Frank and Brooke manage separate departments at Vantage Corporation. Frank's department is in charge of production of products, while Brooke's is responsible for sales of products. One of the company's objectives is to minimize its investment in inventory. Whose set of responsibility reports should include the cost of storing goods awaiting sale?
What will be an ideal response?
Answers will vary
In responsibility accounting, the various responsibilities of departmental managers must be spelled out clearly. In this situation, Frank probably should be designated as being responsible for the amount of inventory on hand. If the company is trying to minimize its investment in inventory, Frank should take that goal into consideration in deciding how many units of product to make and when to make them. These decisions will affect the amount of inventory on hand. Therefore, his responsibility report should include the cost of storing finished goods inventory. These costs should not be included on Brooke's report because she cannot control the number of units produced (and thus the number of units in inventory).
You might also like to view...
A(n) ______ form of media allows receivers to observe multiple cues, such as body language and tone of voice, and allows senders to get feedback.
A. encoded B. rich C. dense D. complex E. formal
When Rogers acquired Microcell, the clients of Fido, Microcell's brand name
A. faced problems developed due to unbalanced capacities along the value chain. B. paid additional administrative costs associated with managing a more complex set of activities. C. instantly gained broader market coverage and better reception for their phones. D. incurred increased costs and associated expenses with expanded overhead and capital expenditures.
List the procedure for conducting one-way analysis of variance
What will be an ideal response?
If Department K had 2,000 units, 45% completed, in process at the beginning of the period, 12,000 units were completed during the period, and 1,200 units were 40% completed at the end of the period, what was the number of equivalent units of production for the period if the first-in, first-out method is used to cost inventories?
A) 11,580 B) 11,280 C) 13,680 D) 10,000