  Home Study tools

 My courses
 My books Career Life 

Chapter 12, Problem 30P Bookmark Show all steps: ON Find solutions for your homework Search
home / study / business / accounting theory / accounting theory solutions manuals / cost accounting / 9th edition / chapter 12 / problem 30p

Cost Accounting
(9th Edition)
Post a question
Answers from our experts for your tough
homework questions

Enter question
Problem

Ohio Steel produces steel products for a variety of customers. One division of the company is the Continue to post
Garage Door Division, created in the late 1940s. Since that time, this division’s principal products 20 questions remaining
have been galvanized steel components used in garage door installations. The division has been
continuously profitable since 1950, and, in 2013, it generated $20 million of profits on $500
million of sales. However, over the past 10 years, divisional growth has been slow; profitability
has become stagnant, and few new products have been developed, although the garage door
Snap a photo from your
phone to post a question
components market has matured. Company president Kendra Lawson has asked her senior staff We'll send you a one-time
to evaluate operations of the Garage Door Division and to recommend changes that would download link
improve its operations. The staff uncovered the following facts:

• Tonya Calley, age 53, has been division president for the past 15 years. Her compensation 888-888-8888 Text me
package includes an annual salary of $375,000 plus a cash bonus based on achievement of the
budgeted level of annual profit. By providing your phone number, you agree to receive
a one-time automated text message with a link to get
• Growth in sales in the residential metal products industry has averaged 12 percent annually the app. Standard messaging rates may apply.

over the past decade. Most of the growth has occurred in ornamental products used in residential
privacy fencing.

• Nationally, the division’s market share in the overall residential metal products industry has My Textbook Solutions
dropped from 12 percent to 7 percent during the past 10 years and has dropped from 40 percent
to 25 percent for garage door components.

• The division maintains its own information systems, which are essentially the same systems
that were in place 15 years ago; however, some of the manual systems have been computerized
(e.g., payroll, accounts payable, accounting).
Cost Cost Operations
• The division has no customer service department. A small sales staff solicits and takes orders Accounting Accounting Management
9th Edition 7th Edition 13th Edition
by phone from national distribution chains.
View all solutions
• The major intra-division communication tool is the annual operating budget. No formal
statements have been prepared in the division regarding strategies, mission, values, goals and
objectives, or identifying core competencies.

Given this information, identify the major problems in the Garage Door Division and develop
recommendations to address the problems you have identified.

Step-by-step solution

Step 1 of 8

Cost management:

Comment

Step 2 of 8

• Cost management system is defined as the regular procedures aimed at producing cost
estimates, which are precise to evaluate the original costs.

• It is a set of methods used for scheduling and controlling cost generating activities, related to
short and long-term objectives and strategies in an organization.

Comment

Step 3 of 8

Information given for OS Company:

Comment

Step 4 of 8

• The company’s garage door division principal products have been stimulated steel components
used in garage door installations.

• The division has been profitable since 1950 to 2013 and generates $20 million of revenues on
$500 million of sales.

• The growth of the company had a slow down, profitability was stagnant, and new products were
introduced.

• The president asked the senior management to evaluate the circumstances that would improve
the company.

• The team exposed certain facts to the management about the compensations, market share,
growth in sales, and absence of customer service departments, intra division communication
failures, mission, and evaluating core competencies.

Comment

Step 5 of 8

Identification of problems:

Comment

Step 6 of 8

• The mission of the division is not defined accurately.

• The division does not have information technology department even though it has computerized
systems.

• The division is not customer centric since it does not have a customer service department.

• The annual budget is the only control tool used by the top management.

Comment

Step 7 of 8

Recommendations:

Comment

Step 8 of 8

• The company needs to develop a proper mission statement and maintain consistency.

• The top management should maintain intra division communication.

• The top management must ensure that the division has a customer service department.

• The management should allocate capital for the growth of information technology department.

Comment

Was this solution helpful? 0 0

Recommended solutions for you in Chapter 12

Chapter 12, Problem 35P Chapter 12, Problem 31P

Through its three sets of elements (motivational, After graduating last year
informational, and reporting), a CMS focuses the from an Ivy League
attention of a given... university, Joe Tyler was
hired as a stock analyst.
See solution
Wanting to make his
mark on...

See solution

COMPANY LEGAL & POLICIES CHEGG PRODUCTS AND SERVICES CHEGG NETWORK CUSTOMER SERVICE
About Chegg Advertising Choices Cheap Textbooks Mobile Apps EasyBib Customer Service
Chegg For Good Cookie Notice Chegg Coupon Sell Textbooks Internships.com Give Us Feedback
College Marketing General Policies Chegg Play Solutions Manual Thinkful Help with eTextbooks
Corporate Development Intellectual Property Rights Chegg Study Help Study 101 Help to use EasyBib Plus
Investor Relations Terms of Use College Textbooks Textbook Rental Manage Chegg Study
Jobs Global Privacy Policy eTextbooks Used Textbooks Subscription
Join Our Affiliate Program DO NOT SELL MY INFO Flashcards Digital Access Codes Return Your Books
Media Center Honor Code Learn Chegg Money Textbook Return Policy
Site Map Honor Shield Chegg Math Solver

© 2003-2021 Chegg Inc. All rights reserved.