BUS 630 Complete Class

BUS 630 Complete Class
BUS 630 Managerial Accounting
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BUS 630 Week 1 Assignment Dell Inc Paper
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Submit a paper on one of the major topics listed
below using one of the recommended
journal articles found in the syllabus as the basis for
the paper and incorporating at least two other
related articles of the student’s choice:
Outsourcing
Supply Chain Management
Cost Cutting
Budgeting
Options
The paper must (a) identify the main issues in the
chosen area, (b) apply and reference new learning
that has occurred, (c) build upon class activities or
incidents that facilitated learning and
understanding, and (d) present specific current
and/or future applications and relevance to the
workplace. The emphasis of the paper should be on
application of new learning.
use article;
http://www.sec.gov/Archives/edgar/data/826083/
000095013405004423/d22995e10vk.htm
Must be eight- double-spaced pages in length
and formatted according to APA style as
outlined in the approved APA style guide.
Papers with more or less than eight pages in
length will have two points deducted from the

final score for each page over or under,
exclusive of Appendix, References, Exhibits,
etc.
Must include an introductory paragraph with a
succinct thesis statement.
Must address the topic of the paper with
critical thought.
Must conclude with a restatement of the thesis
and a conclusion paragraph.
Must use APA style as outlined in the approved
APA style guide to document all sources.
Must include, on the final page, a Reference List
that is completed according to APA style as
outlined in the approved APA style guide.
BUS 630 Week 1 DQ 1 Theory of Constraints
Apply the Theory of Constraints to your own
working environment (past or present). Explain
why your organization doesn’t have unlimited
resources (space, inventory, product line, etc).
Explain why there are always limits to what your
organization can do.
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BUS 630 Week 1 DQ 2 Kranbrack Corporation
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M.K. Gallant is president of Kranbrack Corporation,
a company whose stock is traded on a national
exchange. In a meeting with investment analysts at

the beginning of the year, Gallant had predicted
that the company’s earnings would grow by 20%
this year. Unfortunately, sales have been less than
expected for the year, and Gallant concluded with
two weeks of the end of the fiscal year that it
would impossible to ultimately report an increase
in earning as large as predicted unless some drastic
action was taken. Accordingly, Gallant has ordered
that wherever possible, expenditures should be
postponed to the new year – including canceling or
postponing orders with suppliers, delaying planned
maintenance and training, and cutting back on endof-the-year
advertising and travel. Additionally,
Gallant ordered the company’s controller to
carefully scrutinize all costs that are currently
classified as period costs and reclassify as many as
possible as product costs. The company is expected
to have substantial inventories of work in process
and finished goods at the end of the year.
Comment on the following questions. Respond to
at least two of your fellow students’ postings.
Why would reclassifying period costs as
product costs increase this period’s reported
earnings?
Do you believe Gallant’s actions are ethical?
Why or why not?

Assgnt. The questions in this exercise are based
on Dell, Inc. To answer the questions, you will need
to download Dell’s 2005 Form 10-K. You do not
need to print this document in order to answer the
questions.
What is Dell’s strategy for success in the
marketplace? Does the company rely primarily
on a customer intimacy, operational
excellence, or product leadership customer
value proposition? What evidence supports
your conclusion?
What business risks does Dell face that may
threaten its ability to satisfy stockholder
expectations? What are some examples of
control activities that the company could use to
reduce these risks? (Hint: Focus on pages 7-10
of the 10-K.)
How as the Sarbanes-Oxley Act of 2002
explicitly affected the disclosures contained in
Dell’s 10-K report? (Hint: Focus on pages 34-35,
59, and 76-78.)
Is Dell a merchandiser or a manufacturer?
What information contained in the 10-K
supports your answer?
What are some examples of direct and indirect
inventoriable costs for Dell? Why has Dell’s

gross margin (in dollars) steadily increased
from 2003 to 2005, yet the gross margin as a
percentage of net revenue only increased
slightly?
What is the inventory balance on Dell’s January
28, 2005 balance sheet? Why is the inventory
balance so small compared to the other current
asset balances? What competitive advantage
does Dell derive from its low inventory levels?
Page 27 of Dell’s 10-K reports a figure called
the crash conversion cycle. The cash conversion
cycle for Dell has consistently been negative. Is
this a good sign for Dell or a bad sign? Why?
Describe some of the various types of
operating expenses incurred by Dell. Why are
these expenses treated as period costs?
List four different cost objects for Dell. For each
cost object, mention one example of a direct
cost and an indirect cost.
BUS 630 Week 2 Assignment Basic CVP
Analysis Fashion Shoe Company

