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Planning and Budgeting
1. Discuss the relationship between budget targets and performance evaluation procedures of HCC Industries
2. Why did HCC corporate managers decide to abandon stretch budgeting concept?
3. Describe the new processes that the HCC implemented to replace its existing budgeting concept. What are the strengths and weaknesses of this new process?
4. Evaluate the decision to use minimum performance standard targets instead of stretch budget
5. Should HCC Managers have expected that the MPS target setting philosophy would be equally effective in all the four operating divisions described?
6. What if any could have been done to improve the implementation of new philosophy?
7. Reference using Harvard referencing style and presentation
The following matter should be given particular attention
Evidence of extensive research beyond the prescribed text is required.
The Lavender Toy Company has been a family run business for the last 25 years. It is well recognized in the state of Michigan for selling educational related toys specifically for children, ages 4 through 8. Once a year, Lavender Toy goes through an extensive analysis as to which new toy they should promote for the upcoming year. They only have room to manufacture one new toy because they will drop the poorest selling toy, automatically, from their product line. Colleen, Kasey, Elvira June, Market Experts employed by Lavender Toy, have prepared the following information regarding their suggestions as to which toy should be promoted during the upcoming year.
Potential Toys to be considered Betsy Blocks Knute Numbers Donna Dollie
Initial Investment $90,000 $108,000 $78,950
Annual Cash Flows $36,000 $42,000 N/A
Number of Years flow expected to continue 5 6 N/A
Salvage Value None $1500 None
Lump Sum Payment None None $128,000 at end of Year 7
Corporate Rate of Return 10 per cent 10 per cent 10 per cent
Current rate of interest of CDs 4 per cent 4 per cent 4 per cent
1. Using your new 3 tools for capital budgeting, rank these investment opportunities: 1 = highest, 2 = middle, 3 = lowest. Show all computations in good form.
2. Support your rankings with sound capital budgeting analysis.
QUESTION 1 Management accounting
Describe the three factors that drive management accounting work. Give examples (about 150 words).
Management Accounting and Financial Accounting
In this module, we have studied nature of managerial accounting and difference between role of managerial accounting and financial accounting.
How is the purpose of managerial accounting different from financial accounting?
Are more accountants involved in the financial or managerial function today?
Comment on the use of a variable costing approach vs. absorption income statement. Describe the differences in the presentation and use of each type of income statement.
How is the concept of "cost of goods sold" different from "contribution margin"?
Explain the contribution margin concept/computation and when to use the information.
Choose one or two topics for further investigation and share your knowledge with the class. Provide factual information (not merely opinions) backed up by current news, examples, or other interesting details. Your comments should be in your own words and include references in APA format, if applicable.
Winner Ltd (“Winner”) produces medals for winners of major sporting events and other contests. Its manufacturing plant has the capacity to produce 10,000 medals each month. Current production and sales are 7,500 medals per month. The company normally charges $150 per medal.
Cost information for the current activity level is as follows:
Variable costs that vary with number of units produced: Direct materials
Direct manufacturing labour
Variable costs (for set-ups, materials handling, quality control and so on) that vary with number of batches, 150 batches × $500 per batch
Fixed manufacturing costs Fixed marketing costs
Winner has just received a special one-time-only order for 2,500 medals at $100 per medal. Accepting the special order would not affect the company’s regular business. Winner makes medals for its existing customers in batch sizes of 50 medals (150 batches × 50 medals per batch = 7,500 medals). The special order requires Winner to make the medals in 25 batches of 100 each.
1. Should Winner accept this special order? Show your calculations.
2. Suppose plant capacity were only 9,000 medals instead of 10,000 medals each month. The special order must either be taken in full or be rejected completely. Should Winner accept the special order? Show your calculations.
3. As in requirement 1, assume that monthly capacity is 10,000 medals. Winner is concerned that, if it accepts the special order, its existing customers will immediately demand a price discount of $10 in the month in which the special order is being filled.
They would argue that Winner’s capacity costs are now being spread over more units and that existing customers should get the benefit of these lower costs. Should Winner accept the special order under these conditions? Show your calculations.
Elite Custom Cabinetry Company produces custom cabinet order to exact measure based off CAD drawings provided by kitchen remodeling firms:
As of June 1, there was one order in production (job 5-3) and two new jobs were started in June (jobs 6-1 and 6-2).
Job 5-3 had incurred costs as follows prior to the month of June: direct material $4,600; direct labor $6,550, overhead $3,400
There were no finished goods as orders ship out upon completion. Raw material inventory was $18,600 as of June 1.
The following events occurred during June:
1. Purchased additional raw materials of $20,000.
2. Incurred direct labor hours of 640 hours at a rate of $24.00 during the month of June.
3. Incurred total manufacturing overhead costs of $18,400 during the month of June.
4. Assigned Direct materials and direct labor hours to jobs as follows:
Job 5-3 2,300 112
Job 6-1 8,700 320
Job 6-2 5,420 208
Totals 16,420 640
5. The company uses direct labor hours to assign overhead to individual jobs and the predetermined
overhead rate is $28.00 per hour based on the budget of 600 labor hours per month.
6. Job 5-3 and 6-1 are completed and shipped in the month of June. Job 6-2 is in progress at month end.
A. Calculate the completed cost of jobs 5-3 and 6-1.
B. Calculate the cost of work in process (job 6-2)
C. Calculate over or under applied overhead for hours worked and rate per hour.
D. Calculate the actual overhead rate per hour
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