ACCOUNTING FOR MANAGERIAL DECISION MAKING
Case 1 ;
WeRConsultants offers three professional services to its clients: (1) management
consultancy, (2) corporate training, and (3) outbound program.
Ruby Rahme, the chief accountant of the company, wants to apply the Activity-
Based Costing (ABC) system to determine the cost of each service. She obtains
the following cost information for 2014 as follows:
a. Professional labour annual salaries:
Type of Numbers of Salary per Total salary
Professional Professional person per year
labour labour per year
Consultants 5 $ 120,000 $ 600,000
Team Leaders 8 75,000 600,000
Trainers 12 40,000 480,000
b. All other 2014 annual costs are support costs, and categorised into four
activity costs, as follows:
Supplies $ 45,000
Building rent and maintenance 80,500
Administrative costs to manage clients 240,000
Subcontract services 90,000
c. Consumption of supplies depends on the number of clients per year.
Other information about individual professional services:
Management Corporate Outbound Total
consultancy Training Program
Square metre of 600 1,200 500 2,300
occupied by each
Number of clients 30 70 60 160
Number of 50 100 300 450
services per year
d. Professional labour allocations to individual professional services:
Management Corporate Outbound
consultancy training program
Consultants 5 – –
Team leaders 2 3 3
Trainers 2 7 3
a. Using the Activity-Based Costing data presented above, choose the most
appropriate cost driver for each activity pool, and compute the cost-driver
rate for each activity. (3 marks)
b. Compute the annual cost of each professional service for 2014. (7.5 marks)
DingedIn manufactures Sweaters and Jumpers. The company’s product line
projected income statement follows:
Total DingedIn’s DingedIn’s
Sales revenue $840,000 $620,000 $220,000
Cost of Goods Sold
Variable 203,000 128,000 75,000
Fixed 300,000 202,000 98.000
Total Cost of Goods Sold 503,000 330,000 173,000
Gross profit 337,000 290,000 47,000
Marketing and administrative expenses
Variable 150,000 78,000 72,000
Fixed 115,000 88,000 27,000
Total marketing and administrative expenses 265,000 166,000 99,000
Operating income (loss) $ 72,000 $124,000 $ (52,000)
Management is considering to discontinue the DingedIn’s Jumpers product line.
Management accountants for the company estimate that dropping the DingedIn’s
Jumpers line will decrease total fixed Cost of Goods Sold by $45,000 and total
fixed marketing and administrative expenses by $9,500.
Prepare an analysis supporting your opinion about whether or not the DingedIn’s
Jumpers product line should be dropped.
Our Service Charter
Excellent Quality / 100% Plagiarism-FreeWe employ a number of measures to ensure top quality essays. The papers go through a system of quality control prior to delivery. We run plagiarism checks on each paper to ensure that they will be 100% plagiarism-free. So, only clean copies hit customers’ emails. We also never resell the papers completed by our writers. So, once it is checked using a plagiarism checker, the paper will be unique. Speaking of the academic writing standards, we will stick to the assignment brief given by the customer and assign the perfect writer. By saying “the perfect writer” we mean the one having an academic degree in the customer’s study field and positive feedback from other customers.
Free RevisionsWe keep the quality bar of all papers high. But in case you need some extra brilliance to the paper, here’s what to do. First of all, you can choose a top writer. It means that we will assign an expert with a degree in your subject. And secondly, you can rely on our editing services. Our editors will revise your papers, checking whether or not they comply with high standards of academic writing. In addition, editing entails adjusting content if it’s off the topic, adding more sources, refining the language style, and making sure the referencing style is followed.
Confidentiality / 100% No DisclosureWe make sure that clients’ personal data remains confidential and is not exploited for any purposes beyond those related to our services. We only ask you to provide us with the information that is required to produce the paper according to your writing needs. Please note that the payment info is protected as well. Feel free to refer to the support team for more information about our payment methods. The fact that you used our service is kept secret due to the advanced security standards. So, you can be sure that no one will find out that you got a paper from our writing service.
Money Back GuaranteeIf the writer doesn’t address all the questions on your assignment brief or the delivered paper appears to be off the topic, you can ask for a refund. Or, if it is applicable, you can opt in for free revision within 14-30 days, depending on your paper’s length. The revision or refund request should be sent within 14 days after delivery. The customer gets 100% money-back in case they haven't downloaded the paper. All approved refunds will be returned to the customer’s credit card or Bonus Balance in a form of store credit. Take a note that we will send an extra compensation if the customers goes with a store credit.
24/7 Customer SupportWe have a support team working 24/7 ready to give your issue concerning the order their immediate attention. If you have any questions about the ordering process, communication with the writer, payment options, feel free to join live chat. Be sure to get a fast response. They can also give you the exact price quote, taking into account the timing, desired academic level of the paper, and the number of pages.