Each of the following scenarios requires the use of accounting


Question Description:

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Each of the following scenarios requires the use of accounting information to carry out one or more of the following managerial activities: (1) Planning, (2) Control and evaluation, (3) Continuous improvement, or (4) Decision making. a. Manager: At the last board meeting, we established an objective of earning a 25 percent return on sales. I need to know how many units of our product we need to sell to meet this objective. Once I have estimated sales in units, we then need to outline a promotional campaign that will take us where we want to be. However, to compute the targeted sales in units, I need to know the unit sales price and the associated production and support costs. b. Manager: We have a number of errors in our order entry process. Incorrect serial number of the system on the order entry, duplicate orders, and incorrect sales representative codes are examples. To improve the order entry process and reduce errors, we can improve communication, provide better training for sales representatives, and develop a computer program to check for prices and duplication of orders. Reducing errors will not only decrease costs, but will also increase sales as customer satisfaction increases. c. Manager: This report indicates that we have spent 35 percent more on rework than originally planned. An investigation into the cause has revealed the problem. We have a large number of new employees who lack proper training on our production techniques. Thus, more defects were produced than expected, causing a higher than normal rework requirement. By providing the required training, we can eliminate the excess usage. d. Manager: Our bank must decide whether the addition of fee-based products is in our best interest or not. We must determine the expected revenues and costs of producing the new products. We also need to know how much it will cost us to upgrade our information system and train our new employees in cross-selling tactics. e. Manager: This cruise needs to make more money. I would like to know how much our profits would be if we reduce our variable costs by $10 per passenger while maintaining our current passenger volume. Also, marketing claims that if we increase advertising expenditures by $500,000 and cut fares by 20 percent, we can increase the number of passengers by 30 percent. I would like to know which approach offers the most profit, or if a combination of the approaches may be best. f. Manager: We are forming manufacturing cells for each major product, and we are automating our die-making process. I would like to know if the number of defects drops and if cycle time actually decreases as a result. Furthermore, do these changes reduce our production costs? I also want to know the cost of resources before and after the proposed changes to see if cost improvement is taking place. g. Manager: We are considering the possibility of outsourcing our legal services. I need to know the types of services provided by our internal staff for the past five years. I want an accurate assessment of the cost per hour for each type of service that has been performed. Once I have an idea of the internal cost then I can compare our cost with the hourly billing rates of external law firms. h. Manager: My engineers have said that by redesigning our two main production processes, we can reduce setup time by 90 percent. This would produce savings of nearly $200,000 per setup. They have also indicated that some additional minor modifications in the designs of our three main products would reduce our materials waste by 12 percent, saving nearly $70,000 per month. Required: 1. Describe each of the four managerial responsibilities. 2. Identify the managerial activity or activities applicable for each scenario, and indicate the role of accounting information in the activity.

Answer

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