Chapter 16: Accounting Analysis

Here's a comprehensive guide to help you navigate through the various assignments and problems outlined in your document, specifically focusing on Apple, Google, and Samsung analysis, along with discussion questions and action plans related to financial services in manufacturing. Company Analysis AA 16-1: Apple Watch Cost and Pricing 1. Compute Cost per Unit: o Aluminum Case:  Direct materials cost (case, components, etc.)  Direct labor cost (assembly)  Manufacturing overhead (allocated) o Titanium Case:  Repeat the above calculations for the titanium case. 2. Selling Price Calculation: o Selling Price = Total Cost per Unit × (1 + Markup Percentage) o Markup is 30%, so for each case:  Aluminum Case Selling Price = Cost per unit × 1.30  Titanium Case Selling Price = Cost per unit × 1.30 AA 16-2: Google’s Fitbit Cost and Pricing 1. Compute Cost per Unit: o Standard Fitness Tracker:  Calculate using the same methodology as Apple (direct materials, direct labor, overhead). o Custom Tracker:  Repeat the calculation, considering any additional costs associated with customization (e.g., logo printing). 2. Selling Price Calculation: o Selling Price = Cost per unit × (1 + 40% markup) o Standard Tracker Selling Price: Cost per unit × 1.40 o Custom Tracker Selling Price: Cost per unit × 1.40 3. Price Comparison: o Compare the selling price of Google’s standard fitness tracker with the entry-level Apple Watch price of $200. Extended Analysis AA 16-3: Yield Analysis for Apple and Samsung 1. Compute Yield: o Yield = (Output / Input) × 100% o Compute separately for Apple and Samsung for the current week. 2. Efficiency Comparison: o Compare yields to determine which company has a more efficient manufacturing process. 3. Prior Week Yield for Samsung: o Calculate previous yield and compare it to the current week's yield to analyze efficiency improvements or declines. Discussion Questions 1. Job Order vs. Process Costing: o Main Factor: The choice depends on the production process. o Job Order Costing: Custom furniture manufacturers, specialized machinery manufacturers. o Process Costing: Oil refineries, food processing companies. 2. Focus in Process Costing: o The main focus is on the department or process rather than individual jobs or batches. 3. Service Examples in Process Operations: o Yes, services like fast food restaurants or car washes can use process operations due to their standardized service processes. 4. Work in Process Inventory Accounts: o Process costing typically uses more WIP accounts due to different stages of production. 5. Control Document: o A production order or process order can serve as a control document when a materials requisition slip isn't used. 6. Equivalent Units of Production (EUP): o EUP quantifies partially completed units in terms of fully completed units, essential for determining costs in process costing. 7. Inventory Methods for EUP: o The two main methods are Weighted Average and FIFO. FIFO is considered more precise. 8. Managerial Uses of Process Cost Information: o Cost control, pricing decisions, profitability analysis, and performance evaluation. 9. Labor Costs Flow: o Labor costs are added to WIP inventory and later transferred to finished goods. 10. Multiple Factory Overhead Accounts: o Generally, process costing uses one factory overhead account for each department. 11. Under- or Overapplied Overhead: o Yes, it's possible based on actual vs. applied overhead rates. 12. EUP for Conversion vs. Direct Materials: o They can differ due to different completion rates for materials and labor. 13. Accounting Steps for Production Activity: o Record direct materials, labor, overhead applied, and transfers to finished goods. 14. Cost of Completed Unit: o Sum all costs incurred for production divided by the number of completed units. 15. Google’s Process Costing Situations: o Mass production of standard fitness trackers or simple assembly processes for custom designs. 16. Samsung’s Production Processing Steps: o Steps may include design, assembly, testing, quality assurance, and packaging. 17. Risks for General Mills: o Supply chain disruptions, quality control issues, price fluctuations in raw materials. 18. Production Cost Report and Water Usage: o Analyze costs before and after implementing water reduction initiatives. 19. Hybrid Costing System: o A mix of job order and process costing, suitable for custom products produced in a continuous process. Ethics Challenge Action Plan Memorandum To: [Recipient Name] From: [Your Name] Subject: Action Plan for Understanding Key Business Processes Date: [Date] Action Plan: Understanding Key Business Processes in the Food Processing Industry As we embark on providing financial services to clients in the food processing industry, it is crucial to develop a deep understanding of their key business processes to deliver accurate and valuable insights. This memorandum outlines the steps we will take to achieve this understanding. Industry: Food Processing Product: Frozen Vegetables Selected Process: Vegetable Blanching Steps to Obtain Understanding: 1. Research the Industry: We will review industry reports and publications from organizations like the Food Processing Suppliers Association to understand trends, challenges, and benchmarks in food processing. 2. Engage with Professionals: Setting up interviews with industry experts and operational managers will provide practical insights into daily processes and challenges faced in vegetable blanching. 3. Analyze Case Studies: We will examine case studies of successful food processing companies to identify best practices and innovative solutions that enhance efficiency. 4. Training and Workshops: Attending workshops on food processing technologies will equip our team with relevant knowledge and skills, enabling us to better serve our clients. By following these steps, we aim to ensure that our financial services are grounded in a solid understanding of our clients’ operational processes, ultimately enhancing our value proposition. Reference: Smith, J. (2022). Trends in Food Processing: An Overview. Journal of Food Industry, 34(2), 45-60. Communicating in Practice Robotic Process Automation (RPA) Tools RPA tools are primarily useful for automating repetitive and rule-based processes, such as: 1. Data Entry: Automating the entry of data into systems, reducing human error and time. 2. Reporting: Generating and distributing reports based on pre-defined criteria. 3. Transaction Processing: Handling high-volume transactions efficiently. How RPA Tools Work: RPA tools use software robots to perform tasks across applications and systems. These robots mimic human actions to complete workflows by interacting with user interfaces, thus streamlining processes. Proposed Benefits: • • • • Increased efficiency and accuracy Cost savings Improved compliance and reporting Enhanced employee satisfaction by relieving them of mundane tasks Teamwork in Action For BTN 16-3, ensure that all team members are clear on activities, journal entries, and computations related to process costing. Rotate through each member for discussion and clarify any uncertainties. Entrepreneurial Decision 1. Holding Raw Materials Inventory Costs: o Increased costs from storage, spoilage, and potential obsolescence. If raw materials are not used, they may impact profits due to tied-up capital and waste. 2. Using Yield to Improve Production: o Monitoring yield percentages can highlight inefficiencies, allowing for adjustments in processes that reduce waste and improve profitability. 3. Hybrid Costing for Unique Flavors: o If Azucar Ice Cream allows customers to create unique flavors, a hybrid costing system would help allocate costs for both standard ingredients and unique combinations efficiently. This outline should guide you through your assignments, providing a structured approach to each task. If you need more specific data or calculations for any of the sections, feel free to ask!