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Complete the following exercise
(Problem 4-21) and submit to your instructor.
The Fashion Shoe Company operates a chain of
women’s shoe shops around the country. The
shops carry many styles of shoes that are all
sold at the same price. Sales personnel in the
shops are paid a substantial commission on
each pair of shoes sold (in addition to a small
basic salary) in order to encourage them to be
aggressive in their sales efforts.
The following worksheet contains cost and
revenue data for Shop 48 and is typical of the

company’s many outlets:
Per Pair
of
Shoes
Selling
price
$
30.00
Variable
expenses:
Invoice
cost
$
13.50
Sales
commission 4.50
Total
variable
expenses
$
18.00

Annual
Fixed
expenses:
Advertising $
30,000
Rent
20,000
Salaries
Total fixed
expenses
100,000
$
150,000
Calculate the annual break-even point in
dollar sales and in unit sales for Shop 48.
Prepare a CVP graph showing cost and
revenue data for Shop 48 from zero shoes
up to 17,000 pairs of shoes sold each year.
Clearly indicate the break-even point on
the graph.

If 12,000 pairs of shoes are sold in a year,
what would be Shop 48's net operating
income or loss?
The company is considering paying the
store manager of Shop 48 an
incentive commission of Shop 48 an
incentive commission of 75 cents per pair
of shoes (in addition to the salesperson's
commission). If this change is made, what
will be the new break-even point in dollar
sales and in unit sales?
Refer to the original data. As an alternative
to (4) above, the company is considering
paying the store manager 50 cents
commission on each pair of shoes sold in
excess of the break-even point. If this
change is made, what will be the shop's net
operating income or loss if 15,000 pairs of
shoes are sold?
Refer to the original data. The company is
considering eliminating sales commissions
entirely in its shops and increasing fixed
salaries by $31,500 annually. If this change
is made, what will be the new break-even
point in dollar sales and in unit sales for
Shop 48? Would you recommend that the
change be made? Explain.

Carefully review the Grading Rubric for the
criteria that will be used to evaluate your
assignment.
BUS 630 Week 2 DQ 1 Downsizing and Fixed Cost
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Downsizing and Fixed Costs
1. Industry downsizing has been a major part of
the corporate world, even government
agencies are downsizing.
GovernmentExecutive.com "covers the

usiness of the federal government and its
huge departments and agencies - dozens of
which dwarf the largest institutions
in the private sector" on its website. Read the
assigned Government Executive
article and answer the following questions:
Which industries have substantially reduced
fixed cost commitments?
Do you believe this reduction in costs has
substantially impaired the ability of these
industries to meet the needs of their
customers? Respond to at least two of your
fellow students’ postings.
BUS 630 Week 2 DQ 2 Direct Labor Variable or
Fixed Cost
Throughout the corporate world, businesses are
transforming labor into a more flexible (and
variable) cost. Among such companies are
Hewlett-Packard, General Electric, DuPont, Sun
Microsystems, and British Airways. Discuss
whether direct labor is a fixed or a variable cost.
What are the pros and cons of management

treating direct labor as a variable cost? Are there
ethical issues to be considered here?
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BUS 630 Week 3 Assignment JetBlue Airways
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Complete the following exercise (Research and
Application 7-20) and submit to your instructor.
The questions in this exercise are based on JetBlue
Airways Corporation. To answer the questions, you
will need to download JetBlue’s 10-K/A for the year
ended December 31, 2004 (10K/A with a filing date
of March 8, 2005). You do not need to print the 10-
K/A to answer the questions.
Required:
• What is JetBlue’s strategy for success in the
marketplace? Does the company rely primarily on
a customer intimacy, operational excellence, or
product leadership customer value proposition?
What evidence supports your conclusion?
• What business risks does JetBlue face that may
threaten the company’s ability to satisfy
stockholder expectations? What are some
examples of control activities that the company
could use to reduce these risks? (Hint: Focus on
pages 17-23 of the 10-K/A.)
• How can the concept of unit-level activities be
applies to an airline? More specifically, what are
two examples of unit-level activities for JetBlue?
What steps has JetBlue taken to manage these
unit-level activities more efficiently?

