Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
16th Edition
ISBN: 9780134475585
Author: Srikant M. Datar, Madhav V. Rajan
Publisher: PEARSON
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Chapter 1, Problem 1.18E
To determine
Value chain:
A value chain refers to a set of activities a firm performs so as to deliver a product or service to the ultimate user. It is a process through which firms receive raw materials, add value to the raw materials through various processes to make a finished product, and sell the end product to its customers.
The business activities that add value to the experience of the ultimate user includes, research and development, product and process design, production, marketing, distribution, and after-sales service. These business activities are part of administrative services.
To ascertain: The cost of each item as one of the business functions of the value chain.
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Required Information
[The following information applies to the questions displayed below]
Watko Entertainment Systems (WES) buys audio and video components for assembling home entertainment systems from
two suppliers, Bacon Electronics and Hessel Audio and Video. The components are delivered in cartons. If the cartons are
delivered late, the installation for the customer is delayed. Delayed Installations lead to contractual penalties that call for
WES to reimburse a portion of the purchase price to the customer.
During the past quarter, the purchasing and delivery data for the two suppliers showed the following:
Total purchases (cartons)
Average purchase price (per carton)
Number of deliveries
Percentage of cartons delivered late.
Bacon
Hessel
Answer is complete but not entirely correct.
Effective
Cost Per
Carton
Bacon
5,000
$ 176
40
30%
S
S
Hessel
3,000
$192
The Accounting Department recorded $249,600 as the cost of late deliverles to customers.
228.80
220.80 x
20
15%
Required:
Assume…
Question 1.Good Dentist Ltd. produces three distinct products and sells them in bulk to smaller retailers. Itsmanagers are concerned that the company's profit is not as high as its competitors. They believethey fall in profits could be caused due to the company's uncompetitive selling price(s), for one ormore product, and losses on other products. Details of the company's costs and selling prices are asfollows:Product Dental Tool Kit Dental Whitening Kit Electric Toothbrush£ £ £Selling Price 14.00 40.00 50.00Direct CostsLabour 4.00 9.00 15.00Direct Material - nylon bristles 5.00Direct Material - other 3.00 21.00 15.00Total Direct Cost 7.00 30.00 35.00Units produced 4,000 5,000 7,000Labour hours 1 hour per unit 2 hour per unit 2 hour per unitCurrently the company uses the traditional method of allocating indirect overheads but isconsidering using the ABC method for increasing the accuracy. The company's indirect overheadsare as follows:£Depreciation 20,000Purchasing Expenses…
Chapter 1 Solutions
Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
Ch. 1 - How does management accounting differ from...Ch. 1 - Management accounting should not fit the...Ch. 1 - How can a management accountant help formulate...Ch. 1 - Describe the business functions in the value...Ch. 1 - Explain the term supply chain and its importance...Ch. 1 - Management accounting deals only with costs. Do...Ch. 1 - How can management accountants help improve...Ch. 1 - Prob. 1.8QCh. 1 - Prob. 1.9QCh. 1 - What three guidelines help management accountants...
Ch. 1 - Prob. 1.11QCh. 1 - Prob. 1.12QCh. 1 - Prob. 1.13QCh. 1 - Prob. 1.14QCh. 1 - Prob. 1.15QCh. 1 - Which of the following is not a primary function...Ch. 1 - Value chain and classification of costs, computer...Ch. 1 - Prob. 1.18ECh. 1 - Value chain and classification of costs, fast-food...Ch. 1 - Key success factors. Dominion Consulting has...Ch. 1 - Key success factors. Vargas Construction Company...Ch. 1 - Planning and control decisions. Gregor Company...Ch. 1 - Planning and control decisions. Gavin Adams is the...Ch. 1 - Prob. 1.24ECh. 1 - Five-step decision-making process, service firm....Ch. 1 - Professional ethics and reporting division...Ch. 1 - Professional ethics and reporting division...Ch. 1 - Planning and control decisions, Internet company....Ch. 1 - Prob. 1.29PCh. 1 - Prob. 1.30PCh. 1 - Management accounting guidelines. For each of the...Ch. 1 - Prob. 1.32PCh. 1 - Prob. 1.33PCh. 1 - Budgeting, ethics, pharmaceutical company. Chris...Ch. 1 - Professional ethics and end-of-year actions. Linda...Ch. 1 - Professional ethics and end-of-year actions....Ch. 1 - Ethical challenges, global company environmental...
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