Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
16th Edition
ISBN: 9780134475585
Author: Srikant M. Datar, Madhav V. Rajan
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 14, Problem 14.1Q
To determine
To explain: The given statement.
Expert Solution & Answer
Answer to Problem 14.1Q
The comment of the division president is a disagree comment. A president will not only focus on the customer but also see the cost allocation issues with the accountant.
Explanation of Solution
Costing:
Costing is a technique used in cost accounting to determine the cost of a product. With the optimum use of costing a company can reduce the cost burden and increase the profit margin.
- Only focus on the customer and not on the cost allocation issues it affect the business decision adversely.
- The cost accounting information is very important for the cost planning and also for the cost reduction.
- With the figures of cost accounting the company can ascertain the amount spend on the manufacturing of product so that make and buy decision can easily take.
Thus, the statement given by the division president is not correct.
Want to see more full solutions like this?
Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!
Students have asked these similar questions
Elmhurst Corporation is considering changes to its responsibility accounting system. Which of the following statements is/are correct for a responsibility accounting system.
i. In a cost center, managers are responsible for controlling costs but not revenue.
ii. The idea behind responsibility accounting is that a manager should be held responsible for those items that the manager can control to a significant extent.
iii. To be effective, a good responsibility accounting system must help managers to plan and to control.
iv. Costs that are allocated to a responsibility center are normally controllable by the responsibility center manager.
1. I and II only are correct.
2. II and III only are correct.
3. I, II, and III are correct.
4. I, II and IV are correct.
Which of the following statements is true?
A cost center is a responsibility center.
The basic objective of responsibility accounting is to charge each manager with those costs and/or revenues over which he has control.
Under a responsibility accounting system, fewer expenses are charged against managers; the higher one moves upward in an organization.
Responsibility centers. Elmhurst Corporation is considering changes to its responsibility accounting system. Which of the following statements is/are correct for a responsibility accounting system.
In a cost center, managers are responsible for controlling costs but not revenue.
The idea behind responsibility accounting is that a manager should be held responsible for those items that the manager can control to a significant extent.
To be effective, a good responsibility accounting system must help managers to plan and to control.
Costs that are allocated to a responsibility center are normally controllable by the responsibility center manager.
I and II only are correct.
II and III only are correct.
I, II, and III are correct.
I, II and IV are correct.
Chapter 14 Solutions
Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
Ch. 14 - Prob. 14.1QCh. 14 - Why is customer-profitability analysis an...Ch. 14 - Prob. 14.3QCh. 14 - A customer-profitability profile highlights those...Ch. 14 - Give examples of three different levels of costs...Ch. 14 - What information does the whale curve provide?Ch. 14 - A company should not allocate all of its corporate...Ch. 14 - What criteria might managers use to guide...Ch. 14 - Once a company allocates corporate costs to...Ch. 14 - A company should not allocate costs that are fixed...
Ch. 14 - How should a company decide on the number of cost...Ch. 14 - Show how managers can gain insight into the causes...Ch. 14 - How can the concept of a composite unit be used to...Ch. 14 - Explain why a favorable sales-quantity variance...Ch. 14 - How can the sales-quantity variance be decomposed...Ch. 14 - Flexible-budget variance, sales-quantity,...Ch. 14 - Sales-volume, sales-mix, and sales-quantity...Ch. 14 - Cost allocation in hospitals, alternative...Ch. 14 - Customer profitability, customer-cost hierarchy....Ch. 14 - Customer profitability, service company. Instant...Ch. 14 - Customer profitability, distribution. Best Drugs...Ch. 14 - Cost allocation and decision making. Reidland...Ch. 14 - Cost allocation to divisions. Rembrandt Hotel ...Ch. 14 - Cost allocation to divisions. Bergen Corporation...Ch. 14 - Prob. 14.25ECh. 14 - Variance analysis, working backward. The Hiro...Ch. 14 - Variance analysis, multiple products. Emcee Inc....Ch. 14 - Market-share and market-size variances...Ch. 14 - Click here to open your MyFinanceLab Study Plan...Ch. 14 - Customer profitability. Bracelet Delights is a new...Ch. 14 - Customer profitability, distribution. Green Paper...Ch. 14 - Customer profitability in a manufacturing firm....Ch. 14 - Customer-cost hierarchy, customer profitability....Ch. 14 - Allocation of corporate costs to divisions. Cathy...Ch. 14 - Cost allocation to divisions. Forber Bakery makes...Ch. 14 - Prob. 14.36PCh. 14 - Cost-hierarchy income statement and allocation of...Ch. 14 - Variance analysis, sales-mix and sales-quantity...Ch. 14 - Market-share and market-size variances...Ch. 14 - Variance analysis, multiple products. The Robins...Ch. 14 - Customer profitability and ethics. KC Corporation...
Knowledge Booster
Similar questions
- As manager of department B in MarIeys Manufacturing, based on the costs you identified in the previous exercise for further research, how does this impact the financial performance of your department, and what might be some questions you want to ask or solutions you might propose to Marleys management?arrow_forwardAssume you have been hired by Hilton Hotels and Resorts. As part of your new role in the accounting department, you have been tasked to set up a responsibility accounting structure for the company. As your first task, your supervisor has asked you to give an example of a cost center, profit center, and an investment center within the Hilton organization. Your supervisor is a little unsure of the difference between a profit center and investment center and would like you to explain the difference.arrow_forwardTypes of decisions that managers make include all of the following except: a.choosing which products to sell b.designing performance evaluation systems c.setting tax rates d.hiring employees e.All of these are decisions that managers makearrow_forward
- Why are companies divided into departments for the purpose of management control? What are some of the challenges to preparing departmental reports? Is it possible to evaluate a cost center's profitability?arrow_forwardI'm having trouble determining the profitability of the firm's information systems services and e-commerce consulting activities in problem 3. Could you help me solve this problem? I'm confused by the activity-based costing system and need to find the total billings, income, and profitability percentage.arrow_forward( separation of duties) explain how can they implemented and how they make accountant job more efficient?arrow_forward
- 2. Why do managers use a standard cost system to control business activities?a) Setting standards required __________________ and ____________________ among different divisions and functions.arrow_forward(Ch 8) Which departments in an organization produce services for external customers? Question 1 options: Support departments. Dual-rate departments. Operating departments. Sales departments. (Ch 8) When allocating support department costs, managers must identify cost pools. The choice of cost pools is: Question 2 options: not influenced by the allocation base. not important, because all support department costs will eventually be allocated anyway. influenced by the design of the accounting information system. determined by whether a company uses IFRS or ASPE.arrow_forwardWhich of the following statements about responsibility accounting are correct? Select one: a. Responsibility accounting systems differ widely across organizations. b. The structure for accumulating cost information generally mirrors the structure for accumulating responsibility center information. c. Responsibility accounting is the primary responsibility of accounting staff.arrow_forward
- Why are companies divided into departments for the purpose of management control? Is it possible to evaluate a cost center's profitability? Explain.arrow_forwardWhat is the aim of dividing businesses into departments for the purpose of controlling management? How does one go about determining the profitability of a cost center? Explain.arrow_forwardWhen managerial accountants design an evaluation system that is based on criteria for which a manager is responsible, and it is structured to encourage managers to make decisions that will meet the goals of the company as well as their own personal job goals, the framework used is ________.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax College
Principles of Accounting Volume 2
Accounting
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax College