13-7. Wheeler Company wants to buy a numerically controlled (NC) machine to
be used in producing specially machined parts for manufacturers of
trenching machines. The outlay required is $800,000. The NC equipment
will last five years with no expected salv
12-3. Chesbrough, Inc., makes many of the components of its main product inhouse. Recently, Berham Electronics offered to supply one component, K25, at a price of $6.50 each. Chesbrough uses 20,000 units of component
K-25 each year. The absorption cost pe
1. Explain how CVP analysis can be used for managerial planning.
Answer : CVP analysis allows managers to focus on selling prices, volume, costs,
profits, and sales mix. Many different what if question can be asked to assess the
effect on profits
Discuss the differences between centralized and decentralized
Answer: In centralized decision making, decisions are made at the
very top level, and lower-level managers are charged with
implementing these decisions. On the oth
Question 1. Discuss the difference between budgets and standard costs.
Answer : Standard costs are essentially budgeted amounts on a perunit basis. Unit standards serve as inputs in building budgets.
Question 7. Explain why standard costing systems are ad
Question 1. Define the term budget. How are budgets used in planning?
Answer : Budgets are the quantitative expressions of plans. Budgets
are used to translate the goals and strategies of an organization into
Question 2. Define control.
Monte Company produces ski boots. At the beginning of the year, the cost
manager estimated that overhead costs would be $11,640,000 and that the
units produced would be 1,200,000. Actual data concerning production for
the past year follow:
Rico Food Company sells and delivers various specialty foods to homes.
Rico believes that the best driver for its delivery activity is miles
traveled. Not surprisingly, it discovered that the cost of fuel for delivery
trucks doubled as the miles trav
2-10. Sterling Company manufactures laundry detergent. At the beginning of
February, the following information was supplied by its accountant:
Raw materials inventory $73,000
Work-in-process inventory 80,400
Finished goods inventory 62,000
1. What is a management accounting information system?
The management accounting information system provides information needed to
satisfy specific management objectives. At the heart of a management accounting
information system are processes; they are d