• How can the concept of batch-level activities be
applied to an airline? What are two examples of
batch-level activities for JetBlue? What steps has
JetBlue taken to manage these batch-level activities
more efficiently?
• What is one example of a customer-level
activity and an organization-sustaining activity for
JetBlue?
Noreen, E. W., Brewer, P. B., Garrison R. H. (2011).
Managerial accounting for managers (2nd ed.).
New York, NY: McGraw Hill. ISBN: 978-0-07-
352713-0.
BUS 630 Week 3 DQ 1 Fixed Labor
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Far North Telecom, Ltd., of Ontario, has organized a
new division to manufacture and sell specialty
cellular telephones. The division’s monthly costs
are shown in the table below. Far North Telecom
regards all of its workers as full-time employees
and the company has a long-standing no layoff
policy. Furthermore, production is highly
automated. Accordingly, the company includes its
labor costs in its fixed manufacturing overhead.
The cellular phones sell for $150 each. During
September, the first month of operations, the
following activity was recorded: 12,000 units
produced, 10,000 units sold. Comment on the five
questions below the table. Respond to at least two
of your fellow students’ postings.
Manufacturing costs:
Variable costs per
unit:
Direct Materials $48
Variable
$2
manufacturing

overhead
Fixed manufacturing
overhead costs (total) $360,000
Selling and
administration costs:
Variable
12% of
sales
Fixed (total) $470,000
a. Compute the unit product cost under:
i. absorption costing
ii. variable costing
b. Prepare an absorption costing income statement
for September
c. Prepare a contribution format income statement
for September using variable costing.
d. Assume that the company must obtain
additional financing in order to continue
operations. As a member of top management,
would you prefer to rely n the statement in (b)
above or in (3) above when meeting with a group of
prospective investors?
e. Reconcile the absorption costing and variable
costing net operating incomes in (2) and (3) above.

Complete the following exercise (Research and
Application 7-20) and submit to your instructor.
The questions in this exercise are based on JetBlue
Airways Corporation. To answer the questions, you
will need to download JetBlue’s 10-K/A for the year
ended December 31, 2004 (10K/A with a filing date
of March 8, 2005). You do not need to print the 10-
K/A to answer the questions.
Required:
• What is JetBlue’s strategy for success in the
marketplace? Does the company rely primarily on
a customer intimacy, operational excellence, or
product leadership customer value proposition?
What evidence supports your conclusion?
• What business risks does JetBlue face that may
threaten the company’s ability to satisfy
stockholder expectations? What are some
examples of control activities that the company
could use to reduce these risks? (Hint: Focus on
pages 17-23 of the 10-K/A.)
• How can the concept of unit-level activities be
applies to an airline? More specifically, what are
two examples of unit-level activities for JetBlue?
What steps has JetBlue taken to manage these
unit-level activities more efficiently?

• How can the concept of batch-level activities be
applied to an airline? What are two examples of
batch-level activities for JetBlue? What steps has
JetBlue taken to manage these batch-level activities
more efficiently?
• What is one example of a customer-level
activity and an organization-sustaining activity for
JetBlue?
Noreen, E. W., Brewer, P. B., Garrison R. H. (2011).
Managerial accounting for managers (2nd ed.).
New York, NY: McGraw Hill. ISBN: 978-0-07-
352713-0.
BUS 630 Week 3 DQ 2 Profitability
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Complete the following exercise and respond to at
least two of your fellow students' postings.
Gallatin Carpet Cleaning is a small, family-owned
business operating out of Bozeman, Montana. For
its services, the company has always charged a flat
fee per hundred square feet of carpet cleaned. The
current fee is $28 per hundred square feet.
However, there is some question about whether
the company is actually making any money on
jobs for some customers-particularly those located
on remote ranches that require considerable
travel time. The owner's daughter, home for the
summer from college, has suggested investigating
this question using activity-based costing. After
some discussion, a simple system consisting of four
activity cost pools seemed to be adequate. The
activity cost pools and their activity measures
appear below:
Activity Cost Pool
Cleaning carpets
Activity
Measure
Square
feet
cleaned
Activity
for the
Year
20,000
hundred

