DeVoe School of business

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DeVoeSchool of businessACC310Accounting Decisions for Managers

WORKSHOPFIVE

Handoutfor Dropbox 5.4 Multimedia Assignment (Chapter 11)

Enteryour responses here forActivity1: Review the E-lectures for each chapter objective.

Question

Response

  1. What is responsibility accounting and what is its impact on decision making?

Cengage (2007) defines responsibility accounting as a concept based on the assumption that every cost incurred must be a responsibility of a specific person in the firm. The main idea behind responsibility accounting is to ensure that every person in the senior management can be judged for their performance. The concept also ensures a reasonable distribution of responsibilities down through the organization’s hierarchy. Responsibility accounting therefore, ensures that managers are making the optimal decision because they are held liable for the outcomes.

  1. Define an investment center and explain how investment center managers might be evaluated.

An investment center is a business unit that utilizes capital to generate directly profit (Cengage, 2007). Investment center managers can be evaluated through the performance of the investment in accordance with the revenue it brings. The performance measurement can be measured using various metrics such as return on investment (ROI), residual income (RI) and economic value added (EVA). Unlike profit center, investment center utilizes capital to purchase other assets.

Enteryour responses here for Activity 2: Review EAV: Herman Miller

Question

Response

Explain generally how the use of EVA metrics has helped Herman Miller improve its profitability as compared to when it focused on metrics prescribed by generally accepted accounting principles.

Starting from years 2000s the CFO, Walker of Merman Miller Inc. started a new way of improving the profitability of the organization just like many firms had done. Herman Miller focused more on the shareholders’ value maximization. The firm believed that a firm can never attain this without creating an economic value added (EVA). Positive EVA can only be attained at high profitability above the cost of capital. This new metric therefore helped the firm in focusing more on the profitability maximization than it was there before when the firm was using GAAP in assessing its financial performance.

Enteryour responses here for Activity 3: Quiz Bowl

Question

Response

Complete the Quiz Bowl and post your score in the response box

Reference

Cengage(2007). Manegerial Accounting. Retrieved December 12 2015from http://vrle.go.galegroup.com/vrle/printdoc.do?sgHitCountType=None&ampsort=&ampprodId=V

DeVoe School of business

  • Uncategorized

DeVoeSchool of businessACC310Accounting Decisions for Managers

WORKSHOPFOUR

Handoutfor Dropbox 4.4 Multimedia Assignment (Chapter 9)

Enteryour responses here forActivity1: Review the E-lectures for each chapter objective.

Question

Response

  1. What are some of the characteristics of a typical budget?

Budgets are guided by elaborate strategic plans encompassing all facets of an organization. Budgets are always future oriented since they are used in planning. Forecasts and estimates form an integral part of budgets. Budgets provide guidance on production, expenditure, sales, and labor.

  1. Why is the sales budget the most important piece of the budgeting process?

The sales budget is the first section of the production budget. Other components of the production budget such as purchases, selling and administrative expenses, cash, and financial statements spring from the sales budget. Therefore, a minor error in the sales budget creates disproportionately higher errors in other budgets. Furthermore, sales budgets are used to anchor the strategic plan by informing of an organization’s cash needs.

Enteryour responses here for Activity 2: Review EAV: High Sierra SportCompany

Question

Response

Explain how High Sierra uses the 80/20 rule, along with its budgeting process, to make decisions to improve future profitability.

High Sierra has implemented a total quality management system to increase future profitability by improving quality and reducing production costs. In particular, the company has reduced the time-to-market of products by 20% in order to increase shareholder returns. This is also coupled with an 80% increase in sales. Using this approach, Sierra High has laid the groundwork for improved profitability in the future.

Enteryour responses here for Activity 3: Quiz Bowl

Question

Response

Complete the Quiz Bowl and post your score in the response box

80%

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