Cost accounting study guide

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Accounting Final Exam
1.) Five forces included in industry analysis
Competitors.
Potential entrants into the market.
Equivalent products.
Bargaining power of customers.
Bargaining power of input suppliers.
2.) The balanced scorecard translates an organization’s mission and strategy into a set of performance measures that provides the framework for implementing its strategy. The balanced scorecard does not focus solely on achieving short-run financial objectives. It also highlights the nonfinancial objectives that an organization must achieve to meet and sustain its financial objectives. The scorecard measures an organization’s performance from four perspectives: (1) financial, the profits and value created for shareholders; (2) customer, the success of the company in its target market; (3) internal business processes, the internal operations that create value for customers; and (4) learning and growth, the people and system capabilities that support operations. Financial Perspective

Income and investment measures: Economic value added a(EVA®), return on investment Revenue and cost measures: Revenue growth, revenues from new products, cost reductions in key areas Income measures: Operating income, gross margin percentage

Customer Perspective
Market share, customer satisfaction, customer-retention percentage, time taken to fulfill customers’ requests, number of customer complaints
Internal-Business-Process Perspective
Innovation Process: Operating capabilities, number of new products or services, new-product development times, and number of new patents
Operations Process: Yield, defect rates, time taken to deliver product to customers, percentage of on-time deliveries, average time taken to respond to orders, setup time, manufacturing downtime Postsales Service Process: Time taken to replace or repair defective products, hours of customer training for using the product

Learning-and-Growth Perspective
Employee measures: Employee education and skill levels, employee-satisfaction ratings, employee turnover rates, percentage of employee suggestions implemented, percentage of compensation based on individual and team incentives

Technology measures: Information system availability, percentage of processes with advanced controls 3.) Design quality – how closely the characteristics of a product or service meet the needs and wants of customers Conformance quality – is the performance of a product or service relative to its design and product specifications

4.) Costs of quality are classified into four categories; examples for each category are listed in Exhibit 19-1.
1. Prevention costs—costs incurred to preclude the production of products that do not conform to specifications
2. Appraisal costs—costs incurred to detect which of the individual units of products do not conform to specifications
3. Internal failure costs—costs incurred on defective products before they are shipped to customers
4. External failure costs—costs incurred on defective products after they have been shipped to customers

5.) For production line A, all observations are within the range of μ ± 2, so management believes no investigation is necessary. For production line B, the last two observations signal that a much higher percentage of copiers are not performing as they should, indicating that the problem is probably because of a nonrandom, out-of-control occurrence such as an incorrect speed setting or mishandling of a component part. Given the ±2 rule, both observations would be investigated. Production line C illustrates a process that would not prompt an investigation under the ±2 rule but that may well be out of control, because the last eight observations show a clear direction, and over the last six days, the percentage of defective copiers are increasing and getting further and further away from the mean. The pattern of observations moving away from the mean could be due, for example, to the tooling on a machine...
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