Travel to jobs
Job support
Other (costs of idle
capacity and
organization-sustaining
costs)
(00s)
square
feet
Miles 60,000
driven miles
Number of
2,000 jobs
jobs
None
Not
applicable
The total cost of operating the company for the
year is $430,000, which includes the following
costs:
Wages
$
150,000
Cleaning
supplies 40,000
Cleaning
equipment
20,000
depreciation
Vehicle
expenses 80,000
Office expenses 60,000

President's
compensation 80,000
$
430,000
Resource consumption is distributed across the
activities as follows:
Distribution
of Resource
Consumptio
n Across
Activities
Cleanin
g
Trave
l to
Job
Carpets Jobs Suppor
t
Othe
r
Total
100
Wages 70% 20% 0% 10%
%
Cleaning
100
100% 0% 0% 0%
supplies
%
Cleaning
100
equipment 80% 0% 0% 20%
%
depreciation
Vehicle
100
0% 60% 0% 40%
expenses
%
Office 0% 0% 45% 55% 100

expenses %
President's
100
compensatio 0% 0% 40% 60%
%
n
Job support consists of receiving calls from
potential customers at the home office, scheduling
jobs, billing, resolving issues, and so on.
Using Exhibit 7-5 as a guide, prepare the firststage
allocation of costs to the activity cost
pools.
Using Exhibit 7-6 as a guide, compute the
activity rates for the activity cost pools.
The company recently completed a 5 hundred
square foot carpet -cleaning job at the Flying
N ranch--a 75-mile round-trip journey from
the company's offices in Bozeman. Compute
the cost of this job using the activity-based
costing system.
The revenue from the Flying N ranch was
$140 (5 hundred square feet @ $28 per
hundred square feet). Using Exhibit 7-11 as a
guide, prepare a report showing the margin
from this job.
What do you conclude concerning the
profitability of the Flying N ranch job?
Explain.

What advice would you give the president
concerning pricing jobs in the future?
BUS 630 Week 4 Assignment Master Budget Exercise
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Complete the following three exercises and submit
to your instructor. Be sure to show your work for
calculations to earn full credit.
Sales and Production Budgets (8-12): The marketing
department of Jessi Corporation has submitted the

following sales forecast for the upcoming fiscal year
(all sales are on account):
1 st Quarte 2 nd Quarte 3 rd Quarte 4 th Quarte
r r r r
Units to
be
produce
d
11,000 12,000 14,000 13,000
The selling price of the company's product is $18.00
per unit. Management expects to collect 65% of
sales in the quarter in which the sales are made,
30% in the following quarter, and 5% of sales are
expected to be "'uncollectible. The beginning
balance of accounts receivable, all of which is
expected to be collected in the first quarter, is
$70,200. The company expects to start the first
quarter with 1,650 units in finished goods
inventory. Management desires an ending finished
goods inventory in each quarter equal to 15% of the
next quarter's budgeted sales. The desired ending
finished goods inventory for the fourth quarter is
1,850 units.
· Prepare the company's sales budget
and schedule of expected cash collections.

· Prepare the company's production
budget for the upcoming fiscal year.
Direct Materials and Direct Labor Budgets (8-
13): The production department of Hareston
Company has submitted the following forecast of
units to be produced by quarter for the upcoming
fiscal year:
1 st Quarte
r
Units to
be
produce
d
2 nd Quarte
r
3 rd Quarte
r
4 th Quarte
r
7,000 8,000 6,000 5,000
In addition, the beginning raw materials inventory
for the first quarter is budgeted to be 1,400 pounds
and the beginning accounts payable for the first
quarter is budgeted to be $2,940. Each unit requires
2 pounds of raw material that costs $1.40 per
pound. Management desires to end each quarter
with an inventory of raw materials equal to 10% of
the following quarter's production needs. The
desired ending inventory for the fourth quarter is
1,500 pounds. Management plans to pay for 80% of
raw material purchases in the quarter acquired and
20% in the following quarter. Each unit requires

