per hour. Assume, too, that the budgeted labor-hour standard for October of the current year is 1.90 hours and that this standard is reduced each month by 1%. During December of the current year the company produced 9,000…
hi, could you please provide resources and sources for me for the following (the case study is following these questions) For the following case situation, address the following issues in short essay format Identify the ethical dilemma- the planned increase in productivity to reduce variable costs and increase the contribution margin ratio Identify and analyze primary and secondary issues related to this ethical dilemma and impact on various stakeholders Analyze the ethical alternatives Analyze alternative resolutions to this ethical dilemma, the impact on various stakeholders, and the reasons specific stakeholders prefer each alternative Resolution of the ethical dilemma George Hawkins is the controller of Okie Auto, Inc., which manufactures automobile parts at several plants in Oklahoma, and is a subsidiary of a national firm. Okie has had disappointing ﬁnancial performance in recent years, because of pressure for lower selling prices. Corporate headquarters has threatened to close…
Explain with an example why managers find it difficult to adopt a decision alternative even when the relevance cost analysis shows the superiority of this decision alternative to maximize operating income over other decision alternatives. What might the company do to reduce the pressure on management and decrease the ethical conflict?
2. What are some possible drawbacks to using standard costs that Sarah might consider? a. Standards limit operating improvements because employees may be discouraged from improving beyond the standards. b. Standards may become “stale” in a dynamic manufacturing environment. c. Employees may focus only on efficiency improvement and their own operations rather than considering the larger objectives of the organization. d. Since standards are impossible to attain, they are a distraction from the work at hand. e. Since standards never change, they do not reflect reality.
2. What are some possible drawbacks to using standard costs that Sarah might consider? a. Standards limit operating improvements because employees may be discouraged from improving beyond the standards. b. Standards may become “stale” in a dynamic manufacturing environment. c. Employees may focus only on efficiency improvement and their own operations rather than considering the larger objectives of the organization. d. Since standards are impossible to attain, they are a distraction from the work at hand. e. Since standards never change, they do not reflect reality. Answers a, b and c b, c and d c, d and e a, d and e b, d and e
Which of the following statements are false? SELECT ALL THAT APPLY a. One of the dangers of allocating common fixed costs to a product line is that such allocations can make the line appear less profitable than it really is. b. A new fixed cost that must be paid if a special offer is accepted is not relevant in making the decision. c. A cost that will be incurred regardless of which course of action a manager takes is relevant to the manager's decision. d. Your Company is considering replacing Machine X. The original cost of Machine X is not relevant to this decision.
In discussing "output-based compensation schemes," such as piece-rate systems, Stanford economist Edward Lazear observed, "One major advantage of this approach is that it accommodates a variety of worker preferences." But he also noted, "A disadvantage is that a pure piece-rate scheme makes the worker bear risk associated with variations in. business conditions." Source: Edward P. Lazear, "Compensation and Incentives in the Workplace," Journal of Economic Perspectives, Vol. 32, No. 3, Summer 2018, pp. 195-214. a. What does Lazear mean by the first quote above? How do these compansation schemes accommodate different worker preferences? Preferences for whar? OA Piece-rate compensation can benefit both workers who have less ability as well as those who have greater ability OB. Piece-rate pay can benefit workers who prefer to earn more income as well as those who prefer more leisure time. OC. A piece-rate system can benefit workers who prefer a slower work pace and those who prefer a…
Southwest Airlines' activities to achieve lower cost have been well documented in academics and business press. Yet most of the low cost airlines fail to match its success while imitating its strategy. This can be explained by ____ a) Interconnected resources b) Social complexity c) Unique Organizational Culture d) All of the above
Aaron McKinney is a cost accountant for Majik Systems Inc. Martin Dodd, Vice President of Marketing, has asked Aaron to meet with representatives of Majik Systems major competitor to discuss product cost data. Martin indicates that the sharing of these data will enable Majik Systems to determine a fair and equitable price for its products. Would it be ethical for Aaron to attend the meeting and share the relevant cost data? Explain your answer.
Management accountants advocate that marginal costing is superior to absorption costing when assisting management with decision-making. In light of the above statement, discuss in detail the advantages of marginal costing as the basis of management reporting. Justify whether management accounting is required in non-profit organisations.
Prepare a report from Mary Jane to Don explaining how these changes will affect Mirabel’s overall cost structure. For those changes that are controllable, make a recommendation considering the uncontrollable cost changes. Be certain to consider not only the company’s break-even point, but also the desired margin of safety.
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.