Strategic Cost Management

Assignment no.1

Exercise #5

1. Why might the snack foods division president want to play the end-of-year games
describe above?
Despite the estimate of Jane Tan the new controller of annual growth rate for only
8%, the president Louie Ryan might seen possible opportunities for the snack
foods division and of year games. Base on the inquiries compiled Yummy foods
offer bonus incentives to reported earnings if it exceeds the sale targets.
Promotion opportunities are likely to achieve if top management delivers high
reported earnings. The deferring of cost in current year to next year might
increase the bonus.

2. The division controller is deeply troubled and reads the Standards of Ethical Conduct for
Management Accountants. Classify each of the end-of-year games (a-g) as (i) acceptable,
or (ii) unacceptable according to that document.
End-of-year games are unacceptable.
1. The fiscal year must end on December 31 at midnight. When the close is
"extended," the sales for the following year are reported as if they were made this
year.
2. Changing shipping dates is accounting report falsification.
3. December advertisements should be charged to the current fiscal year. The
advertising agency is allowing accounting records to be falsified.

End-of-the-year games that are acceptable

1. If the independent contractor does not perform maintenance work in December,
there is no maintenance transaction to record. The plant manager is in charge of
ensuring that packaging equipment is well maintained. The division controller is
likely to be able to do little more than note the lack of a December maintenance
charge.
2. Sales in many organizations are heavily concentrated in the final weeks before
the fiscal year ends. If the division marketing manager approves the double bonus,
the division controller has little choice but to observe the extra bonus paid in
December.
3. If the number of TV spots in December is reduced, the cost of advertising in
December will be reduced. There is no falsification of records in this case.
4. A lot depends on how you "persuade" carriers to accept your goods. If, on the
other hand, the carrier receives no special treatment and agrees willingly to accept
the assignment, the transaction appears ethical.
 3. What should Tan do if Ryan suggest that end-of-year games are played in every division
of Yummy Foods and that she would greatly harm the snack foods division if she does
not play along and paint the rosiest picture possible of the division’s result?
Jane Tan should raise her concerns to the division of Yummy Foods directly to
Ryan and the previous corporate controller that they were practicing unethical and
illegal running of the end-of-year games. If Ryan is unwilling to listen and follow
the ethical advises she can resign or request for transfer to another division not to
sacrifice her profession for being unethical and believing an illegal behavior.

Exercise #7

1. Managerial accounting is concerned with providing information for the use of those
who are inside the organization, whereas Financial Accounting is concerned with
providing information for the use of those who are outside the organization.
2. Planning consist of identifying alternatives, selecting from among the alternatives the
one that is best for the organization, and specifying what actions will be taken to
implement the chosen alternatives.
3. When Directing and Motivating, managers oversee day-to-day activities and keep the
organization functioning smoothly.
4. The accounting and other reports coming to management that are used in controlling the
organization are called Feedback.
5. The delegation of decision-making authority throughout an organization by allowing
managers at various operating levels to make key decisions relating to their area of
responsibility is called Decentralization.
6. A position on the organization chart that is directly related to achieving the basic
objectives of an organization is called a Line position
7. A Staff position provides service or assistance to other parts of the organization and does
not directly achieve the basic objectives of the organization.
8. The manager in charge of the accounting department is generally known as the
Controller.
9. The plans of management are expressed formally in Budget.
10. A detailed report to management comparing budgeted data to actual data for a specific
time period is called a Performance Report.
11. The Chief Financial Officer is the member of the top management team who is
responsible for providing timely and relevant data to support planning and control
activities and for preparing financial statements for external users.
12. Managerial accounting places less emphasis on Precision and more emphasis on
Timeliness (non-monetary data) than financial accounting.