Chapter 22: 17DQ (page 1013)
Define and describe cycle time and identify the components of cycle time.
A metric reflecting thetotal time required to complete a taskis known as cycle time. Value-adding time, as well as non-value-adding time, are included in its components.
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SP 22 Santana Rey’s two departments, computer consulting services and computer workstation furniture manufacturing, have each been profitable for Business Solutions. Santana has heard of the balanced scorecard and wants you to provide details on how it could be used to measure performance of her departments.
Required
1. Explain the four performance perspectives included in a balanced scorecard.
2. For each of the four performance perspectives included in a balanced scorecard, provide examples of measures Santana could use to measure the performance of her departments.
Google reports costs in financial statements. If plantwide overhead rates are allowed for reporting costs to external users, why might a company choose to use a more complicated and more expensive method for assigning overhead costs to products?
Question: What is the difference between operating departments and service departments?
Use the information in the following table to compute each department’s contribution to overhead (both in dollars and as a percent). Which department contributes the largest dollar amount to total overhead? Which contributes the highest percent (as a percent of sales)? Round percents to one decimal.
Dept. A | Dept. B | Dept. C | |
Sales | \(53,000 | \)180,000 | \(84,000 |
Cost of goods sold | 34,185 | 103,700 | 49,560 |
Gross profit | 18,815 | 76,300 | 34,440 |
Total direct expenses | 3,660 | 37,060 | 7,386 |
Contribution to overheads | \) | \( | \) |
Contribution percent of sales | % | % | % |
Question: In each blank next to the following terms, place the identifying letter of its best description.
1. Cost center | A. Incurs costs without directly yielding revenues. |
2. Investment center | B. Provides information used to evaluate the performance of a department. |
3. Departmental accounting system | C. Holds manager responsible for revenues, costs, and investments. |
4. Operating Department | D. Engages directly in manufacturing or in making sales directly to customers. |
5. Profit center | E. Does not directly manufacture products but contributes to profitability of the entire company. |
6. Responsibility accounting system | F. Incurs costs and also generates revenues |
7. Service department | G. Provides information used to evaluate the performance of a department manager |
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