Judgement Case 9-1 – Inventory costs; lower of cost or market; retail inventory method Requirement 1 Theoretically, Hudson should account for the warehousing costs related to its wholesale inventories as a part of inventory. All of the necessary costs associated with preparing, and in this case storing, items for sale are to be included in inventory. The key here is that the warehousing cost is related to a particular set of items and for that reason it is important to account for the warehousing cost with the inventory in order to satisfy the matching principle. The matching principle “requires that revenues and any related expenses be recognized together in the same period” (The matching principle). By following the matching principle all of the costs associated with a particular product, not just its wholesale price, is expensed when the item is sold.
Total revenue equals price time’s quantity. It reflects total receipts obtained from selling a certain output or quantity of goods. Total costs is different it’s equal to fixed costs and variable costs. Fixed costs include building and equipment costs, regulatory fees and salaried personnel and remain stable, especially in the short term, but may vary with a longer time horizon. As the time horizon increases, variable costs rely less on existing factors and restrictions and therefore will begin behaving differently which will in turn affect the cost of production (Wright, 2007).
(p. 204) The pay-mix component in which benefits is likely to be largest is ______________. A. work-life balance b. security or commitment c. performance driven d. market watch 10. (p. 207) Which of the following is not a consequence of level of competitiveness of total compensation? a. increase probability of union-free status B. increase organization profitability c. reduce voluntary turnover
The traditional costing method lumps all overhead costs into a single pool and allocates those costs across all products produced based on one of the three cost drivers (direct labor hours, number of units produced, or machine hours). This method of costing does not take into account the differences between products when allocating overhead costs, like a product’s custom requirements or production complexity, so the costs are applied the same way across all products produced using the cost driver (The Economist Newspaper, 2009). Activity based costing allocates overhead costs to
In the first case, it would appear the demand is inelastic and in the second case it would appear to be elastic. Second, the use of percentages allows comparisons to be made across products. You can compare the percentage change in quantity demanded to a percentage change in price across all products for which you have data on changes in price and quantity demanded. [text: E pp. 114-115; MI pp.
Creating a budget will allow Guillermo to know the exact amount of money that he has to allocate to specific expenses. “Performance reports provide feedback by comparing results with plans and by highlighting variances, which are deviations from plans.” (Horngren at el. 2008, p. 13) Guillermo can use performance reports to determine if changes that he makes positively or negatively affect his bottom line. By using both budgets and performance reports Guillermo should be able to outline a plan that will balance company/organizational goals, personal goals, and maintain profitability. Ethics Influence Regulations and standards such as Generally Accepted Accounting Principles (GAAP), Foreign Corrupt
4. Is ECCO following the inside-out or outside-in strategic perspective? What are the implications of this choice and how can ECCO increase their sales/marketing efforts? * Inside-out strategy: which is an internal oriented strategy. This strategy emphasizes the company’s ability to utilize its existing internal resources and focuses on streamlining operation through proper sizing and cost reduction.
The comparison of overhead costs for Polynesian Fantasy and Vanilla by the two costing methods is: Polynesian Fantasy Vanilla Old Costing method 5.6 5.4 New Costing method 9.06 4.65 Change (New-Old) 3.46 (0.75) There won’t be any change on total company profits. But it will be some differences on individual product between applying two methods. What should Will do The new method (Activity-Based Costing) attempts to provide a better model of the cost of producing products or providing services and delivering them to customers. It promises to depict costs more accurately through a deeper understanding both of the activities involved and the resources consumed by each of these activities. Will should use Activity-Based Costing.
TUI University Tedrick Holmes Module 3 Case 1 Variance Analysis and Performance Evaluation 2 ACC 201 8/3/2011 Introduction In order to understand this case then we must first understand the difference between variable and fixed costs. Variable costs are the costs of labor, material or overhead that change according to the change in the volume of production units. Fixed costs are defined as a cost that does not vary depending on production or sales levels, such as rent, property tax, insurance, or interest expense. As we look at the Pappadeaux case we will discuss how these differences between these two costs can directly affect a business. Analyze and evaluate the case of the Pappadeaux I think that in this case, Harry was unfair in his assessment of Gregory’s performance.
costs were recognised as a percentage of sales revenue. Potential problems with the old cost system Selling and admin. costs were expensed rather than allocated to product lines and customers, making the company bear all the costs. Some customers placed heavy demands than others but resources were still being equally allocated across all products