1. Which of the following markets is characterized by the

1. Which of the following markets is characterized by the following: many buyers and sellers, a homogeneous product, easy entry into and exit from the industry, and all firms are price takers?

a. perfectly competitive market

b. monopolistic competition

c. monopoly

d. oligopoly

2. The following information pertains to three different products being sold by

Which product or products have an inelastic demand curve?

a. Product A

b. Product B

c. Product C

d. Both Product A and Product C

3. Thebes Company had the following information:

What is the markup based on cost of goods sold?

a. 50.0%

b. 100.0%

c. 37.5%

d. 62.5%

4. Banwood Company has the following information for 20×1:

Selling price …………………………………………………………………….$150 per unit

Variable production costs …………………………………$40 per unit produced

Variable selling and admin. expenses …………………………$16 per unit sold

Fixed production costs ………………………………………………………….$200,000

Fixed selling and admin. expenses ………………………………………..$140,000

Units produced …………………………………………………………………10,000 units

Units sold ……………………………………………………………………………8,000 units

There were no beginning inventories.

What is the for Banwood using the absorption costing method?

a. $300,000

b. $180,000

c. $120,000

d. $80,000

5. Jasmine Company’s expected sales were 2,000 units at $100 per unit. During 20×1, it had actual sales of 1,800 units at $110 per unit. Budgeted variable costs were $60 per unit. What is Jasmine’s sales price variance?

a. $8,000 (U)

b. $20,000 (U)

c. $18,000 (F)

d. $2,000 (U)

Lean manufacturing and lean accounting promise significant benefits to an

Lean manufacturing and lean accounting promise significant benefits to an organization. Yet, the initial effect of lean manufacturing is often an initial drop in profits reported on the financial statements.

Required:

1. Go to www.journalofaccountancy.com and search for articles on lean accounting. Using articles found in this search, answer the following questions:

a. Why do standard-costing practices no longer make sense for a lean organization?

b. If standard costing is replaced with a lean accounting approach, what problems might a firm then face?

2. Go to www.leanadvisors.com and identify companies that have implemented lean manufacturing. Answer the following questions:

a. What kind of benefits did manufacturing companies experience from implementing lean manufacturing?

b. Can lean approaches be applied to service organizations? If yes, describe a specific implementation for a service organization and the resulting benefits.

Capital budgeting for environmental projects offers an interesting area for

Capital budgeting for environmental projects offers an interesting area for additional study. The Environmental Protection Agency (EPA) has partnered with Tellus Institute (www. tellus.org) to further its ongoing interest in environmental cost management. Much of the the information relating to the U.S. EPA environmental accounting project can be found in the archives at the EPA website (www.epa.gov). The EPA environmental accounting project dealt with such topics as environmental cost definitions, decisions using environmental costs, and Using the EPA and Tellus websites as well as the World Resources Institute (www.wri.org) and other resources that you can locate, answer the following questions.

Required:

1. What evidence exists that firms use the for screening and evaluating environmental projects? If payback is used, can you find the most common hurdle rate that firms use to justify environmental projects?

2. Are NPV and IRR used for environmental project approval? Can you find out what the hurdle rate is for IRR? Do you think this hurdle rate is the cost of capital? If not, then discuss why a different required rate is used.

3. Do you think the approval thresholds for environmental projects tend to be higher, lower, or the same when compared to nonenvironmental projects? See if you can find any evidence to support your viewpoint. Why might the approval thresholds differ from those of nonenvironmental projects?

4. See if you can find a discussion on how for environmental projects may differ from that for conventional projects. List these differences.

1. Thomas Company is investing $10,000 in a project that

1. Thomas Company is investing $10,000 in a project that has a two-year life with an (IRR) of 10%. The project yields a net cash flow of $7,260 for Year 2.

The present value of $1 for one year at 10 percent is 0.90909

The present value of $1 for two years at 10 percent is 0.86245

What is the net cash flow produced by the project for Year 1? Round any calculations to the nearest dollar.

a. $2,740

b. $4,400

c. $4,000

d. $6,000

2. Assume that an investment of $100,000 produces a net cash flow of $60,000 per year for two years. The discount factor for year 1 is 0.89 and for year 2 is 0.80. The NPV is

a. $0

b. $6,800

c. $1,400

d. ($4,000)

1. Relevant information for direct labor is as follows:Actual hours

1. Relevant information for direct labor is as follows:

Actual hours worked…………840

Actual wage………………….$15.25

Standard hours allowed……820

Standard wage…………….$15.50

What was the direct labor efficiency variance?

a. $305 favorable

b. $305 unfavorable

c. $310 favorable

d. $310 unfavorable

2. Which of the following is the most likely explanation for an unfavorable materials usage variance and a favorable labor wage variance?

a. The new labor contract increased wages.

b. Higher quality materials were purchased, resulting in less waste.

c. The company experience labor turnover and newer, less experienced workers were hired.

d. A new supplier offered a lower price for materials.

