Essentials of Managerial Accounting: BMA #101
Syllabus
Week 1: Managerial Accounting & the Business Environment
Review of Financial Accounting
Fraud & Internal Controls
Week 2: Management Accounting & Cost Concepts
How to Buy a Business
Money Laundering, Hawala, Terrorism
Week 3: Cost Behavior: Analysis & Use
IFRS vs. GAAP
Fraud Case #2: HP & Autonomy
Week 4: Cost-Volume-Profit Analysis
Fraud Case #3: WorldCom
Capitalization Table
Week 5: Variable Costing
Fraud Case #4: Lehman Bros & Repo 105
Qs & Ks; Form 10 vs S-1; Reverse Mergers
Week 6: Cost Allocations
Fraud Case #5: Bernie Madoff & Ponzi Schemes
Week 7: Activity Based Costing
Fraud Case #6: Enron
Week 8: Profit Planning
Flexible Budgets & Performance Analysis
Fraud Case #7: Tyco & Kowalski
Week 9: Segment Reporting, Balanced Scorecard
Relevant Costs for Decision Making
Fraud Case #8: Imclone
Week 10: Capital Budgeting
Presentations as a CFO/IR Director
Fraud Case #9: Healthsouth
Review
Managerial Accounting: An Asian Perspective
Ray H. Garrison, Brigham Young University
Eric W. Noreen, University of Washington
Peter C. Brewer, Miami University
Cheng Nam Sang, Singapore Management University
Katherine Yuen, Singapore Management University
Video Links:
Chapter 1: The Need for Managerial Accounting Information
http://www.mhhe.com/business/accounting/garrison11e/content/additional_video/011pv.swf
Chapter 2: Classifying Costs for Decision Making
http://www.mhhe.com/business/accounting/garrison11e/content/additional_video/021pv.swf
Chapter 4: Cost-Volume-Profit Relationships
http://www.mhhe.com/business/accounting/garrison11e/content/additional_video/061pv.swf
Chapter 5: Absorption and Variable Costing
http://www.mhhe.com/business/accounting/garrison11e/content/additional_video/071pv.swf
Chapter 7: ABC Overview
http://www.mhhe.com/business/accounting/garrison11e/content/additional_video/081pv.swf
Chapter 10: The Budget Process
http://www.mhhe.com/business/accounting/garrison11e/content/additional_video/091pv.swf
Chapter 11: Flexible Budgets
http://www.mhhe.com/business/accounting/garrison11e/content/additional_video/111pv.swf
Chapter 12: Setting Standards
http://www.mhhe.com/business/accounting/garrison11e/content/additional_video/112pv.swf
Chapter 13: Segment Reporting
http://www.mhhe.com/business/accounting/garrison11e/content/additional_video/121pv.swf
Chapter 14: Relevant Costs for Decision Making
http://www.mhhe.com/business/accounting/garrison11e/content/additional_video/131pv.swf
Chapter 15: Capital Budgeting Decisions
http://www.mhhe.com/business/accounting/garrison11e/content/additional_video/141pv.swf
http://www.mhhe.com/business/accounting/garrison11e/content/additional_video/021pv.swf
Chapter 4: Cost-Volume-Profit Relationships
http://www.mhhe.com/business/accounting/garrison11e/content/additional_video/061pv.swf
Chapter 5: Absorption and Variable Costing
http://www.mhhe.com/business/accounting/garrison11e/content/additional_video/071pv.swf
Chapter 7: ABC Overview
http://www.mhhe.com/business/accounting/garrison11e/content/additional_video/081pv.swf
Chapter 10: The Budget Process
http://www.mhhe.com/business/accounting/garrison11e/content/additional_video/091pv.swf
Chapter 11: Flexible Budgets
http://www.mhhe.com/business/accounting/garrison11e/content/additional_video/111pv.swf
Chapter 12: Setting Standards
http://www.mhhe.com/business/accounting/garrison11e/content/additional_video/112pv.swf
Chapter 13: Segment Reporting
http://www.mhhe.com/business/accounting/garrison11e/content/additional_video/121pv.swf
Chapter 14: Relevant Costs for Decision Making
http://www.mhhe.com/business/accounting/garrison11e/content/additional_video/131pv.swf
Chapter 15: Capital Budgeting Decisions
http://www.mhhe.com/business/accounting/garrison11e/content/additional_video/141pv.swf
Internet Exercises:
Chapter 2
Internet Exercise #1
As you know, financial accounting differs in many ways from managerial accounting.
· The website of the Institute of Management Accountants (IMA) at http://www.imanet.org/ provides an overview of the Certified Management Accountant (CMA) designation. (See the Certification link on the home page.)
· The website of the American Institute of Public Accountants (AICPA) at http://www.aicpa.org provides an overview of the Certified Public Accountant (CPA) designation. (Access the overview at http://www.startheregoplaces.com/.
Review the information provided on these two websites. Then, write a brief paper (3 - 5 paragraphs) that:
1. Compares and contrasts these two professional designations (that is, the CMA and CPA).
2. Identifies the professional designation(s) (that is, the CMA, CPA, or both) that involves obtaining a license from the state in which the accountant practices.
3. Lists and briefly describes other certifications discussed on the AICPA and IMA sites.
Internet Exercise #2
The website of the Institute of Management Accountants (IMA) includes information about scholarships and awards for students. Search the site (see search box at top-left of page) and locate the information about the scholarships and awards that are sponsored by the IMA. Briefly describe the various scholarships and awards that are available.
