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increasing. International streaming is experiencing significant increases in memberships and revenues, but the contribution loss continues (the loss decreased from 2016 to 2017). The Domestic DVD segment is experiencing declining memberships, revenues, and contribution profit. 15. Answers will vary. Responses should...
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includes three divisions: residential, corporate, and nonprofit. Under each of these divisions would be the mowing, trimming, and landscaping activities. Alternative responses may present three divisions: mowing, trimming, and landscaping activities with the client categories (residential, corporate, and nonprofit) bel...
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evaluation of management’s ability to generate profitability. In addition, this framework incentivizes management to undertake value-added investments. A disadvantage is that the segment may prioritize the segment over company financial goals. 21. Answers will vary. Managers can influence controllable costs but have li...
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areas where changes are necessary. A disadvantage is this approach is that it requires a significant investment of time and resources on the part of the business. 25. Answers will vary. An advantage of a negotiated approach is that the responsibility center management must be actively involved in the process of establi...
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Chapter 10 Multiple Choice 1. B 3. D 5. B 7. B 9. D 11. A 13. A 15. B Questions 1. Primarily disagree, but there are a few times where fixed costs can be avoided or partially avoided. Variable costs are avoidable costs since variable costs do not exist if the product is no longer made, or if the portion of the busine...
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Irrelevant Sunk Berries for pies Relevant Variable Painting dining area last year Irrelevant Sunk Felipe’s decision not to attend graduate Irrelevant Opportunity school 5. One issue is the concern for how existing customers will feel if they discover that the company offered a lower price to the special-ord...
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modified, and thus cheaper for that reason, current customers may prefer the modified, cheaper version of the product. The company would need to determine if selling the new version of the project would hurt profitability or the company’s reputation. 7. First and foremost, customer service quality is a consideration, f...
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abroad, as well as culture and language. 9. The bakery manager’s salary would be avoidable and therefore differential in the analysis. 11. In general, if the differential revenue from processing further is greater than the differential costs, then it will be profitable to process a joint product after the split-off poi...
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Chapter 11 Multiple Choice 1. B 3. D 5. C 7. A 9. B 11. D 13. B 15. A
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Questions 1. The process for capital decision-making involves five steps: 1. Determine capital needs. 2. Explore resource limitations. 3. Establish baseline criteria for alternatives. 4. Evaluate alternatives using screening and preference decisions. 5. Make the decision. 3. The company then needs to establish alternat...
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only at that point that the company truly realizes whether they have extra value or not enough value in the assets. This difference can provide either a gain or a loss to the company that will impact the taxes at year-end. Therefore, gains or losses affecting tax payments, plus cash flows, are important, since cash-flo...
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consider the value of a dollar over time. 11. Accounting Rate of Return = (Incremental revenues – Incremental expenses) ÷ Initial Investment 13. They need to know what the future value is of their investment compared to today’s present value, and what potential earnings they could see because of delayed payment. 15. Th...
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of return earned by the project. The internal rate of return determines the actual rate of return that a project earns. 19. The internal rate of return (IRR) shows the profitability or growth potential of an investment. All external factors are removed from calculation, such as inflation concerns, and the project with ...
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Answer Key seen in NPV. This removes bias from projects with dissimilar NPVs and is a way to compare more than one option. 21. Answers will vary but should include something like the following: the NPV weighs the early receipt of cash more heavily because when the receipts come in earlier, the discount is closer to 10...
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Questions 1. Answers will vary. Responses may focus on the short-term view versus long-term views and include examples such as: managers focusing on only profitability might avoid spending the money for long-term assets to fuel the future; managers may miss other opportunities like funding the expense for creation of a...
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Profit center—the manager has control over both revenues and costs. Investment center— the manager has control over revenues, costs, and capital assets. 7. Short-term goals include goals such as reducing costs of production by a certain percentage for the current year or increasing year-over-year sales by a certain per...
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sales of a certain product, the regional sales manager will have an increased sales goal as a result. 11. EVA is residual income adjusted for accounting distortions. Like residual income, it encourages managers to make appropriate levels of investment. In addition, it treats items such as research and development costs...
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is dependent on how it performs financially, which is directly related to the company’s internal operations, how the customer perceives and interacts with the company, and the direction in which the company is headed.
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Chapter 13 Multiple Choice 1. B 3. D This OpenStax book is available for free at http://cnx.org/content/col25479/1.11 Answer Key 5. D 7. B 9. A 11. A 13. D 15. C 731
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Questions 1. Sustainability is meeting the needs of the present generation without compromising the ability of future generations to meet their own needs. Corporations can incorporate sustainability practices into their businesses a variety of ways; through the reduction of greenhouse gas emissions, efficient use of wa...
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measures implemented. The company may also provide information on how they have improved the communities in which they operate. A car manufacturer might include a good deal of information on employee well-being as well as community outreach and philanthropy. The company may also provide information on moves toward more...
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command tailor made sustainability information and so are reliant upon disclosures by the organization. At present there is little legal requirement of non-financial disclosures related to sustainability unless there are material factors which may affect the investment decision-making of a user. (See SASB discussion on...
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Answer Key This OpenStax book is available for free at http://cnx.org/content/col25479/1.11 Index Index A absorption costing, 313, 323 accounting rate of return (ARR), 574, 600 activity base, 296, 323 activity-based costing, 294, 323 Activity-based costing, 302 After-tax income, 634 after-tax income, 649 al...
