CHAPTER 1 STUDY PLAN Roger Phones is about to decide whether to launch production and sale of a cell phone with

standard features = low price strategy Computer magic is trying to decide whether to produce and sell a new home computer software package that includes the ability to interface with a sewing machine and vacuum cleaner. There is no such software currently on the market = differentiated product strategy Christina Cosmetics has been asked to provide a store brand lip gloss that will be sold at discount retail stores = low price strategy Marcus Meats is entertaining the idea of developing a special line of gourmet bologna made with sun dried tomatoes, pine nuts, and artichoke hearts = differentiated product strategy For organizations that adopt a low price strategy, management accountants can do the following: Provide information about efficiency Provide information about continuous improvement Provide information about timeliness Provide information about quality

For organizations that adopt a differentiated price strategy, management accountants can do the following: Determine the tradeoff between price, quality, and functionality Set performance benchmarks Identify competing products

Classify each of the cost items as one of the business functions of the value chain. Cost of redesigning blister packs to make drug containers more tamperproof design Cost of videos sent to doctors to promote sales of a new drug marketing Cost of a toll free telephone line used for customer inquiries about drug usage, side effects of drugs and so on customer service Equipment purchased to conduct experiments on drugs yet to be approved by the government research and development Payment to actors for a television infomercial promoting a new hair growth products for balding men marketing Labor costs of workers in the packaging area of a production facility production Bonus paid to a salesperson for exceeding a monthly sales quota marketing Cost of federal express courier service to deliver drugs to hospitals distribution Cost of oil for the deep fryer production Wages of the counter help who give customers the food they order distribution

Cost of the costume for the king on the burger king television commercials marketing Cost of childrens toys given away free with kids meals marketing Cost of the posters indicating the special two cheeseburgers for $2 marketing Cost of frozen onion rings and French fries production Salaries of the food specialists who create new sandwiches for the restaurant chain research and development Cost of to go bags requested by customers who could not finish their meals in the restaurant customer service Company A now prepares a value chain income statement for each brand it sells value chain analysis Company B now presents in a single report all costs related to achieving high quality levels in its products key success factors-cost and quality Company C now presents in its performance reports estimates of the manufacturing costs of its two most important competitors, in addition to its own manufacturing costs key success factors-cost Company D now contracts with its suppliers to frequently deliver small quantities of materials directly to the production floor supply chain analysis Company E now reports the percentage of times it fails to meet delivery dates that it has promised to customers key success factors-time

Classify each action below according to its step in the five step decision making process Mr. Brite calls home depot to ask the price of paint sprayers obtain information Mr. Brite discusses with his employees the possibility of growing revenues of the firm identify the problem and uncertainties One of Mr Brites project managers suggests that using paint sprayers instead of hand painting will increase productivity and thus revenues identify the problem and uncertainties The workers who are not familiar with paint sprayers take more time to finish a job they did when paiting by hand implement the decision, evaluate performance, and learn Mr. Brite compares the expected cost of buying sprayers to the expected cost of hiring more workers who paint by hand, and estimates profits for both alternatives make predictions about the future The project scheduling manager confirms that demand for house painting services has increased obtain information Mr. Brite decides to buy the paint sprayers rather than hire additional painters choose among alternatives

Identify which of the management accounting guidelines applies Analyzing whether to keep the billing function within an organization or outsource it =cost benefit approach Deciding to give bonuses for superior performance to the employees in a Japanese subsidiary and extra vacation time to the employees in a Swedish subsidiary =behavioral and technical considerations Including costs of all the value chain functions before deciding to launch a new product but including only its manufacturing costs in determining its inventory valuation =different costs for different purposes Considering the desirability of hiring one more salesperson = cost benefit approach Giving each salesperson the compensation option of choosing either a low salary and a high percentage sales commission or a high salary and a low percentage sales commission = behavioral and technical considerations Selecting the costlier computer system after considering two systems cost benefit approach Installing a participatory budgeting system in which managers set their own performance targets, instead of top management imposing performance targets on managers behavioral and technical considerations Recording research costs as an expense for financial reporting purposes (as required by U.S. GAAP) but capitalizing and expensing them over a longer period for management performance evaluation purposes different cost for different purposes Introducing a profit sharing plan for employees behavioral and technical considerations

Indicate which executive is primarily responsible for each activity Managing accounts payable controller Communicating with investors CFO Strategic review of different lines of businesses CFO Budgeting funds for a plant upgrade controller Managing the companys short term investments CFO Negotiating fees with auditors CFO Assessing profitability of various products controller Evaluating the costs of benefits of a new product design controller

Better positioned for his role as CFO by doing the following Attending courses that focus on the interaction and negotiations between the various business functions Getting training in issues related to investments and corporate finance Participating in strategy discussions with senior management Preparing the external investor communications and press releases under the guidance of the CFO..