Internet Exercise #3
Perform an Internet search using the term, opportunity costs. Select and read a case study or article from the results of your search. (Make sure that you do not select an instructor’s lecture notes or a class assignment from the results of your search.) Then, write a brief paper (3 – 5 paragraphs) that summarizes the case study or article. (Your paper should provide the appropriate citation. If necessary, you may wish to refer to the following website, which includes information about citations: http://www.cod.edu/library/research/citenet.htm.)
Chapter 3
Internet Exercise #1 T
he websites of selected companies appear below:
Biolea (http://www.biolea.gr).
Evian at (http://www.evian.com).
Gulf Craft Inc. (http://www.gulfcraftinc.com).
Ircon International Limited (http://www.irconinternational.com).
Review the information about the operations of each company that is provided on the company’s website. Write a brief summary (one paragraph) for each of the four companies that includes a:
1. A brief description of the operations of the company and
2. Two specific examples of possible:
A. Fixed costs,
B. Variable costs, and
C. Mixed costs.
Internet Exercise #2
Most retailers have a high proportion of variable costs (cost of goods sold) in their cost structures. Search the Securities and Exchange Commission’s EDGAR corporate filings data base at http://www.sec.gov/edgarhp.htm for the annual report of Form 10-K of a major retail merchant. Using information from each of the three years included in the company’s most recent Form 10-K, perform the following:
1. Calculate how the corporation’s costs have changed as sales have changed over the time period covered by the Form 10-K. (In particular, restate cost of goods sold as a percentage of sales.)
2. Calculate the other major cost categories as a percentage of sales over the time period covered by the Form 10-K.
Report the name of the company selected, summarize the financial results and calculations made related to sales and cost of goods sold for the three most recent years, and comment on any trends noted.
Internet Exercise #3
Perform an Internet search using the term, contribution margin. Select and read a case study or article from the results of your search. (Make sure that you do not select an instructor’s lecture notes or a class assignment from the results of your search.) Then, write a brief paper (3 – 5 paragraphs) that summarizes the case study or article. (Your paper should provide the appropriate citation. If necessary, you may wish to refer to the following website, which includes information about citations: http://www.cod.edu/library/research/citenet.htm.)
Chapter 4
Internet Exercise #1
Industry downsizing has been a major part of the corporate world; even government agencies are downsizing. GovernmentExecutive.com “covers the business of the federal government and its huge departments and agencies - dozens of which dwarf the largest institutions in the private sector” on its website. The website includes an article (accessible at http://www.govexec.com/reinvent/downsize/0795mgmt.htm) entitled “Industry's Downsizing Lessons,” dated July 1, 1997, from Government Executive Magazine, that emphasizes the effects of the reduction in operating leverage (that is, a reduction in fixed costs).
Read the article and answer the following questions:
1. Which industries have substantially reduced fixed cost commitments? Do you believe this reduction in costs has substantially impaired the ability of these industries to meet the needs of their customers?
2. The article also mentions an auto company which downsized and suffered negative consequences. If possible find out why this company suffered a downfall.
3. The public utility industry is listed as an industry with high fixed costs. The article notes that this industry has not had to undergo downsizing. Is this statement still true? (Note: how about Enron? How about the California Electricity Outages in 2001?)
4. The article lists the four lessons of operating leverage. The lessons revolve around the costs (or benefits) associated with downsizing. Review one (or two) of these lessons, and comment on the lesson(s).
5. Briefly discuss the articles' concern that excessive cutting of fixed costs (best described as the cost of preparedness) has (or could) substantially impair the country's ability to respond to "problems" in several different parts of the world at the same time. Does the group think that cuts in defense department spending are "riskier" than cuts in the private sector? Why?
Internet Exercise #2
Perform an Internet search using the term, break-even analysis. Select and read a case study or article from the results of your search. (Make sure that you do not select an instructor’s lecture notes or a class assignment from the results of your search.) Then, write a brief paper (3 – 5 paragraphs) that summarizes the case study or article. (Your paper should provide the appropriate citation. If necessary, you may wish to refer to the following website, which includes information about citations: http://www.cod.edu/library/research/citenet.htm.)
Internet Exercise #3
Perform an Internet search using the term, degree of operating leverage. Select and read a case study or article from the results of your search. (Make sure that you do not select an instructor’s lecture notes or a class assignment from the results of your search.) Then, write a brief paper (3 – 5 paragraphs) that summarizes the case study or article. (Your paper should provide the appropriate citation. If necessary, you may wish to refer to the following website, which includes information about citations: http://www.cod.edu/library/research/citenet.htm.)
Chapter 5
Internet Exercise #1
Perform an Internet search using the term, variable costing, and locate an article (less than one year old) from the results of your search. (Make sure that you do not select an instructor’s lecture notes or a class assignment from the results of your search.) After reading the article, write a brief paper (3 – 5 paragraphs) that summarizes and comments on the article. (Your critique should provide the appropriate citation for the article. If necessary, you may wish to refer to the following website, which includes information about citations: http://www.cod.edu/library/research/citenet.htm.)
