Managerial Cost Accounting

What is the difference between a direct and indirect cost? Variable versus fixed cost? What are the differences in accounting for inventoriable (product) versus period costs?

What are the relationships among financial, management, and cost accounting?

1-34 Budgeting, ethics, pharmaceutical company. Chris Jackson was recently promoted to Controller of Research and Development (R&D) for BrisCor, a Fortune 500 pharmaceutical company that manufactures prescription drugs and nutritional supplements. The company’s total R&D cost for 2017 was expected (bud-geted) to be $5 billion. During the company’s midyear budget review, Chris realized that current R&D expen-ditures were already at $3.5 billion, nearly 40% above the midyear target. At this current rate of expenditure, the R&D division was on track to exceed its total year-end budget by $2 billion! In a meeting with CFO Ronald Meece later that day, Jackson delivered the bad news. Meece was both shocked and outraged that the R&D spending had gotten out of control. Meece wasn’t any more under-standing when Jackson revealed that the excess cost was entirely related to research and development of a new drug, Vyacon, which was expected to go to market next year. The new drug would result in large profits for BrisCor, if the product could be approved by year-end.

Meece had already announced his expectations of third-quarter earnings to Wall Street analysts. If the R&D expenditures weren’t reduced by the end of the third quarter, Meece was certain that the tar-gets he had announced publicly would be missed and the company’s stock price would tumble. Meece instructed Jackson to make up the budget shortfall by the end of the third quarter using “whatever means necessary.”

Jackson was new to the controller’s position and wanted to make sure that Meece’s orders were fol-lowed. Jackson came up with the following ideas for making the third-quarter budgeted targets: a. Stop all research and development efforts on the drug Vyacon until after year-end. This change would delay the drug going to market by at least 6 months. It is possible that in the meantime a BrisCor com-petitor could make it to market with a similar drug.

b. Sell off rights to the drug Martek. The company had not planned on doing this because, under current market conditions, it would get less than fair value. It would, however, result in a one-time gain that could offset the budget shortfall. Of course, all future profits from Martek would be lost.

c. Capitalize some of the company’s R&D expenditures, reducing R&D expense on the income state-ment. This transaction would not be in accordance with GAAP, but Jackson thought it was justifi-able because the Vyacon drug was going to market early next year. Jackson would argue that capitalizing R&D costs this year and expensing them next year would better match revenues and expenses.


1. Referring to the “Standards of Ethical Behavior for Practitioners of Management Accounting and Financial Management,” Exhibit 1-7 (page 17), which of the preceding items (a–c) are acceptable to use? Which are unacceptable?

2. What would you recommend Jackson do?

2-33 Inventoriable costs versus period costs. Each of the following cost items pertains to one of these companies: Best Buy (a merchandising-sector company), KitchenAid (a manufacturing-sector company), and HughesNet (a service-sector company): a. Cost of phones and computers available for sale in Best Buy’s electronics department b. Electricity used to provide lighting for assembly-line workers at a KitchenAid manufacturing plant c. Depreciation on HughesNet satellite equipment used to provide its services d. Electricity used to provide lighting for Best Buy’s store aisles e. Wages for personnel responsible for quality testing of the KitchenAid products during the assembly process

f. Salaries of Best Buy’s marketing personnel planning local-newspaper advertising campaigns g. Perrier mineral water purchased by HughesNet for consumption by its software engineers h. Salaries of HughesNet area sales managers i. Depreciation on vehicles used to transport KitchenAid products to retail stores


1. Distinguish between manufacturing-, merchandising-, and service-sector companies. 2. Distinguish between inventoriable costs and period costs. 3. Classify each of the cost items (a–i) as an inventoriable cost or a period cost. Explain your answers.

2-34 Computing cost of goods purchased and cost of goods sold. The following data are for Marvin Department Store. The account balances (in thousands) are for 2017.

Marketing, distribution, and customer-service costs                    37,000

Merchandise inventory, January 1, 2017                                            27,000

Utilities                                                                                                                      17,000

General and administrative costs                                                               43,000

Merchandise inventory, December 31, 2017                                        34,000

Purchases                                                                                                                  155,000

Miscellaneous costs                                                                                             4,000

Transportation-in                                                                                                    7,000

Purchase returns and allowances                                                                   4,000

Purchase discounts                                                                                                  6,000

Revenues                                                                                                                 280,000


1. Compute (a) the cost of goods purchased and (b) the cost of goods sold.

2. Prepare the income statement for 2017.

Week 2 Discussion Question 1 & 2

Week 2 Discussion 1

Review case 3-4, Franklin Industries’ Whistleblowing.

Respond to the following:

What is your most powerful and persuasive response to the reasons and rationalizations you need to address? To whom should the argument be made? When and in what context?

Week 2 Discussion Question 2

Respond to this week’s discussion posted by your instructor.

