3 accounting decision e information managerial manual solution

Title Overview: The emphasis of Managerial Accounting, 9th edition is on teaching students to use accounting information to best manage an organization. In a practice Hilton pionee. Manual solutions provide electronic and soft downloadable products for the selected Textbooks and not the actual hard copy Materials. There is no need to provide us with your own physical shipping address, instead, we will need only your own email address in which we are going to attach the files for you.

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Clients who use PayPal are going to receive a payment invoice into their email which they sign up with. To find items to sell in their shop, they travel around the United States and Europe buying unique artifacts. Within an hour of making a purchase, they use their smartphone to take a picture of the item and post a short tweet about the item on Twitter.

Then, they ship the item back to Dayton for sale in their shop. Which symbol should be used to represent Twitter in a context diagram of this process? Which symbol should be used to represent the preparation of data for their tweet in a context diagram of this process? Which symbol should be used to represent the transfer of data to Twitter in a context diagram of this process?

Which symbol should be used to represent the remote server that stores the tweets i. He has been asked to document the existing accounting information system, and focus on the activities and flow of data between activities.

He decides to begin with a summary description of the sources and uses of data in the organization and how they are processed by the system. The documentation tool that he should employ for this purpose is a A data flow diagram. B document flowchart. C system flowchart. D program flowchart. B processes, but not the data that flows between processes. C who is performing processes, but not how they perform the process.

D who is performing processes, but not the data that flows between processes. B data source. D data source and destination. Answer: At a minimum, a professional should be able to read documentation. A professional may also be called upon to evaluate internal control system documentation in order to identify control strengths and weaknesses or recommend improvements.

A professional may be engaged to prepare documentation, which requires the greatest amount of skill and understanding of a particular system.

Answer: First, SOX requires auditors to evaluate internal control systems. Data flow diagrams and flowcharts are the two most frequently used development and documentation tools used in practice. Second, since systems development is extremely complex, DFDs and flowcharts are tools that are used to create order from chaos and complexity.

Third, documentation tools and concepts are covered on the CPA exam. Answer: The Sarbanes-Oxley Act requires that independent auditors understand the automated and manual procedures an entity uses.

One of the best ways to gain this understanding is to use the flowcharts to document the internal control system, as weaknesses and strengths are more easily spotted from such graphic portrayals. Answer: A data flow may consist of one or more pieces of datum. The determining factor is whether the data elements always flow together at the same time. For example, "customer payment" have both payment and remittance data.

Since these elements always flow together, only one data flow line is required. However, data flows between the customer and the payment processes have customer inquiries and cash receipts; these data items do not always flow together at the same time.

In such a case, two data flow lines will be shown. The DFD itself shows inputs, major processes, and outputs; each process in the DFD can be "exploded" or shown in greater level of detail with the sub-processes and related data flows. Answer: The purpose of a DFD is to diagram the origins, flow, transformation, storage, and destination of data.

The purpose a flowchart is to present a graphical description of the flow of documents, relationships among input, processing, and output, or the sequence of logical operations in an information system or program.

A DFD is limited to basic symbols and lines, and focuses on the flow and use of data. A flowchart will generally be more complex, and more focused on the managerial, AIS, or IS aspects of the organization. Answer: The Sarbanes Oxley Act of requires executives of public companies to document and evaluate internal controls. External auditors must evaluate management's assessment of internal control and attest to its accuracy.

Therefore, company executives and the auditors must document and test the internal controls — documentation tools, such as flowcharts, are used to do this. Answer: A data flow is a graphic representation of the flow of data between processes, data stores, and data sources and destinations.

A data flow is really a form of communication. When the analyst draws a curved or straight line with an arrow at one end, what is represented is a form of communication among the other elements of the data flow process. Consider for example a data source being depicted by a box. The box represents a data source. Data then is sent from the source to a circle, which represents a transformation process.

The source of data sends the flow to the transformation process, which will process the data and somehow use the data or turn it into useful information. Note that data flows can represent one or more pieces of datum. Because data flows may have more than one data element, the analyst must determine whether to show one or more lines. Good DFDs and data flow lines in such diagrams eliminate the need for users and analysts to "infer" what type of information is flowing.

Answer: In order to create a useful DFD, the analyst must determine system boundaries—what is to be included or excluded from the system. A context diagram will help to achieve this goal, since it is a good way to depict the boundaries of the system. The analyst first creates a context diagram by placing a circle in the middle of the diagram. The circle represents the system under consideration. On either side of the circle, boxes are created which represent outside entities the system interacts with directly.

Data flow lines are drawn to show the direction of the flow of data. After this pictorial representation has been completed, the analyst can then better assess the boundaries of the system and amount of interaction between the system and outside entities.

Select one from your list and describe why it could be the most important one to consider when preparing a DFD. Support your choice with an example. Answer: Understand the system.

Ignore certain aspects of the system such as control processes and control actions. Determine system boundaries.

Develop a context diagram. Identify data flows. Group data flows. Identify transformation processes. Group transformation processes. Identify all files or data stores. Identify all data sources and destinations. All DFD elements are named.

Subdivide the DFD. Give each process a sequential number. The unit product cost of the high-volume product, Parcel, declines under the activity-based approach, whereas the unit product cost of the low- volume product, Rascon, increases. This occurs because half of the overhead is applied on the basis of engineering design hours instead of direct labor-hours.

When the overhead was applied on the basis of di- rect labor-hours, most of the overhead was applied to the high-volume product. However, when the overhead is applied on the basis of engi- neering-hours, more of the overhead cost is shifted over to the low- volume product. Engineering-hours is a product-level activity, so the higher the volume, the lower the unit cost and the lower the volume, the higher the unit cost. Model X X99 Direct materials The unit product cost of each model under the activity-based ap- proach would be computed as follows: Model X X99 Direct materials The increase in unit product cost for Model X can be explained as follows: First, where possible, overhead costs have been traced to the products rather than being lumped together and spread uniformly over production.

Therefore, the special processing costs, which are traceable to Model X, have all been assigned to Model X and none as- signed to Model X99 under the activity-based approach. It is common in industry to have some products that require special handling or special processing of some type.

This is especially true in modern factories that produce a variety of products. Activity-based costing provides a vehicle for assigning these costs to the appropriate products. These costs have been assigned according to the number of setups completed for each product. However, because a batch-level activity is involved, another factor affecting unit costs comes into play.

That factor is batch size. Some products are produced in large batches and some are produced in small batches. The smaller the batch, the higher the per unit cost of the batch activity. In the case at hand, the data can be ana- lyzed as follows: Model X Cost to complete one setup [see 2 a ] Such differences in cost are obscured when direct labor-hours or any other volume measure is used as a basis for applying overhead cost to products.

In sum, overhead cost has shifted from the high-volume product to the low-volume product as a result of more appropriately assigning some costs to the products on the basis of the activities involved, rather than on the basis of direct labor-hours. Using activity-based absorption costing, the unit product cost of each model would be: Deluxe Regular Direct materials Unit costs appear to be distorted as a result of using direct labor-hours as the base for assigning overhead cost to products.

Although the deluxe model requires twice as much labor time as the regular model, it still is not being assigned enough overhead cost, as shown in the analy- sis in part 3 a. This suggests that less than half the overhead cost is being assigned to the deluxe model that ought to be assigned, and unit costs for the deluxe model are understated.

If these costs are being used as a basis for pricing, then the selling price for the deluxe model may be too low. This may be the reason why profits have been steadily declining over the last several years. It may also be the reason why sales of the deluxe model have been increasing rapidly. According to the activity-based absorption costing system, the manu- facturing overhead cost per pound is: Kenya Viet Dark Select Total overhead cost assigned above a The unit product costs according to the activity-based absorption costing system are: Kenya Viet Dark Select Direct materials given These activities include purchase orders issued, number of setups for material processing, and number of batches processed.

An implication of the activity-based approach is that our low-volume products may not be covering the costs of the manufacturing resources they use. Under our present costing and pricing system, our high-volume products, such as our Kenya Dark coffee, may be subsidizing our low-volume products.

Some adjustments in prices may be required. However, the per pound cost can also be computed as shown below. This alternative approach provides additional insight into the data and facilitates emphasis of some points made in the chapter. Twenty thousand pounds of the Kenya Dark coffee are purchased per order with four orders per year , and just pounds of the Viet Select coffee are purchased per order with eight orders per year.

Thus, the purchase order cost per pound for the Kenya Dark coffee is just 1. As stated in the text, this is one reason why unit costs of low- volume products, such as the Viet Select coffee, increase so dramatically when activity-based costing is used. There were no beginning or ending inventories, so all of the jobs were started, finished, and sold during the month.

Therefore cost of goods sold equals the total manufacturing cost. We can verify that by compu- ting the cost of goods sold as shown below: Manufacturing costs charged to jobs: Direct materials Overhead underapplied When the predetermined overhead rate is based on capacity, overhead is ordinarily underapplied because manufacturing overhead ordinarily contains significant amounts of fixed costs.

Therefore, overhead will ordinarily be underapplied. The overhead applied to Mrs. If the actual overhead cost and the actual professional hours charged turn out to be exactly as estimated there would be no underapplied or overapplied overhead. If the predetermined overhead rate is based on the professional staff hours available, the computations would be: Estimated overhead cost a Proponents of this method of computing predeter- mined overhead rates suggest that the underapplied overhead be treat- ed as a period expense that would be disclosed separately on the in- come statement as Cost of Unused Capacity.

The overhead applied to the Verde Baja job is computed as follows: Estimated studio overhead cost a When the predetermined overhead rate is based on capacity, the un- derapplied overhead is interpreted as the cost of idle capacity.

Indeed, proponents of this method suggest that the underapplied overhead should be treated as a period expense that would be disclosed separate- ly on the income statement as Cost of Unused Capacity. The competition is able to offer the latest equipment, excellent service, and attractive prices.

The company must do some- thing to counter this threat or it will ultimately face failure. Under the conventional approach in which the predetermined overhead rate is based on the estimated studio hours, the apparent cost of the Verde Baja job has increased between and This results in costs that seem to increase as the volume declines. Under the conventional method, managers may be mis- led into thinking that they are actually losing money on the Verde Baja job and they might refuse such jobs in the future—another sure road to disaster.

It is true that the underapplied overhead under the alternative approach is much larger than under the conventional approach and is growing. However, if it is properly labeled as the cost of idle capacity, management is much more likely to draw the appropriate conclusion that the real problem is the loss of business and therefore more idle capacity rather than an increase in costs. Traditional approach: Actual total manufacturing overhead cost incurred assumed to equal the original estimate Traditional approach: Under the traditional approach, the reported net operating income can be increased by increasing the production level which then results in overapplied overhead which is deducted from Cost of Goods Sold.

In fact, it can be shown that the total production level would have to be , units rather than , units. This results in less of a deduc- tion on the income statement for the Cost of Unused Capacity. Net operating income is more volatile under the new method than under the old method.

As a consequence, swings in sales in either di- rection will have a more dramatic impact on reported profits under the new method. Under the old method, the target net operating income can be attained by producing an additional 8, units.

Under the new method, the production would have to be increased by 12, units. Again, this is a consequence of the difference in predetermined overhead rates.