Standard costing concepts can also be applied to services. Standard

Standard costing concepts can also be applied to services. Standard service costs are similar in concept to standard product costs. In the medical field, costs of caring for a patient have been increasing at a high rate for many years. Hospitals, for example, have often been paid on a retrospective basis. Essentially, they have been able to recover (from Medicare or their insurers) most of what they spent in treating a patient. Hospitals have thus had very little incentive to control costs. Some argue that retrospective payments encourage hospitals to acquire new and expensive technology and to offer more and more complex procedures. Prospective payments have emerged as an alternative to retrospective payments. Recently, a new type of prospective payment has emerged known as “per-case payment.”

Required:

Conduct an Internet search on per-case payments, and answer the following questions:

1. What is per-case payment?

2. Explain the following: “Per-case payment can become a viable payment scheme only if the hospital’s case mix can be properly measured.”

3. Discuss the merits of using diagnostic related groups (DRGs) to measure case mix.

4. Patient management categories (PMCs) have been suggested as an alternative approach to measuring case mix. Define PMCs, and discuss their merits.

5. Describe how the per-case payment approaches are forms of standard costing discussed in this chapter.

Supply chain management can be a major source of cost

Supply chain management can be a major source of cost savings for manufacturing and service firms. A firm can reduce its costs by understanding the linkages it has with its suppliers and customers. A major factor in assessing and understanding these linkages is the measurement of costs across the supply chain. Activity-based costing is now assuming a major role in this measurementrequirement. The role of ABC in supply chain management needs to be explored carefully.

Required:

Using Internet resources, answer the following questions. (In addition to a general search, you might try http://www.sas.com/, and check out its library resources.)

1. What is supply chain management?

2. Why has supply chain management become such an important topic?

3. Are businesses actually measuring and using supply chain costs?

4. Why is ABC considered important in supply chain management?

The objective of benchmarking is to improve performance by identifying,

The objective of benchmarking is to improve performance by identifying, understanding, and adopting outstanding best practices from others. If this process is carried out inside the organization, then it is called internal benchmarking. It is not uncommon for one facility within an organization to have better practices than another. Unfortunately, it is unusual for these better practices to naturally spread throughout the organization. The American Productivity & Quality Center (APQC) has conducted a study to understand what prevents the transfer of practices within a company. It also has made some recommendations concerning internal benchmarking. 

Required:

Access http://www.apqc.org and/or other Internet resources to see if you can answer the following:

1. Why is internal benchmarking an attractive option for an organization?

2. Why do companies want to engage in internal benchmarking?

3. What are some of the organizational obstacles relating to internal benchmarking?

4. Identify some recommendations that will make internal transfers of best practices more effective.

5. Internal benchmarking is a prominent example of what is called knowledge management or knowledge sharing. Use the APQC site and other Internet resources to define knowledge management (or knowledge sharing). Now, go to Knowledge Leader (http:// www.knowledgeleader.com), and describe its external knowledge-sharing service.

Search the Internet to find a complete description of a

Search the Internet to find a complete description of a company that has implemented the Balanced Scorecard. Possible sources include the following: Palladium Executive Strategy (http://www.thepalladiumgroup.com), SAP (http://www.sap.com), and http://www.sas.com. Once you have a company located, answer the following questions:

1. What is/are the strategy or strategies of the company?

2. What perspectives were used?

3. What are the strategic objectives?

4. What are the measures?

5. Did the company present a strategy map?

6. Were there any problems identified in implementation? If so, what were the problems?

7. What were the results? Did the Balanced Scorecard make a difference?

Many companies are now preparing corporate sustainability reports. Many such

Many companies are now preparing corporate sustainability reports. Many such reports are found at http://www.sustainability-reports.com. Other reports can be found at the websites of individual companies. For example, Baxter and 3M voluntarily prepare and publish reports on health, safety, and the environment. In 2000, Baxter expanded its environmental reporting to include a report on sustainability reporting. 3M has indicated that it intends to change its environmental reporting to better reflect the three elements of sustainability: environmental effects, economic effects, and social effects. To this end, 3M gathered data throughout 2001 and issued its first report on sustainability performance in 2003. You can find the most recent reports for these two companies at http://www.3m.com and http://www.baxter.com. Find the environmental reports of three companies, where at least one is a U.S. company. Examine the environmental reports of these three companies, including their reports on sustainability performance. Answer the following questions for each firm.

1. How much has been saved due to environmental actions? Which firm has saved the most?

2. Describe each firm’s packaging reduction efforts and the resulting savings. (Savings can be expressed in nonfinancial terms.)

3. Describe each firm’s recycling activities—for both their own products as well as the materials they receive from suppliers.

4. What kinds of environmental performance measures are being used by each firm? Can you relate these to the core strategic objectives discussed in the chapter?

5. Evaluate the sustainability performance of each firm. Which do you think is closer to the concept of sustainable development?

6. What reasons do they offer for providing environmental information?

7. How do the environmental reports compare? Which report did you like best? Why?