Internet Exercise #2
Perform an Internet search using the term, absorption costing, and locate an article (less than one year old) from the results of your search. (Make sure that you do not select an instructor’s lecture notes or a class assignment from the results of your search.) After reading the article, write a brief paper (3 – 5 paragraphs) that summarizes and comments on the article. (Your critique should provide the appropriate citation for the article. If necessary, you may wish to refer to the following website, which includes information about citations: http://www.cod.edu/library/research/citenet.htm.)
Chapter 7
Internet Exercise #1
A consulting company that provides software and services relating to business intelligence and analytics has a library of customer success stories on its website at http://www.sas.com/success/indexByTopic.html#1000.1001.0000. Select and read one of the success stores relating to Activity-Based Management. Then, write a brief paper (3 - 5 paragraphs) that summarizes the success story.
Internet Exercise #2
A company that provides management consulting, professional consulting, and software solutions consulting services to the public and private sectors has a library of customer success stories on its website at http://www.aimamc.com/staci/reference_articles.htm.. Select and read one of the success stores relating to Activity-Based Costing. Then, write a brief paper (3 - 5 paragraphs) that summarizes the success story.
Internet Exercise #3
Perform an Internet search using the term, activity-based costing. Select and read a case study or article from the results of your search. (Make sure that you do not select an instructor’s lecture notes or a class assignment from the results of your search.) Then, write a brief paper (3 – 5 paragraphs) that summarizes the case study or article. (Your paper should provide the appropriate citation. If necessary, you may wish to refer to the following website, which includes information about citations: http://www.cod.edu/library/research/citenet.htm.)
Chapter 8
Internet Exercise #1
Bechtel Corporation and Boeing Corporation both use job-order costing. The Bechtel web site, http://www.bechtel.com, and the Boeing web site, http://www.boeing.com, contain information about the business operations of each company. Review the websites of both companies, consider the related discussion of the types of companies in Chapter 2 that would tend to use job-order costing, and write a brief paper (2 – 3 paragraphs) that supports the use of job-order costing by each of these two companies.
Internet Exercise #2
Fortune Magazine publishes the FSB 100, a list of America's 100 Fastest-Growing Small Companies. Access the FSB 100 at http://www.fortune100s.com/fortune100/. Identify three companies on the FSB 100 that would most likely use job-order costing systems. Write a brief summary (one paragraph) for each of the three companies chosen. Each summary should include the company name, its website address, a brief description of the company’s business, and the reasons why the company would most likely use a job-order costing system.
Internet Exercise #3
Perform an Internet search using the term, job-order costing. Select and read a case study or article from the results of your search. (Make sure that you do not select an instructor’s lecture notes or a class assignment from the results of your search.) Then, write a brief paper (3 – 5 paragraphs) that summarizes the case study or article. (Your paper should provide the appropriate citation. If necessary, you may wish to refer to the following website, which includes information about citations: http://www.cod.edu/library/research/citenet.htm.)
Chapter 9
Internet Exercise #1
The websites of selected companies appear below:
Biolea (http://www.biolea.gr).
Evian at (http://www.evian.com).
Gulf Craft Inc. (http://www.gulfcraftinc.com).
Ircon International Limited (http://www.irconinternational.com).
Review the information on each company’s website about its operations and decide whether each company would be more likely to use a job-order costing or process costing system. Write a brief summary (one paragraph) about each of the four companies. The summary for each should include the name of the company, a brief description of its business, and the reasons why the company would most likely use the costing system identified.
Internet Exercise #2 Fortune Magazine publishes the FSB 100, a list of America's 100 Fastest-Growing Small Companies. Access the FSB 100 at http://www.fortune100s.com/fortune100/. Identify three companies on the Fortune 500 that would most likely use job-order costing systems. Write a brief summary (one paragraph) for each of the three companies that includes the name, website address, a brief description of its business, and sets forth the reasons why the company would most likely use a process costing system.
Internet Exercise #3
Perform an Internet search using the term, process costing. Select and read a case study or article from the results of your search. (Make sure that you do not select an instructor’s lecture notes or a class assignment from the results of your search.) Then, write a brief paper (3 – 5 paragraphs) that summarizes the case study or article. (Your paper should provide the appropriate citation. If necessary, you may wish to refer to the following website, which includes information about citations: http://www.cod.edu/library/research/citenet.htm.)
Chapter 10
Internet Exercise #1
The State of Rhode Island publishes its budget and the supporting information at www.budget.state.ri.us/index.htm. Access the budget and answer the following:
1. What are the duties of the budget office? (Hint: Use the Primer link.)
2. What are the six governmental functions listed in the budget? For the most recent year, calculate the percentage of the total budget allocated to each function. If possible, compare the most recent percentage breakdown with that of the prior year.
3. What are the major sources of Rhode Island's revenues? Calculate the percentage which each category represents of the total revenues.
4. What is the accounting basis used in the preparation of the budget? (Hint: Use the Primer link and scroll down until you see the Budget Basis section.)
5. The budget mentions four categories of program performance measures. List them, and briefly describe how they are used in Rhode Island. (Hint: Use the Primer link and scroll down until you see the Program Performance Measures section.)
6. What did you learn from reviewing the most recent budget of the State of Rhode Island?
Internet Exercise #2
Perform an Internet search using the term, self-imposed budget. Select and read a case study or article from the results of your search. (Make sure that you do not select an instructor’s lecture notes or a class assignment from the results of your search.) Then, write a brief paper (3 – 5 paragraphs) that summarizes the case study or article. (Your paper should provide the appropriate citation. If necessary, you may wish to refer to the following website, which includes information about citations: http://www.cod.edu/library/research/citenet.htm.)