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board of directors, 31, 55 bottleneck, 536, 541 break-even point, 136, 166 bribery, 42, 55 Brundtland Commission Report, 666, 694 budget, 350, 383 budget analyst, 33, 55 budgeted balance sheet, 371, 383 budgeted income statement, 364, 383 business sustainability, 665, 694 business value, 676 C capital asset...
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cash inflow, 571, 600 cash outflow, 571, 600 controllable factor, 649 controllable factors, 621 controller, 31, 55 Controlling, 17 controlling, 55 cash payments schedule, 367, 383 conversion cost, 276 cash-management accountant, conversion costs, 96, 110, 191, 229 33, 55 Centralization, 460 centralization,...
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cost center, 468, 490, 621, 649 Accountant (CMA), 37, 55 cost driver, 85, 110, 205, 229, 299, Certified Public Accountant (CPA), 323 36, 55 cost equation, 101 charitable giving, 675 cost of goods manufactured, 209, chief executive officer (CEO), 31, 229 55 cost of goods sold, 210, 229 chief financial offic...
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differential cost, 516, 541 differential revenue, 516, 541 Direct labor, 77, 200, 295 direct labor, 110, 196, 229, 323 direct labor budget, 361, 383 Continuous improvement, 47 direct labor rate variance, 417, continuous improvement, 55 438 Contribution margin, 128 contribution margin, 166 direct labor time va...
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irrelevant cost, 516, 541 411, 438 direct materials quantity variance, 413, 438 direct materials variance, 411, 438 future value, 578 future value (FV), 579, 600 G GAAP, 38, 313 irrelevant revenue, 516, 541 J job cost sheet, 194, 218, 229 job order cost system, 217 discount cash flow model, 586 generally acce...
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goals, 16 effective communication, 28, 56 Government agencies, 33 Enrolled Agent (EA), 37, 56 enterprise resource planning (ERP), 44, 56 government agency, 56 H H&R Block, 186 Environmental sustainability, 673 high-low method, 107, 110 environmental sustainability, 694 equity issues, 674, 694 equivalent unit...
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evaluating, 56 194, 229, 257, 276, 314, 323 external user, 56 external users, 23 F factory-level cost, 302, 323 favorable variance, 408, 438 financial accounting, 21 Incremental revenues, 574 indirect labor, 96, 110, 229, 296, Indirect labor, 203 indirect material, 96 Indirect material, 296 lump sum, 577, 60...
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intangible goods, 43 intangible products, 80 110 Manufacturing overhead, 77, 203 manufacturing overhead, 110, finished goods inventory, 207, 210 Integrated Reporting, 690 204, 229 fixed asset, 649 Fixed assets, 636 fixed cost, 83, 110 Fixed costs, 128, 517 fixed factory overhead variance, 428, 438 internal...
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master budget, 354, 383 opportunity costs, 520, 541 qualitative factors, 639 materiality, 686, 694 ordinary annuities, 600 quantitative factor, 516, 541, 649 materials requisition form, 197, ordinary annuity, 582 229 organizational chart, 30, 464, 490 merchandising, 70 merchandising firm, 71, 110 Outsourcin...
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overhead variances, 421 P P/E ratio, 681, 694 minimum required rate of return, 633, 649 mission statement, 15, 57 Mixed costs, 88 mixed costs, 110 monetary accounting information, 26, 57 Paris Climate Agreement, 664, 694 reporting, 22, 24, 25 payback method (PM), 570, 600 Residual income (RI), 479 performan...
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Pet Smart, 186 planning, 16, 57 630, 649 revenue center, 470, 490, 621, 649 net present value method (NPV), predetermined overhead Robinson-Patman Act, 522 600 allocation rate, 213 non-renewable resources, 674, predetermined overhead rate, 694 296 Non-time value methods, 570 preference decision, 568, 600 ...
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organizations, 34 normal capacity, 521, 541 O objective, 57 objectives, 16 operating asset, 649 Operating assets, 636 operating budget, 354, 383 Operating budgets, 357 operating expense, 566 operating expenses, 600 prime costs, 110, 191, 229, 276 screening decision, 568, 600 process costing, 188, 188, 276 SE...
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profit margin percentage, 476 Operating leverage, 160 selling and administrative expense budget, 363, 383 736 Index sensitivity analysis, 147, 166 total fixed costs, 85, 110 work in process inventory, 195, service, 70 Total quality management (TQM), service industries, 227 47 service organization, 80, 110 ...
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static budget, 375, 383 stepped cost, 90, 110 stockholder, 649 Stockholders, 640 strategic goals, 458 strategic plan, 622, 649 strategic planning, 16, 57 sunk cost, 518, 541 Traditional allocation, 295 traditional allocation, 311, 323 transfer pricing, 483, 491 treasurer, 31, 57 triple bottom line, 672 tri...
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sustainable development, 666, 694 T tangible good, 57, 110 tangible goods, 43 tangible products, 80 target pricing, 148, 166 technology, 44 unit-level cost, 302, 323 Upper management, 459 upper management, 491 V variable cost, 85, 110 Variable costing, 313 variable costing, 323 Variable costs, 128, 517 vari...
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