Horngren’s Cost Accounting A Managerial Emphasis 17th Global Edition by Srikant M. Datar solution ma
1-30 (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 or low-price strategy Cost leadership or low-price strategy Product differentiation strategy |
a. b. c. d. |
Cost to produce and sell special tetrazzini Prices of tetrazzini sold by other competitors The customers which the company may target to sell its special tetrazzini Extra price the customers would be willing to pay considering the specialty of the product Yearly cash surplus after producing and selling special tetrazzini Cost of producing the low-cost soap Price of the homogenous products produced by the competitors The present surplus production capacity of Vanford Soap Market size of the low-cost soap in terms of sales volume Estimated growth in the low-cost soap market in terms of sales volume and revenue Sensitivity of target customers to price and quality Cost of producing the drill machine as per the specification of the tender The present surplus production capacity of Diato Inc. Price of the homogenous products produced by the competitors who may compete for the tender Minimum order size to reach the break-even-point Cash surplus that is going to be achieved by producing and selling 1,000 drill machines Cost to produce and sell the newly featured tablet Present cash surplus of Smart Pixel to develop, produce, and sell the newly featured tablet Prices of tablets with standard features sold by other competitors Price sensitivity of the target customers Present market size of tablets in terms of sales volume Premium price the target customers will be willing to pay for the new features |
1-31 (10–15 min.) Management accounting guidelines.
a. Cost-benefit approach: managers continually face resource-allocation decisions, such as decisions on the purchase of machinery, establishment of a new branch, or building of new factory. The cost-benefit approach helps managers to weigh both the costs and expected returns from such projects before making the decision.
b. Behavioral and technical considerations: Behavioral consideration impels managers to discuss issues with their employees on any aspect of the organization. Such interaction creates opportunity to understand both the needs of staff and the strategic focus of the organization. Technical considerations enable managers to make wise economic decisions by providing desired information in an appropriate format and at the required intervals.
c. Different costs for different purposes: Managers apply various ways in computing costs depending on whether the costs evaluation is for external or internal use. For example, costs that are inherent to a project may be written off or capitalized depending on the judgement of the management in assessing the performance of the project.
1-32 (15 min.) Management accounting guidelines.
- Cost-benefit approach
- Cost-benefit approach and/or behavioral and technical considerations (for example: how the overall morale of employees will be impacted due to retrenchment, and whether the machines will operate normally after the new start-up)
- Different costs for different purposes
- Cost-benefit approach or behavioral and technical considerations (for example: how employees will react to more supervisory control)
- Cost-benefit approach or behavioural and technical consideration (for example: how to design the performance bonus to correctly improve productivity without sacrificing other aspects)
- Cost-benefit approach
- Cost-benefit approach and/or behavioral and technical considerations (for example: how employees will react to the production process)
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