Managerial Accounting Service Costs
Managerial Accounting
Service Costs
Please read Ch. and review the videos and website material. Financial accounting involves preparing financial statements from company information. Managerial accounting involves decision making within a business.
Though service companies do not produce a tangible product, they usually still have labor, materials, and overhead costs. These costs are not associated with manufacturing product, but with serving customers. Give an example of a service business and determine what would be labor costs, material costs ( if any) and overhead costs. Why did you categorized the costs in each category?
DQ2 Environmental Managerial Accounting
For this questions. please conduct some research beyond the textbook.
Throughout the last decade, environmental issues have become an increasingly important part of the business environment for most companies. Companies and managers must now consider the environmental impact of their business decisions in the same way that they would consider other operational issues
. Comment on one environmental issue you have researched and indicate how the decision was made by management.
ACC220 Managerial Accounting
Module 2 Discussion
DQ1 Contribution margin
An examination of the accounting records of Clowney Company disclosed a high contribution margin ratio and production at a level below maximum capacity.
Based on this information, suggest a likely means of improving operating income. Explain. and include references.
DQ2 Role playing
The break-even point is as relevant in a service company as it is in a manufacturing company. In the role of the managerial accountant, what step would you take in a break even analysis for a service industry?
Pick a service industry and identify the correct unit of analysis and activity for that unit. Show calculations for a break-even scenario for your chosen industry. Please include references for maximum number of points.
ACC220 Managerial Accounting
Module 3 Discussion
DQ1 Predetermined factory overhead
Factory overhead includes all manufacturing costs except direct materials and direct labor. Factory overhead costs come from a variety of sources, including indirect materials and indirect labor.
Discuss how the predetermined factory overhead rate can be used in job order cost accounting to assist management in pricing jobs. Why use a predetermined factory overhead rate ? Please support your response with references for the maximum number of points.
DQ2 3D Printing
The use of technology has exploded in recent memory. We see a lot of companies using 3D printing and other technology. 3D printing is a technology that creates a three-dimensional product from an “additive” process. “Additive” means the product is built from plastic, metal, or other material that is built layer by successive layer until the final object is complete
Explain how 3D printing could benefit a job shop environment. How would the technology be used? Please give an example. How would you classify the cost ( direct labor, direct material or factory overhead?)
ACC220 Managerial Accounting
Module 4 Discussion
DQ1 Real world manufacturing
The following categories represent typical process manufacturing industries:
Beverages
Chemicals
Food
Pharmaceuticals
Soap and cosmetics
Identify one company and determine the following:
a. Typical products manufactured by the selected company, including brand names
b. Typical raw materials used by the selected company
c. Types of processes used by the selected company Use annual reports, the Internet, or library resources in doing this activity. and include the reference data.
DQ2 Accounting for material costs
In papermaking operations for companies such as International Paper Company, wet pulp is fed into paper machines, which press and dry pulp into a continuous sheet of paper. The paper is formed at very high speeds (60 mph). Once the paper is formed, the paper is rolled onto a reel at the back end of the paper machine. One of the characteristics of papermaking is the creation of “broke” paper. Broke is paper that fails to satisfy quality standards and is therefore rejected for final shipment to customers. Broke is recycled back to the beginning of the process by combining the recycled paper with virgin (new) pulp material. The combination of virgin pulp and recycled broke is sent to the paper machine for papermaking. Broke is fed into this recycle process continuously from all over the facility. In this industry, it is typical to charge the papermaking operation with the cost of direct materials, which is a mixture of virgin materials and broke. Broke has a much lower cost than does virgin pulp. Therefore, the more broke in the mixture, the lower the average cost of direct materials to the department. Papermaking managers frequently comment on the importance of broke for keeping their direct materials costs down.
a. How do you react to this accounting procedure? b. What “hidden costs” are not considered when accounting for broke as described? Please include references to support your response.
ACC220 Managerial Accounting
Module 5 Discussion
DQ1 Domino’s Pizza budget
Domino’s Pizza LLC (DPZ) operates pizza delivery and carry-out restaurants. The annual report describes its business as follows: We offer a focused menu of high-quality, value-priced pizza with three types of crust (Hand-Tossed, Thin Crust, and Deep Dish), along with buffalo wings, bread sticks, cheesy bread, CinnaStix®, and Coca-Cola® products. Our hand-tossed pizza is made from fresh dough produced in our regional distribution centers. We prepare every pizza using real cheese, pizza sauce made from fresh tomatoes, and a choice of high-quality meat and vegetable toppings in generous portions. Our focused menu and use of premium ingredients enable us to consistently and efficiently produce the highest-quality pizza.
Over the 41 years since our founding, we have developed a simple, cost-efficient model. We offer a limited menu, our stores are designed for delivery and carry-out, and we do not generally offer dine-in service. As a result, our stores require relatively small, lower-rent locations and limited capital expenditures.
How would a master budget support planning, directing, and controlling for Domino’s? Please support your response with references.
DQ2 Variance
You started your own construction business and need to determine the cost of materials used to build one house, and how many materials you will need to do so.
Where would you begin to determine the standard price and quantity needs to build one house?
What would produce a difference between the standard cost to build a house and the actual cost? What would cause a favorable outcome? What would cause an unfavorable outcome?
What action might your company take if you had an unfavorable total direct materials cost variance?
Please support your responses with references.
ACC220 Managerial Accounting
Module 6 Discussion
DQ1 Support Department
The Customer Service Department of Door Industries Inc. asked the Publications Department to prepare a brochure for its training program. The Publications Department delivered the brochures and charged the Customer Service Department a rate that was 25% higher than could be obtained from an outside printing company. The policy of the company required the Customer Service Department to use the internal publications group for brochures. The Publications Department claimed that it had a drop in demand for its services during the fiscal year, so it had to charge higher prices in order to recover its payroll and fixed costs.
Recommend how the cost of the brochure should be transferred to the Customer Service Department. Please support your response with references.
DQ2 Organization
You have just been elected president of a brand-new service club on campus. The club is part of a national organization, but the organization charter gives the local organization a fair amount of flexibility in setting up the management of the club. As president, you can choose to make most of the decisions for the club and pass along your direction to the officers and members below you, or you can create specific committees, such as membership or academic, and allow each of the committees to make its own decisions and rules within the overall guidelines set out by the national charter.
Consider the need to manage and evaluate the club and describe which form of organization would you set up for your club and why. Please support your response with references.
ACC220 Managerial Accounting
Module 7 Discussion
DQ1 Foreign Currency Decisions
Global Electronics Inc. invested $1,000,000 to build a plant in a foreign country. The labor and materials used in production are purchased locally. The plant expansion was estimated to pro-duce an internal rate of return of 20% in U.S. dollar terms. Due to a currency crisis, the currency exchange rate between the local currency and the U.S. dollar doubled from two local units per U.S. dollar to four local units per U.S. dollar.
Write a brief memo to the chief financial officer, Tom Greene, explaining the impact that the currency exchange rate change would have on the project’s internal rate of return if (1) the plant produced and sold product in the local economy only, and (2) the plant produced all product locally and exported all product to the United States for sale. Please include references and calculations to support your response.
DQ2 Competitive Pricing Strategy
Aaron McKinney is a cost accountant for Majik Systems Inc. Martin Dodd, Vice President of Marketing, has asked Aaron to meet with representatives of Majik Systems’ major competitor to discuss product cost data. Martin indicates that the sharing of these data will enable Majik Sys-tems to determine a fair and equitable price for its products.
Would it be ethical for Aaron to attend the meeting and share the relevant cost data? Explain your answer.
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