Standard cost systems help managers budget and control costs are rarely used in practice in well-established businesses are based on what managers think costs should be help maintain consistency and quality

Standard cost systems help managers budget and control costs are rarely used in practice in well-established businesses are based on what managers think costs should be help maintain consistency and quality

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter11: Performance Evaluation And Decentralization

Section: Chapter Questions

Problem 3MCQ: A responsibility center in which a manager is responsible only for costs is a(n) a. investment...

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Standard cost systems
help managers budget and control costs
are rarely used in practice in well-established businesses
are based on what managers think costs should be
help maintain consistency and quality

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A responsibility center in which a manager is responsible only for costs is a(n) a. investment center. b. revenue center. c. profit center. d. cost center.
Discuss how financial data prepared on the basis of variable costing can assist management in the development of short-run pricing policies.
Continuous improvement is the governing principle of a lean accounting system. Following are several performance measures. Some of these measures would be associated with a traditional standard-costing accounting system, and some would be associated with a lean accounting system. a. Materials price variances b. Cycle time c. Comparison of actual product costs with target costs d. Materials quantity or efficiency variances e. Comparison of actual product costs over time (trend reports) f. Comparison of actual overhead costs, item by item, with the corresponding budgeted costs g. Comparison of product costs with competitors product costs h. Percentage of on-time deliveries i. First-time through j. Reports of value- and non-value-added costs k. Labor efficiency variances l. Days of inventory m. Downtime n. Manufacturing cycle efficiency (MCE) o. Unused (available) capacity variance p. Labor rate variance q. Using a sister plants best practices as a performance standard Required: 1. Classify each measure as lean or traditional (standard costing). If traditional, discuss the measures limitations for a lean environment. If it is a lean measure, describe how the measure supports the objectives of lean manufacturing. 2. Classify the measures into operational (nonfinancial) and financial categories. Explain why operational measures are better for control at the shop level (production floor) than financial measures. Should any financial measures be used at the operational level? 3. Suggest some additional measures that you would like to see added to the list that would be supportive of lean objectives.
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