Internet Exercise #3
Perform an Internet search using the term, responsibility accounting. Select and read a case study or article from the results of your search. (Make sure that you do not select an instructor’s lecture notes or a class assignment from the results of your search.) Then, write a brief paper (3 – 5 paragraphs) that summarizes the case study or article. (Your paper should provide the appropriate citation. If necessary, you may wish to refer to the following website, which includes information about citations: http://www.cod.edu/library/research/citenet.htm.)
Chapter 11
Internet Exercise #1
Perform an Internet search using the term, flexible budget. Select and read a case study or article from the results of your search. (Make sure that you do not select an instructor’s lecture notes or a class assignment from the results of your search.) Then, write a brief paper (3 – 5 paragraphs) that summarizes the case study or article. (Your paper should provide the appropriate citation. If necessary, you may wish to refer to the following website, which includes information about citations: http://www.cod.edu/library/research/citenet.htm.)
Internet Exercise #2
Perform an Internet search using the term, reducing overhead costs. Select and read a case study or article from the results of your search. (Make sure that you do not select an instructor’s lecture notes or a class assignment from the results of your search.) Then, write a brief paper (3 – 5 paragraphs) that summarizes the case study or article. (Your paper should provide the appropriate citation. If necessary, you may wish to refer to the following website, which includes information about citations: http://www.cod.edu/library/research/citenet.htm.)
Chapter 12
Internet Exercise #1
Perform an Internet search using the term, standard cost system. Select and read a case study or article from the results of your search. (Make sure that you do not select an instructor’s lecture notes or a class assignment from the results of your search.) Then, write a brief paper (3 – 5 paragraphs) that summarizes the case study or article. (Your paper should provide the appropriate citation. If necessary, you may wish to refer to the following website, which includes information about citations: http://www.cod.edu/library/research/citenet.htm.)
Internet Exercise #2
Perform an Internet search using the term, ideal standards. Select and read a case study or article from the results of your search. (Make sure that you do not select an instructor’s lecture notes or a class assignment from the results of your search.) Then, write a brief paper (3 – 5 paragraphs) that summarizes the case study or article. (Your paper should provide the appropriate citation. If necessary, you may wish to refer to the following website, which includes information about citations: http://www.cod.edu/library/research/citenet.htm.)
Internet Exercise #3
Perform an Internet search using the term, labor efficiency. Select and read a case study or article from the results of your search. (Make sure that you do not select an instructor’s lecture notes or a class assignment from the results of your search.) Then, write a brief paper (3 – 5 paragraphs) that summarizes the case study or article. (Your paper should provide the appropriate citation. If necessary, you may wish to refer to the following website, which includes information about citations: http://www.cod.edu/library/research/citenet.htm.)
Chapter 13
Internet Exercise #1
As you know, a company’s return on investment (or ROI) is the product of its margin and turnover. Financial analysts often compute and analyze a company’s ROI by obtaining the required data from its annual report. Unfortunately, the analyst is usually unable to determine the precise amounts of the company’s operating and nonoperating assets. Although this obstacle is a limitation, the information is still useful to some extent.
Search the Securities and Exchange Commission’s EDGAR corporate filings data base at http://www.sec.gov/edgarhp.htm for the annual report on Form 10-K of each of the two companies listed below.
1. Google Inc. (choose the one with the Standard Industrial Code (SIC) of 7370)
2. Yahoo Inc. (choose the one with the Standard Industrial Code (SIC) of 7373)
Using data from the two most recent annual reports of these two companies, compute the margin, turnover, and ROI for each company for the two most recent fiscal years. After reviewing the ratios, briefly discuss each company’s performance, and then compare and contrast the performances of the two companies.
Internet Exercise #2 A company that provides training, certification and consulting services to commercial, government, and non-profit organizations in applying best practices in balanced scorecard (BSC), strategic performance management and measurement, and transformation and change management has a customer success story on its website at http://www.balancedscorecard.org/Home/tabid/36/Default.aspx. Click on the Award for Excellence link (on the right-side of the page) and read the story about Mecklenburg County, which successfully transformed the county government and positioned it for tough times. Then, write a brief paper (3 - 5 paragraphs) that summarizes the success story.
Internet Exercise #3 Perform an Internet search using the term, economic value added. Select and read a case study or article from the results of your search. (Make sure that you do not select an instructor’s lecture notes or a class assignment from the results of your search.) Then, write a brief paper (3 – 5 paragraphs) that summarizes the case study or article. (Your paper should provide the appropriate citation. If necessary, you may wish to refer to the following website, which includes information about citations: http://www.cod.edu/library/research/citenet.htm.)
Chapter 14
Internet Exercise #1
Perform an Internet search using the term, relevant costs. Select and read a case study or article from the results of your search. (Make sure that you do not select an instructor’s lecture notes or a class assignment from the results of your search.) Then, write a brief paper (3 – 5 paragraphs) that summarizes the case study or article. (Your paper should provide the appropriate citation. If necessary, you may wish to refer to the following website, which includes information about citations: http://www.cod.edu/library/research/citenet.htm.)
