Problem 8-45 Regression Analysis
Pilot Shop is a catalog business providing a wide variety of aviation products to pilots throughout
the world. Maynard Shephard, the recently hired assistant controller, has been asked to develop a
cost function to forecas
decline in expected future demand; the companies are profitable but smaller.
1. Do the recent actions by these companies support their long-term strategy?
2. How do the productivity gains at these companies affect profits in the short -term and
Solution (20 min)
Jackson Supply is experiencing the anomaly of achieving its strategic
goals (customer service) while the stock price is falling relative to
competitors. Two questions arise:
1. Is the firm properly measuring customer service? Perhaps mor
e first payment on December 31, 2000.
e first payment on January 1, 2000, the date the contract was signed.
45 percent income tax bracket, calculate your answer for requirement 1.
mber 31, 2012 @ 6% annual return =
What is Micro Ad
1. Assuming Martens plans to meet the expected demand for 20,000 attic fans, how many should it manufacture and how many should it
purchase from Harris Products? Explain your reasoning with calculations.
2. Idenpendent of Part 1 above, assume that Beth Jo
1. Calculate the number of tons completed and transferred out during the month.
2. Calculate the number of equivalent units for both materials and conversion costs for the
month of May, assuming that the company uses the weighted-average method.
1. Service and administrative costs are costs that are incurred by
headquarters' staffs or other central units. In order to maintain the
company as a functioning entity, administrative costs are incurred for the
benefit of all units of the company. Servic
11 Give four examples of firms you believe would be significant users of cost
management information and explain why.
Firms Using Cost Management. Here are some examples; there are
many possible answers.
1. Wal-Mart: to keep costs low by streamlining
1. New Century Software, Inc @ http:/www.newcenturysoftware.com/
The goal of New Century Software, Inc. is to provide products and services to help meet the facilities-based
information needs of the pipeline industry through the use of Geographic Informat
The observations made by the consultant show that the manufacturer was incurring large costs in
operations, distribution, and administration due to the high level of complexity in its products. Maintaining
relationships with 10 vendors for a single item c
Calculate the operating leverage for each company. If sales increase, which company benefits more? How do you know?
If sales increase, company B will benefit more. Company B has a higher proportion of fixed costs in
Questions 14-1 through 14-12
14-1: What is the difference between a master budget, pro-forma budgets, and a flexible budget?
14-1: A master budget represents forecasted operating profit based on a single output level (planned sales) for an
Placement Success (weight = 35%):
Mean Starting Salary and Bonus (14%) -The average starting salary a
graduates of a full-time master's program in business. Salary figures are b
number of graduates that reported data. The mean signing bo
Solution (15 min)
Current Profit per unit
New target cost (to meet competitve price)
2. The target cost can probably be achieved by efforts in two areas:
a. The analysis of budgeted versus actual cost shows an unfa
51 Undercosting a product increases the profit from the product and benefits
the firm. Do you agree? Why?
Undercosting a product may appear to have increased the reported profit the product earned
(assuming the firm did not lower its selling price because
Brief Exercises: 10-14 through 10-23
Kraft Bakeries introduced in 2013 a new line of frozen apple pie. For
2013, sales by quarter were as follows: 11,000 units; 16,000 units;
15,000 units; and, 20,000 units. Because of aggressive marketing and
Responsibility for setting accounting and reporting standards for federal agencies rests primarily with the
Federal Accounting Standards Advisory Board.
By law, federal agencies must incorporate the accounting standards (G
Under current accounting and reporting standards nongovernmental, not-for-profit organizations (NFPs)
must utilize the fund accounting structure set forth in the AICPA Audit and Accounting Guide Not-forProfit Entities.
Some of the budgeting approaches governments have experimented with as alternatives to line-item,
incremental budgeting include performance budgeting, program budgeting, the planning-programmingbudgeting system, and zero-based budgeting
A state has the obligation to monitor and regulate a not-for-profit (NFP) organization because it granted
the NFP tax-exempt status through the not-for-profit corporation laws.
The federal government's primary objective in
Audits of governments' financial statements are performed to determine if the financial statements are
correct and in accordance with generally accepted accounting principles, but not to determine if there is
compliance with laws and re
An effective system of monitoring financial condition may permit management to identify unfavorable
financial trends in sufficient time to take preventive action to avoid financial distress.
A tax watchdog group is an exam
Governmental funds are further classified as governmental or business-type.
Governmental funds are identical to governmental activities, proprietary funds are identical to businesstype activities, and fiduciary funds are id