Questions from Cost Accounting

Q: Several years ago, Seville Company acquired Salvador Components. Prior to

Several years ago, Seville Company acquired Salvador Components. Prior to the acquisition, Salvador manufactured and sold automotive components to third-party customers. Since becoming a division of S...

Q: Suwon Pharmaceuticals invests heavily in research and development (R&D

Suwon Pharmaceuticals invests heavily in research and development (R&D), although it must currently treat its R&D expenditures as expenses for financial accounting purposes. To encourage investment in...

Q: Biddle Company uses EVA to evaluate the performance of division managers.

Biddle Company uses EVA to evaluate the performance of division managers. For the Wallace Division, after-tax divisional income was $400,000 in year 3. The company adjusts the after-tax income for adv...

Q: I thought evaluating performance would be easier than this. I have

I thought evaluating performance would be easier than this. I have three vice presidents, operating the same business in three different countries. I need to be able to compare them in order to prepar...

Q: What are the advantages of using an ROI-type measure rather

What are the advantages of using an ROI-type measure rather than the absolute value of division profits as a performance evaluation technique for business units?

Q: In computing the cost per equivalent unit, the weighted-average

In computing the cost per equivalent unit, the weighted-average method considers: a. Current costs only. b. Current costs plus costs in beginning WIP inventory. c. Current costs plus the cost of endin...

Q: How does EVA differ from residual income?

How does EVA differ from residual income?

Q: What are the dangers of using only business unit measures to evaluate

What are the dangers of using only business unit measures to evaluate the performance of business unit managers?

Q: A company prepares the master budget by taking each division manager’s estimate

A company prepares the master budget by taking each division manager’s estimate of revenues and costs for the coming period and entering the data into the budget without adjustment. At the end of the...

Q: “If every division manager maximizes divisional income, we will maximize

“If every division manager maximizes divisional income, we will maximize firm income. Therefore, divisional income is the best performance measure.” Comment.