978-1118096895 Chapter 11 Part 7

BYP 11-4 REAL-WORLD FOCUS

(a) Glassmaster is using standard costs because management states that

(b) The materials price variance experienced should not lead to changes

in the standard for the next fiscal year. Management indicates that the

BYP 11-5 REAL-WORLD FOCUS

(a) The objectives for each perspective are:

Financial: Increase profitability, lower costs, increase revenue

(b) To measure achievement of the customer perspective objectives of on–

time flights, lowest prices and more customers, the company will use

(c) To achieve the learning perspective objective of ground crew alignment,

BYP 11-6 REAL-WORLD FOCUS

(a) The normal industry standard for plants to be considered operating at

(b) A government task force urged the company to try to operate at 120%

(c) It is argued that assembly lines need too much scheduled maintenance

it can be slowed down later.

(d) Potential drawbacks of the midnight shift are that midnight-shift workers

are prone to above-average rates of on-the-job errors, absenteeism

(e) Another potential problem with this approach is that each plant can

only make a limited number of car models. Adding a third shift at the

Kansas City plant assumes that the market demand for these cars will

BYP 11-7 COMMUNICATION ACTIVITY

To: Professor Standard

From: I. M. Smart

Subject: Setting Standard Costs

This memorandum covers two points as follows:

standards.

Ideal standards represent optimum levels of performance under perfect

operating conditions. In contrast, normal standards represent efficient

of the entire work force.

Normal standards are rigorous but attainable. Such standards should

labor, and manufacturing overhead.

1. Direct materials. The direct materials price standard is the cost per

unit of direct materials that should be incurred. This standard should

BYP 11-7 (Continued)

for unavoidable waste and normal spoilage.

2. Direct labor. The direct labor price standard is the rate per hour that

should be incurred for direct labor. This standard should be based

The direct labor quantity standard is the time that should be required

to make one unit of product. In setting this standard, allowances

downtime.

3. Manufacturing overhead. For this standard, a standard predetermined

overhead rate is used. This rate is determined by dividing budgeted

BYP 11-8 ETHICS CASE

(a) Bill and his fellow painters in the painting department will benefit from

Bill’s slow action. The company and its customers are harmed. The

(b) Deliberately falsifying and distorting the time study was unethical. If

every employee in every phase of producing this new product distorted

the time study, the company would not be competitive. If the company

(c) The company might conduct several time study tests using different

employees. Or the company might conduct unannounced time studies.

And the standard might be changed more often than every six months by

conducting monthly time studies to effect continuous improvements in

inefficient performance.

BYP 11-9 ALL ABOUT YOU

public universities should use standardized tests to measure student

learning.

(b) As discussed in the chapter, standards provide a mechanism for evalu-

(c) Potential disadvantages of standards are that they might reduce the

willingness of instructors or institutions to experiment with new teaching

approaches. In addition, in order to obtain high scores, instructors might

feel compelled to “teach to the exam,” thus narrowing the breadth of

(d) Answers will vary depending on student response.

BYP 11-10 CONSIDERING YOUR COSTS AND BENEFITS

Discussion Guide: The practice of medicine holds an unusual place in

reducing costs? In recent years, managerial accounting has played an

important, although not always successful, role in this issue. In the 1990s,

health-care providers made extensive use of managerial accounting

techniques to reduce costs. By the end of that decade, a number of

enough on maintaining quality.

Today, many health-care organizations are implementing balanced score-

cards in an effort to balance the dual (and in some ways competing) goals

of quality health-care and reduced costs. For example, by providing

quality of health-care.