Post your response in the discussion area.

Discussion Question:

Do you believe a member of the audit engagement team servicing a client should also serve on the audit committee of the board of directors of the client entity? Why or why not?

Unit VII Case Study

To read the case study below, you must first log into the myCSU Student Portal and access the Business Source Complete database found in the CSU Online Library.

Read the case study indicated below, and answer the following questions:

Marianne, J. L. (2010). Accounting for business combinations and the convergence of International Financial Reporting Standards with U.S. Generally Accepted Accounting Principles: A case study. Journal of the International Academy for Case Studies, 16(1), 95-108.

1. What key financial ratios will be affected by the adoption of FAS 141R and FAS 160? What will be the likely effect?

2. Could any of the recent and forthcoming changes affect the company’s acquisition strategies and potentially its growth?

3. What were FASB’s primary reasons for issuing FAS 141R and FAS 160?

4. What are qualifying SPEs? Do they exist under IFRS? What is the effect of FAS 166 eliminating the concept of

qualifying SPEs on the convergence of accounting standards?

5. If the company adopts IFRS, what changes should management be aware of?

6. What are the principle differences between IFRS and U.S. GAAP?

Your submission should be a minimum of three pages in length in APA style; however, a title page, a running head, and an abstract are not required. Be sure to cite and reference all quoted or paraphrased material appropriately in APA style.

The Role of Financial Statements 

The Role of Financial Statements

1700 words

As a health care manager, daily management tasks include financial management. Financial management includes items such as labor cost, equipment cost, and a budget that controls the operations. Operations requires management planning and control. The budget is created using the basic financial information and accounting principles information that an organization reports in its monthly, quarterly, and annual financial reports.

After learning the basics of financial statements, it is very important for a health care manager to understand the basic five areas of performance that set the financial plan for the organization. Define and provide an example of what the following mean:

  • Short-term solvency
  • Activity
  • Financial leverage
  • Profitability
  • Value

Define the following terms, and explain why they are important in a health care organization:

  • Current ratio
  • Total asset turnover
  • Debt ratio
  • Profit margins

Include a minimum of 2 references.

Accounting Discussion

This assignment has 3 parts:

Ethical behavior is important to the accounting profession as well as the general business environment.  Most companies have code of conduct policies and ethical training to ensure all employees understand the company’s behavior expectations and responsibilities.

  1. What are the advantages and disadvantages of a company having a formal code of conduct that employees are obligated to follow?
  2. What are your thoughts about whether employees should have to participate in mandatory ethical trainings each year?
  3. How might having a code of conduct help an employee make decisions when faced with an ethical situation?

cash flow concept

write 400–600 words that respond to the following questions with your thoughts, ideas, and comments. This will be the foundation for future discussions by your classmates. Be substantive and clear, and use examples to reinforce your ideas. The time value of money concept is one of the 3 major principles of the study and practice of financial management. It is used to evaluate potential investments, determine a rate of return on a project, calculate the required payments on a loan or annuity, and estimate a future value of funds currently invested and the present value of funds to be received at some future date. It is imperative that managers at all levels of business have a working knowledge of this topic. In your first task, you have been asked to engage your colleagues in a detailed and documented discussion about the time value of money concept: what it is, why it is important, how it is used, and generally, how the applications to single and periodic payments are computed using various calculation methods and formulas. In your initial post, identify and recommend at least 1 credible Web site that an investor can visit to find the current market value of market indexes such as the Dow Industrial Averages, and address at least 3 of the following:

• What is the discounted cash flow concept, and why is it essential for financial managers to understand and employ this important concept?

• What are the methods associated with evaluating single or periodic payments, and what is at least 1 application of each?


• Discuss the different methods that can be used to calculate these amounts, and explain how at least 1 of these models can be used.

• How can the time value of money models or formulas be used to determine the rate of return for an investment or the time it will take for a current sum to grow to a desired future amount?

• Discuss the “Rule of 72” and how it can be used to estimate how long it takes for money to double at various rates of return.


Identify and recommend at least 1 credible Web site that an investor can visit to find the current market value of market indexes such as the Dow Industrial Averages.

Assignment Objectives 

Apply the time value of money in making financial decisions.

Use effective communication, team and problem-solving skills to collaborate on a project.

Transportation Logistics Management

MINIMUM OF 250 words each

Please Follow the directions.


Each student will reflect on the BP oil spill as it relates to the global supply chain – Examine the use of current transportation economic situations such as the 2010 BP oil spill in the Gulf of Mexico in the internet exercise discussion board.

Instructions:  Your initial post should be at least 250 words.


Please answer the following questions after reviewing the reading and lessons for Week 4.

Discuss the advantages and disadvantages of a push system and a pull system. Give specific product examples as part of your discussion that are not included in the readings for this week.

Instructions:  Your initial post should be at least 250 words