Horngren’s Cost Accounting A Managerial Emphasis 17th Global Edition by Srikant M. Datar solution ma

(10–15 min.)   Professional ethics and reporting division performance.
 
1.      Gilpin’s ethical responsibilities are well summarized in the IMA’s “Standards of Ethical Conduct for Management Accountants” (Exhibit 1-7 of text). Areas of ethical responsibility include the following:

• Competence
• Confidentiality
• Integrity
• Credibility

The ethical standards related to Gilpin’s current dilemma are integrity, competence and credibility. Using the integrity standard, Gilpin should carry out duties ethically, and communicate unfavorable and favorable information, professional judgments as well as opinions. Competence demands that Gilpin perform her professional duties in accordance with relevant laws, regulations, and technical standards, providing accurate decision support information. Credibility requires that Gilpin report information fairly, objectively, and disclose deficiencies in internal controls in conformance with organizational policy and/or applicable law. Gilpin should use her professional judgment to decide if reclassifying the costs of packing materials is appropriate according to accounting principles. She should not take a decision solely on the basis of avoiding overhead cost allocation.
 
2. Gilpin should discuss her concerns with Myers. Any overhead not allocated to Blakemore would be allocated to other divisions of Eastern Glass and Window. Gilpin may want to consider consulting the IMA for ethical guidance. Support for line management should be wholehearted, but it should not entail unethical conduct.
 
1-28     (15 min.)   Planning and control decisions, Internet company.
1.         Planning decisions
a.   Decision to raise monthly subscription fee from July
c.   Decision to offer e-mail service to subscribers and upgrade content of online services (later decision to inform subscribers and upgrade online services is an implementation part of control)
e.   Decision to decrease monthly subscription fee starting in November.
Control decisions

2. Decision to inform existing subscribers about the rate of increase—an implementation part of control decisions

d.   Dismissal of VP of Marketing—performance evaluation and feedback aspect of control decisions
2.        Other planning decisions that may be made at PostNews.com: decision to raise or lower advertising fees; decision to charge a fee from on-line retailers when customers click-through from PostNews.com to the retailers’ websites.
            Other control decisions that may be made at PostNews.com: evaluating how customers like the new format for the weather information and evaluating whether the waiting time for customers to access the website has been reduced.
 
1-29     (20 min.) Strategic decisions and management accounting.
 
1.  The strategies the companies are following in each case are:

a. b. c. d.

Product differentiation strategy Cost leadership strategy Cost leadership strategy Product differentiation strategy

2. Examples of information the management accountant can provide for each strategic decision follow:

a.     b.     c.     d.

Market share of the close competitors in anti-ageing cream Price of close competitive products Costs of producing anti-ageing cream with natural ingredients Total investments in the microprocessor Cost advantages for the developed technology Sensitivity of target bulk customers to change in price of microprocessor Total investments for installing bio-metric system and sources of fund Estimated monetary value for increase in productivity and efficiency Effect of cost advantages on product pricing Number of remote customers who are willing to take telemedicine service Potential increased sales as a result of telemedicine service Price charged by other companies who provide similar service