ACC 310 ASH Week 1 DQ 1 Information for Decision Making and Cost Concepts and Behavior
ACC 310 ASH Week 1 DQ 1 Information for Decision Making and Cost Concepts and Behavior 310
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This 3 page Study Guide was uploaded by Cindy Fdez on Tuesday November 18, 2014. The Study Guide belongs to 310 at Ashford University taught by unknown in Winter2013. Since its upload, it has received 390 views. For similar materials see ACC 310 in Accounting at Ashford University.
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Date Created: 11/18/14
Information for Decision Making and Cost Concepts and Behavior Complete Exercise 118 and 219 Remember to complete all parts of the problems and report the results of your analysis Do not forget to show the necessary steps and explain how your attained that outcome Respond to at least two of your classmates postings 118 Beige Computers operates retail stores in both downtown City and suburban Mall locations The company has two responsibility centers the City Division which contains stores in downtown locations and the Mall Division which contains stores in suburban locations Beige s CEO is concerned about the profitability of the City Division which has been operating at a loss for the last several years The most recent income statement follows The CEO has asked for your advice on shutting down the City Division s operations If the City Division is eliminated corporate administration is not expected to change nor are any other changes expected in the operations or costs of the Mall Division What revenues and costs are probably differential for the decision to discontinue City Division s operations Differential costs are Costs that change in response to a particular course of action Should Beige Computers close the city locations the following differential costs will occur Sales revenue 12900000 Costs Advertising Cost of goods sold 6450000 Divisional administrative salaries Selling costs sales commissions 1730000 Rent 2215000 Total differential costs 11790000 Iet differential gain before income tax 1110000 Tax expense 40 444000 lIet differential gain from store What will be the effect on Beige s profits if the division is eliminated Looking at the numbers in this Way We can see that closing the city division will cost Beige Computers 666000 in profits It is the 1425000 in corporate administrative cost that is causing the division to operate at a loss Since the cost is a non differential cost the company should look into how they can decrease that cost 219 Basic Concepts For each of the following costs incurred in a manufacturing frim indicate Whether the costs are most likely fixed F or variable V and Whether they are most likely period costs P or product costs M under full absorption costing Cost Item F or V a Energy to run machines V producing units of output in the factory b Depreciation on the F building for administrative staff offices c Bonuses for top executives V in the company d Overtime pay for assembly V workers e Transportationin costs on V materials purchased f Assembly line workers pay V g Sales commissions for sales V personnel h Administrative support for F sales supervisors i Controller s rental office F Cafeteria costs for the V actory References Lanen WN Anderson SW amp Maher MW 2011 Fundamentals of Cost Accounting 3rd ed New York McGraWHill Irwin
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