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ACC 406 : dilemmas.doc

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blacksardine128
22 Apr 2012
School
Ryerson University
Department
Accounting
Course
ACC 406
Professor
Anthony Chen

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Document Summary

Managerial accountants face several dilemmas, some old, some new: managerial accountants must meet three, often conflicting objectives. They must provide full costs for financial reporting purposes as required by federal regulations. They must provide relevant costs to managers for decision-making purposes and they must provide controllable costs for planning and control purposes. Often costs derived for one purpose fail to satisfy the needs of another purpose. Much of the course is devoted to addressing this problem: much energy is devoted in manufacturing companies to determining the full manufacturing cost of a product. Yet in industries such as the drug business the manufacturing cost might be a relatively small component with r&d prior to manufacture and advertising subsequent to manufacture being more important. Little is done in traditional cost accounting texts about the relationship of period costs to the product. This reflects the period in which cost accounting was born i. e. , that of heavy metal production.

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Related Questions

1) Cost accounting systems are used ________.
A) to accumulate product cost information
B) to accumulate and assign period costs to products
C) by manufacturing companies, not service companies
D) by stockholders for decision-making purposes

Cost accounting systems are used to_____

A. to accumulate product cost information
B. by stockholders for decision-making purposes
C. to accumulate and assign period costs to products
D. by manufacturing companies, not service companies

Kubin Company’s relevant range of production is 15,000 to 19,000units. When it produces and sells 17,000 units, its average costsper unit are as follows:

Average Cost per Unit
Direct materials $ 7.60
Direct labor $ 4.60
Variable manufacturingoverhead $ 2.10
Fixed manufacturingoverhead $ 5.60
Fixed selling expense $ 4.10
Fixed administrativeexpense $ 3.10
Sales commissions $ 1.60
Variable administrativeexpense $ 1.10

Required:

1. For financial accounting purposes, what is the total amountof product costs incurred to make 17,000 units?

2. For financial accounting purposes, what is the total amountof period costs incurred to sell 17,000 units?

3. For financial accounting purposes, what is the total amountof product costs incurred to make 19,000 units?

4. For financial accounting purposes, what is the total amountof period costs incurred to sell 15,000 units?

(For all requirements, do not round intermediatecalculations.)