Internet Exercise #2
Perform an Internet search using the term, make or buy decision. Select and read a case study or article from the results of your search. (Make sure that you do not select an instructor’s lecture notes or a class assignment from the results of your search.) Then, write a brief paper (3 – 5 paragraphs) that summarizes the case study or article. (Your paper should provide the appropriate citation. If necessary, you may wish to refer to the following website, which includes information about citations: http://www.cod.edu/library/research/citenet.htm.)
Internet Exercise #3
Perform an Internet search using the term, constrained resouces. Select and read a case study or article from the results of your search. (Make sure that you do not select an instructor’s lecture notes or a class assignment from the results of your search.) Then, write a brief paper (3 – 5 paragraphs) that summarizes the case study or article. (Your paper should provide the appropriate citation. If necessary, you may wish to refer to the following website, which includes information about citations: http://www.cod.edu/library/research/citenet.htm.)
Chapter 15
Note regarding the In Business feature:
“Trading In That Old Car” feature The "In Business" feature in Chapter 14 entitled "Trading in That Old Car?" is based an article appearing in Consumer Reports in August 2000. The feature sets forth information about the costs of keeping an existing car or replacing it. After noting the Consumer Reports is ordinarily extremely careful in its analysis, the feature indicates that one financial item that would clearly differ substantially between the alternatives was omitted and asks you to identify that item. The item that seems to have been omitted in the analysis is the current trade-in value of the old car. The current trade-in value of the old car would be relevant to the decision since the purchase price of the new car would be reduced by the trade-in value of the old car.
Internet Exercise #1
Go to the Flowers Foods website at http://flowersfoods.com and click on the Virtual Factory Tour link (accessible from the Company Info pull-down menu). Take the tour and learn about the process used to make the company’s oatmeal cookies. After taking the tour, answer the following questions:
1. What capital investments has the company made in its bakery? Identify and briefly describe each.
2. Which parts of the production process probably have been automated?
3. Which parts of the production process are still labor-intensive?
Internet Exercise #2
Perform an Internet search using the term, capital budgeting. Select and read a case study or article from the results of your search. (Make sure that you do not select an instructor’s lecture notes or a class assignment from the results of your search.) Then, write a brief paper (3 – 5 paragraphs) that summarizes the case study or article. (Your paper should provide the appropriate citation. If necessary, you may wish to refer to the following website, which includes information about citations: http://www.cod.edu/library/research/citenet.htm.)
Internet Exercise #1
As you know, financial accounting differs in many ways from managerial accounting.
· The website of the Institute of Management Accountants (IMA) at http://www.imanet.org/ provides an overview of the Certified Management Accountant (CMA) designation. (See the Certification link on the home page.)
· The website of the American Institute of Public Accountants (AICPA) at http://www.aicpa.org provides an overview of the Certified Public Accountant (CPA) designation. (Access the overview at http://www.startheregoplaces.com/.
Review the information provided on these two websites. Then, write a brief paper (3 - 5 paragraphs) that:
1. Compares and contrasts these two professional designations (that is, the CMA and CPA).
2. Identifies the professional designation(s) (that is, the CMA, CPA, or both) that involves obtaining a license from the state in which the accountant practices.
3. Lists and briefly describes other certifications discussed on the AICPA and IMA sites.
Internet Exercise #2
The website of the Institute of Management Accountants (IMA) includes information about scholarships and awards for students. Search the site (see search box at top-left of page) and locate the information about the scholarships and awards that are sponsored by the IMA. Briefly describe the various scholarships and awards that are available.
Internet Exercise #3
Perform an Internet search using the term, opportunity costs. Select and read a case study or article from the results of your search. (Make sure that you do not select an instructor’s lecture notes or a class assignment from the results of your search.) Then, write a brief paper (3 – 5 paragraphs) that summarizes the case study or article. (Your paper should provide the appropriate citation. If necessary, you may wish to refer to the following website, which includes information about citations: http://www.cod.edu/library/research/citenet.htm.)
Chapter 3
Internet Exercise #1 T
he websites of selected companies appear below:
Biolea (http://www.biolea.gr).
Evian at (http://www.evian.com).
Gulf Craft Inc. (http://www.gulfcraftinc.com).
Ircon International Limited (http://www.irconinternational.com).
Review the information about the operations of each company that is provided on the company’s website. Write a brief summary (one paragraph) for each of the four companies that includes a:
1. A brief description of the operations of the company and
2. Two specific examples of possible:
A. Fixed costs,
B. Variable costs, and
C. Mixed costs.
Internet Exercise #2
Most retailers have a high proportion of variable costs (cost of goods sold) in their cost structures. Search the Securities and Exchange Commission’s EDGAR corporate filings data base at http://www.sec.gov/edgarhp.htm for the annual report of Form 10-K of a major retail merchant. Using information from each of the three years included in the company’s most recent Form 10-K, perform the following:
1. Calculate how the corporation’s costs have changed as sales have changed over the time period covered by the Form 10-K. (In particular, restate cost of goods sold as a percentage of sales.)
2. Calculate the other major cost categories as a percentage of sales over the time period covered by the Form 10-K.
Report the name of the company selected, summarize the financial results and calculations made related to sales and cost of goods sold for the three most recent years, and comment on any trends noted.
Internet Exercise #3
Perform an Internet search using the term, contribution margin. Select and read a case study or article from the results of your search. (Make sure that you do not select an instructor’s lecture notes or a class assignment from the results of your search.) Then, write a brief paper (3 – 5 paragraphs) that summarizes the case study or article. (Your paper should provide the appropriate citation. If necessary, you may wish to refer to the following website, which includes information about citations: http://www.cod.edu/library/research/citenet.htm.)
Chapter 4
Internet Exercise #1
Industry downsizing has been a major part of the corporate world; even government agencies are downsizing. GovernmentExecutive.com “covers the business of the federal government and its huge departments and agencies - dozens of which dwarf the largest institutions in the private sector” on its website. The website includes an article (accessible at http://www.govexec.com/reinvent/downsize/0795mgmt.htm) entitled “Industry's Downsizing Lessons,” dated July 1, 1997, from Government Executive Magazine, that emphasizes the effects of the reduction in operating leverage (that is, a reduction in fixed costs).
Read the article and answer the following questions:
1. Which industries have substantially reduced fixed cost commitments? Do you believe this reduction in costs has substantially impaired the ability of these industries to meet the needs of their customers?
2. The article also mentions an auto company which downsized and suffered negative consequences. If possible find out why this company suffered a downfall.
3. The public utility industry is listed as an industry with high fixed costs. The article notes that this industry has not had to undergo downsizing. Is this statement still true? (Note: how about Enron? How about the California Electricity Outages in 2001?)
4. The article lists the four lessons of operating leverage. The lessons revolve around the costs (or benefits) associated with downsizing. Review one (or two) of these lessons, and comment on the lesson(s).
5. Briefly discuss the articles' concern that excessive cutting of fixed costs (best described as the cost of preparedness) has (or could) substantially impair the country's ability to respond to "problems" in several different parts of the world at the same time. Does the group think that cuts in defense department spending are "riskier" than cuts in the private sector? Why?
Internet Exercise #2
Perform an Internet search using the term, break-even analysis. Select and read a case study or article from the results of your search. (Make sure that you do not select an instructor’s lecture notes or a class assignment from the results of your search.) Then, write a brief paper (3 – 5 paragraphs) that summarizes the case study or article. (Your paper should provide the appropriate citation. If necessary, you may wish to refer to the following website, which includes information about citations: http://www.cod.edu/library/research/citenet.htm.)
Internet Exercise #3
Perform an Internet search using the term, degree of operating leverage. Select and read a case study or article from the results of your search. (Make sure that you do not select an instructor’s lecture notes or a class assignment from the results of your search.) Then, write a brief paper (3 – 5 paragraphs) that summarizes the case study or article. (Your paper should provide the appropriate citation. If necessary, you may wish to refer to the following website, which includes information about citations: http://www.cod.edu/library/research/citenet.htm.)
Chapter 5
Internet Exercise #1
Perform an Internet search using the term, variable costing, and locate an article (less than one year old) from the results of your search. (Make sure that you do not select an instructor’s lecture notes or a class assignment from the results of your search.) After reading the article, write a brief paper (3 – 5 paragraphs) that summarizes and comments on the article. (Your critique should provide the appropriate citation for the article. If necessary, you may wish to refer to the following website, which includes information about citations: http://www.cod.edu/library/research/citenet.htm.)
Internet Exercise #2
Perform an Internet search using the term, absorption costing, and locate an article (less than one year old) from the results of your search. (Make sure that you do not select an instructor’s lecture notes or a class assignment from the results of your search.) After reading the article, write a brief paper (3 – 5 paragraphs) that summarizes and comments on the article. (Your critique should provide the appropriate citation for the article. If necessary, you may wish to refer to the following website, which includes information about citations: http://www.cod.edu/library/research/citenet.htm.)
Chapter 7
Internet Exercise #1
A consulting company that provides software and services relating to business intelligence and analytics has a library of customer success stories on its website at http://www.sas.com/success/indexByTopic.html#1000.1001.0000. Select and read one of the success stores relating to Activity-Based Management. Then, write a brief paper (3 - 5 paragraphs) that summarizes the success story.
Internet Exercise #2
A company that provides management consulting, professional consulting, and software solutions consulting services to the public and private sectors has a library of customer success stories on its website at http://www.aimamc.com/staci/reference_articles.htm.. Select and read one of the success stores relating to Activity-Based Costing. Then, write a brief paper (3 - 5 paragraphs) that summarizes the success story.
Internet Exercise #3
Perform an Internet search using the term, activity-based costing. Select and read a case study or article from the results of your search. (Make sure that you do not select an instructor’s lecture notes or a class assignment from the results of your search.) Then, write a brief paper (3 – 5 paragraphs) that summarizes the case study or article. (Your paper should provide the appropriate citation. If necessary, you may wish to refer to the following website, which includes information about citations: http://www.cod.edu/library/research/citenet.htm.)
Chapter 8
Internet Exercise #1
Bechtel Corporation and Boeing Corporation both use job-order costing. The Bechtel web site, http://www.bechtel.com, and the Boeing web site, http://www.boeing.com, contain information about the business operations of each company. Review the websites of both companies, consider the related discussion of the types of companies in Chapter 2 that would tend to use job-order costing, and write a brief paper (2 – 3 paragraphs) that supports the use of job-order costing by each of these two companies.
Internet Exercise #2
Fortune Magazine publishes the FSB 100, a list of America's 100 Fastest-Growing Small Companies. Access the FSB 100 at http://www.fortune100s.com/fortune100/. Identify three companies on the FSB 100 that would most likely use job-order costing systems. Write a brief summary (one paragraph) for each of the three companies chosen. Each summary should include the company name, its website address, a brief description of the company’s business, and the reasons why the company would most likely use a job-order costing system.
Internet Exercise #3
Perform an Internet search using the term, job-order costing. Select and read a case study or article from the results of your search. (Make sure that you do not select an instructor’s lecture notes or a class assignment from the results of your search.) Then, write a brief paper (3 – 5 paragraphs) that summarizes the case study or article. (Your paper should provide the appropriate citation. If necessary, you may wish to refer to the following website, which includes information about citations: http://www.cod.edu/library/research/citenet.htm.)
Chapter 9
Internet Exercise #1
The websites of selected companies appear below:
Biolea (http://www.biolea.gr).
Evian at (http://www.evian.com).
Gulf Craft Inc. (http://www.gulfcraftinc.com).
Ircon International Limited (http://www.irconinternational.com).
Review the information on each company’s website about its operations and decide whether each company would be more likely to use a job-order costing or process costing system. Write a brief summary (one paragraph) about each of the four companies. The summary for each should include the name of the company, a brief description of its business, and the reasons why the company would most likely use the costing system identified.
Internet Exercise #2 Fortune Magazine publishes the FSB 100, a list of America's 100 Fastest-Growing Small Companies. Access the FSB 100 at http://www.fortune100s.com/fortune100/. Identify three companies on the Fortune 500 that would most likely use job-order costing systems. Write a brief summary (one paragraph) for each of the three companies that includes the name, website address, a brief description of its business, and sets forth the reasons why the company would most likely use a process costing system.
Internet Exercise #3
Perform an Internet search using the term, process costing. Select and read a case study or article from the results of your search. (Make sure that you do not select an instructor’s lecture notes or a class assignment from the results of your search.) Then, write a brief paper (3 – 5 paragraphs) that summarizes the case study or article. (Your paper should provide the appropriate citation. If necessary, you may wish to refer to the following website, which includes information about citations: http://www.cod.edu/library/research/citenet.htm.)
Chapter 10
Internet Exercise #1
The State of Rhode Island publishes its budget and the supporting information at www.budget.state.ri.us/index.htm. Access the budget and answer the following:
1. What are the duties of the budget office? (Hint: Use the Primer link.)
2. What are the six governmental functions listed in the budget? For the most recent year, calculate the percentage of the total budget allocated to each function. If possible, compare the most recent percentage breakdown with that of the prior year.
3. What are the major sources of Rhode Island's revenues? Calculate the percentage which each category represents of the total revenues.
4. What is the accounting basis used in the preparation of the budget? (Hint: Use the Primer link and scroll down until you see the Budget Basis section.)
5. The budget mentions four categories of program performance measures. List them, and briefly describe how they are used in Rhode Island. (Hint: Use the Primer link and scroll down until you see the Program Performance Measures section.)
6. What did you learn from reviewing the most recent budget of the State of Rhode Island?
Internet Exercise #2
Perform an Internet search using the term, self-imposed budget. Select and read a case study or article from the results of your search. (Make sure that you do not select an instructor’s lecture notes or a class assignment from the results of your search.) Then, write a brief paper (3 – 5 paragraphs) that summarizes the case study or article. (Your paper should provide the appropriate citation. If necessary, you may wish to refer to the following website, which includes information about citations: http://www.cod.edu/library/research/citenet.htm.)
Internet Exercise #3
Perform an Internet search using the term, responsibility accounting. Select and read a case study or article from the results of your search. (Make sure that you do not select an instructor’s lecture notes or a class assignment from the results of your search.) Then, write a brief paper (3 – 5 paragraphs) that summarizes the case study or article. (Your paper should provide the appropriate citation. If necessary, you may wish to refer to the following website, which includes information about citations: http://www.cod.edu/library/research/citenet.htm.)
Chapter 11
Internet Exercise #1
Perform an Internet search using the term, flexible budget. Select and read a case study or article from the results of your search. (Make sure that you do not select an instructor’s lecture notes or a class assignment from the results of your search.) Then, write a brief paper (3 – 5 paragraphs) that summarizes the case study or article. (Your paper should provide the appropriate citation. If necessary, you may wish to refer to the following website, which includes information about citations: http://www.cod.edu/library/research/citenet.htm.)
Internet Exercise #2
Perform an Internet search using the term, reducing overhead costs. Select and read a case study or article from the results of your search. (Make sure that you do not select an instructor’s lecture notes or a class assignment from the results of your search.) Then, write a brief paper (3 – 5 paragraphs) that summarizes the case study or article. (Your paper should provide the appropriate citation. If necessary, you may wish to refer to the following website, which includes information about citations: http://www.cod.edu/library/research/citenet.htm.)
Chapter 12
Internet Exercise #1
Perform an Internet search using the term, standard cost system. Select and read a case study or article from the results of your search. (Make sure that you do not select an instructor’s lecture notes or a class assignment from the results of your search.) Then, write a brief paper (3 – 5 paragraphs) that summarizes the case study or article. (Your paper should provide the appropriate citation. If necessary, you may wish to refer to the following website, which includes information about citations: http://www.cod.edu/library/research/citenet.htm.)
Internet Exercise #2
Perform an Internet search using the term, ideal standards. Select and read a case study or article from the results of your search. (Make sure that you do not select an instructor’s lecture notes or a class assignment from the results of your search.) Then, write a brief paper (3 – 5 paragraphs) that summarizes the case study or article. (Your paper should provide the appropriate citation. If necessary, you may wish to refer to the following website, which includes information about citations: http://www.cod.edu/library/research/citenet.htm.)
