Chapter 01 – Cost Accounting: Information for Decision Making
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1-27. Trends in Cost Accounting
Title
Responsibility
2 CFO
Signs off on financial statements.
5 Treasurer
Determines where to invest cash balances.
1 Controller
Maintains accounting records.
3 Internal auditor
Ensures procurement rules are followed.
4 Cost accountant
Evaluates costs of products.
1-28. (15 Min.) Ethics and Channel Stuffing: Continental Condiments.
a. As a management accountant, Maria has a responsibility to perform her professional
duties with competence in accordance with relevant laws and regulations. Channel
stuffing borders on illegal activity, especially if it is done to defraud investors by
1-29. (15 Min.) Ethics and Cost Analysis: State University Business School.
a. As a management accountant, Jon has a responsibility to perform his professional
Chapter 01 – Cost Accounting: Information for Decision Making
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b. Jon should first follow the School’s (or University’s) established policy on the
1-30. (15 Min.) Responsibility for Ethical Action: Giant Engineering.
a. As a management accountant Dewi has a responsibility to perform her professional
duties with competence in accordance with relevant laws and regulations. Clearly,
overbilling the federal government is a violation of the law. As such, Dewi might have
1-31. (20 Min.) Cost Data for Managerial Purposes: Alameda Instruments.
This problem demonstrates the ambiguity of cost-based contracting and, indeed, the
Chapter 01 – Cost Accounting: Information for Decision Making
A. Only the differential production costs could be considered as the cost basis.
B. The total cost per monitor for normal production of 40,000 monitors could be
used as the cost basis.
Chapter 01 – Cost Accounting: Information for Decision Making
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A. Use the full per unit cost for normal production of 2,400 units.
B. Use only differential costs as the cost basis.
C. Use differential costs plus a share of fixed costs, based on actual production
Chapter 01 – Cost Accounting: Information for Decision Making
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1-33. (20 Min.) Cost Data for Managerial Purposes: Campus Package Delivery.
a.
b. The decision to expand and offer the express service results in differential profits of
Chapter 01 – Cost Accounting: Information for Decision Making
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1-34. (20 Min.) Cost Data for Managerial Purposes: KC Services.
a.
b. The decision to drop the lawn service results in a differential loss of $11,200 [=
1-35. (20 Min.) Cost Data for Managerial Purposes: B-You
a. The following differential costs would be incurred: