Answer to the question number 01

For each report listed below, identify whether the major purpose of the report is for (1) routine
internal reporting, (2) nonroutine internal reporting, or for (3) external reporting to investors
and other outside parties.
Item:
a) study detailing sale information of the top-ten selling products
b) weekly report of total sales generated by each store in the metropolitan area
c) annual Report sent to shareholders
d) monthly report comparing budgeted sales by store to actual sales
Answer:
a. (2) nonroutine internal reporting
b. (1) routine internal reporting
c. (3) external reporting to investors and other outside parties
d. (1) routine internal reporting

21) Generally, companies follow one of two broad strategies: offering a quality product at a low
price, or offering a unique product or service priced higher than the competition. Assume you
are opening a small food outlet across the street from your campus. How might that business
be operated under each of the two broad strategies? Consider the following specific
operational areas:
a. target customers
b. products offered
c. product pricing
d. location choice
e. advertising content
f. advertising media
Answer: The purpose of this question is to explore some of the differences in business
operations as a result of a broad strategic choice. Answers will differ from student to student,
but you should see some specific themes.

Operational Area Low Price Strategy Differential Strategy

Target customers Target customers might be Target customers might be
students on a tight budget. more wealthy students,
faculty, or perhaps neighbors
who live nearby.
Products offered Few products, heavy High quality products,
emphasis on tight cost probably a reasonable
control, probably set up as a choice, restaurant might
high volume operation have a lot of ambience.
Product pricing Priced at or lower than the Higher priced products.
competition in the area.
Location choice Convenient to the target Not as convenient, perhaps
customers in a higher-end shopping or
entertainment area.
Customers might seek out
the high quality and be
willing to travel a bit for it.
Advertising Advertising would emphasize Advertising would emphasize
content the low price of the products quality or ambience.
offered.
Advertising media Media that would be looked Media that would be looked
at by the target customers, at by the target customer,
such as student newspapers. local magazines and
newspapers.

Diff: 3
Objective: 2
AACSB: Application of knowledge
22) You have been employed as an entry-level management accountant for a little under a year.
You suspect that your immediate supervisor is involved in a significant fraud involving diverting
of company assets to personal use. Briefly describe the steps you might take to resolve this
dilemma.
Answer: The management accountant should first consult any internal company procedures
concerning the resolution of ethical issues, and make sure these procedures are followed as
closely as possible. If these policies do not resolve the situation, present the facts to the next
higher managerial level. If your immediate superior is the chief executive officer or equivalent,
the acceptable reviewing authority may be a group such as the audit committee, executive
committee, board of directors, board of trustees, or owners. Clarify the relevant ethical issues
with an objective advisor (e.g., Institute of Management Accountants hotline). Consult your
own attorney to be aware of your own rights and responsibilities. If all internal review
procedures have still not resolved the ethical situation, the managerial accountant might have
to resign and write an informative letter to an appropriate representative of the organization,
and perhaps notify other parties.
Diff: 3
Objective: 7
AACSB: Ethical understanding and reasoning

39) For each of the following activities identify an appropriate activity-cost driver.
a. machine maintenance
b. machine setup
c. quality control
d. material ordering
e. production scheduling
f. warehouse expense
g. engineering design

Answer: Any one of the listed cost drivers is correct.

Activity

A. Machine # of machines Machine hours Actual times for various

Maintenance maintenances of various
machines
B. Machine Setup # of setups Setup hours Actual times for various
setups for various
machines
C. Quality Control # of inspections Inspection hours Actual times for various
inspections for various
controls
D. Material Ordering # of orders Ordering hours Actual times for various
orders for various
materials
E. Production # of runs Scheduling hours Actual times for various
Scheduling runs for various
schedules
F. Warehousing # of bins, aisles Picking hours Actual times for various
parts for various
warehousing activities
G. Engineering Design # of engineers # of Engineering hours Actual times for various
designs engineering designs

Sherry's Custom Jewelry sells a single product. 700 units were sold resulting in $7,000 of sales
revenue,$2,800 of variable costs, and $1,200.What is CM per unit.

Answer: Contribution margin per unit is $6.00

Explanation: ($7,000 - $2,800) / 700 units = $6 per unit
Dr. Charles Hunter, MD, performs a certain outpatient procedure for $1,000. His fixed costs
are$20,000, while his variable costs are $500 per procedure. Dr. Hunter currently plans to
perform 200procedures this month. What is the budgeted revenue for the month assuming
that Dr. Hunter plans to perform this procedure 200 times?

Answer: $200,000
Explanation: B) 200 × $1,000 = $200,000
Reference:
1. test_bank_chapter_1_the_manager_and_management_accounting (34 no ques’s ans)
2. test_bank_chapter_1_the_manager_and_management_accounting (1.2 Objective 1.2----
-- 21 no ques’s ans)
3. test_bank_chapter_1_the_manager_and_management_accounting (Last Pase)
4. test_bank_chapter_5_activity-based_costing_and_activity-based_management (36 no
ques’s ans)
5. https://www.brainscape.com/flashcards/chapter-3-595354/packs/1188251
(12 no question’s answer)
6. https://www.brainscape.com/flashcards/chapter-3-595354/packs/1188251
(24 no question’s answer)