Internet Exercise #3
Perform an Internet search using the term, labor efficiency. Select and read a case study or article from the results of your search. (Make sure that you do not select an instructor’s lecture notes or a class assignment from the results of your search.) Then, write a brief paper (3 – 5 paragraphs) that summarizes the case study or article. (Your paper should provide the appropriate citation. If necessary, you may wish to refer to the following website, which includes information about citations: http://www.cod.edu/library/research/citenet.htm.)
Chapter 13
Internet Exercise #1
As you know, a company’s return on investment (or ROI) is the product of its margin and turnover. Financial analysts often compute and analyze a company’s ROI by obtaining the required data from its annual report. Unfortunately, the analyst is usually unable to determine the precise amounts of the company’s operating and nonoperating assets. Although this obstacle is a limitation, the information is still useful to some extent.
Search the Securities and Exchange Commission’s EDGAR corporate filings data base at http://www.sec.gov/edgarhp.htm for the annual report on Form 10-K of each of the two companies listed below.
1. Google Inc. (choose the one with the Standard Industrial Code (SIC) of 7370)
2. Yahoo Inc. (choose the one with the Standard Industrial Code (SIC) of 7373)
Using data from the two most recent annual reports of these two companies, compute the margin, turnover, and ROI for each company for the two most recent fiscal years. After reviewing the ratios, briefly discuss each company’s performance, and then compare and contrast the performances of the two companies.
Internet Exercise #2 A company that provides training, certification and consulting services to commercial, government, and non-profit organizations in applying best practices in balanced scorecard (BSC), strategic performance management and measurement, and transformation and change management has a customer success story on its website at http://www.balancedscorecard.org/Home/tabid/36/Default.aspx. Click on the Award for Excellence link (on the right-side of the page) and read the story about Mecklenburg County, which successfully transformed the county government and positioned it for tough times. Then, write a brief paper (3 - 5 paragraphs) that summarizes the success story.
Internet Exercise #3 Perform an Internet search using the term, economic value added. Select and read a case study or article from the results of your search. (Make sure that you do not select an instructor’s lecture notes or a class assignment from the results of your search.) Then, write a brief paper (3 – 5 paragraphs) that summarizes the case study or article. (Your paper should provide the appropriate citation. If necessary, you may wish to refer to the following website, which includes information about citations: http://www.cod.edu/library/research/citenet.htm.)
Chapter 14
Internet Exercise #1
Perform an Internet search using the term, relevant costs. Select and read a case study or article from the results of your search. (Make sure that you do not select an instructor’s lecture notes or a class assignment from the results of your search.) Then, write a brief paper (3 – 5 paragraphs) that summarizes the case study or article. (Your paper should provide the appropriate citation. If necessary, you may wish to refer to the following website, which includes information about citations: http://www.cod.edu/library/research/citenet.htm.)
Internet Exercise #2
Perform an Internet search using the term, make or buy decision. Select and read a case study or article from the results of your search. (Make sure that you do not select an instructor’s lecture notes or a class assignment from the results of your search.) Then, write a brief paper (3 – 5 paragraphs) that summarizes the case study or article. (Your paper should provide the appropriate citation. If necessary, you may wish to refer to the following website, which includes information about citations: http://www.cod.edu/library/research/citenet.htm.)
Internet Exercise #3
Perform an Internet search using the term, constrained resouces. Select and read a case study or article from the results of your search. (Make sure that you do not select an instructor’s lecture notes or a class assignment from the results of your search.) Then, write a brief paper (3 – 5 paragraphs) that summarizes the case study or article. (Your paper should provide the appropriate citation. If necessary, you may wish to refer to the following website, which includes information about citations: http://www.cod.edu/library/research/citenet.htm.)
Chapter 15
Note regarding the In Business feature:
“Trading In That Old Car” feature The "In Business" feature in Chapter 14 entitled "Trading in That Old Car?" is based an article appearing in Consumer Reports in August 2000. The feature sets forth information about the costs of keeping an existing car or replacing it. After noting the Consumer Reports is ordinarily extremely careful in its analysis, the feature indicates that one financial item that would clearly differ substantially between the alternatives was omitted and asks you to identify that item. The item that seems to have been omitted in the analysis is the current trade-in value of the old car. The current trade-in value of the old car would be relevant to the decision since the purchase price of the new car would be reduced by the trade-in value of the old car.
Internet Exercise #1
Go to the Flowers Foods website at http://flowersfoods.com and click on the Virtual Factory Tour link (accessible from the Company Info pull-down menu). Take the tour and learn about the process used to make the company’s oatmeal cookies. After taking the tour, answer the following questions:
1. What capital investments has the company made in its bakery? Identify and briefly describe each.
2. Which parts of the production process probably have been automated?
3. Which parts of the production process are still labor-intensive?
Internet Exercise #2
Perform an Internet search using the term, capital budgeting. Select and read a case study or article from the results of your search. (Make sure that you do not select an instructor’s lecture notes or a class assignment from the results of your search.) Then, write a brief paper (3 – 5 paragraphs) that summarizes the case study or article. (Your paper should provide the appropriate citation. If necessary, you may wish to refer to the following website, which includes information about citations: http://www.cod.edu/library/research/citenet.htm.)