0.60 direct labor-hours and direct labor-hour
workers are paid $14.00 per hour.
· Prepare the company's direct materials budget
and schedule of expected cash disbursements for
purchases of materials for the upcoming fiscal year.
· Prepare the company's direct labor budget for the
upcoming fiscal year, assuming that the direct labor
workforce is adjusted each quarter to match the
number of hours required to produce the
forecasted number of units produced.
Direct Labor and Manufacturing Overhead Budgets
(8-14): The production department of Raredon
Corporation has submitted the following forecast of
units to be produced by quarter for the upcoming
fiscal year:
1 st Quarte
r
Units to
be
produce
d
2 nd Quarte
r
3 rd Quarte
r
4 th Quarte
r
12,000 14,000 13,000 11,000
Each unit requires 0.70 direct labor-hours, and
direct labor-hour workers are paid $10.50 per hour.
In addition, the variable manufacturing overhead
rate is $1.50 per direct labor-hour. The fixed

manufacturing overhead is $80,000 per quarter.
The only noncash element of manufacturing
overhead is depreciation, which is $22,000 per
quarter.
· Prepare the company's direct labor budget for the
upcoming fiscal year, assuming that the direct labor
workforce is adjusted each quarter to match the
number of hours required to produce the
forecasted number of units produced.
· Prepare the company's manufacturing overhead
budget.
Carefully review the Grading Rubric for the criteria
that will be used to evaluate your assignment.
BUS 630 Week 4 DQ 1 Behavioral Aspects of
Budgeting
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Norton Company, a manufacturer of infant
furniture and carriages, is in the initial stages
of preparing the annual budget for next year.
Scott Ford has recently joined Norton’s
accounting staff and is interested to learn as
much as possible about the company’s
budgeting process. During a recent lunch with
Marge Atkins, sales manager, and Pete
Granger, production manager. Ford initiated
the conversation below. Read the conversation
and answer the questions that follow.
Respond to at least two of your fellow
students’ postings.
Ford:
Since I’m new around here and am going to be
involved with the preparation of the annual
budget, I’d be interested to learn how the two
of you estimate sales and production numbers.
Atkins:

We start out very methodically by looking at
recent history, discussing what we know about
current accounts, potential customers, and the
general state of consumer spending. Then, we
add that usual dose of intuition to come up
with the best forecast we can.
Granger:
I usually take the sales projections as the basis
for my projections. Of course, we have to make
an estimate of what this year’s ending
inventories will be, which is sometimes
difficult.
Ford:
Why does that present a problem? There must
have been an estimate of ending inventories in
the budget for the current year.
Granger:
Those numbers aren’t always reliable because
Marge makes some adjustments to the sales
numbers before passing them on to me.
Ford:
What kind of adjustments?
Atkins:

Well, we don’t want to fall short of the sales
projections so we generally give ourselves a
little breathing room by lowering the initial
sales projection anywhere from 5% to 10%.
Granger:
So, you can see why this year’s budget is not a
very reliable starting point. We always have to
adjust the projected production rates as the
year progresses and, of course, this changes
the ending inventory estimates. By the way,
we make similar adjustments to expenses by
adding at least 10% to the estimates; I think
everyone around here does the same thing.
a. Marge Atkins and Pete Granger have
described the use of what is sometimes called
budgetary slack.
i. Explain why Atkins and Granger behave in
this manner and describe the benefits they
expect to realize from the use of budgetary
slack.
ii. Explain how the use of budgetary slack
can adversely affect Atkins and Granger.
b. As a management accountant, Scott Ford
believes that the behavior described by Marge
Atkins and Pete Granger may be unethical. By
referring to the IMA’s Statement of Ethical

Professional Practice in chapter 1, explain why
the use of budgetary slack may be unethical.
BUS 630 Week 4 DQ 2 Critiquing a Cost Report
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Complete the following exercise: Frank Weston,
supervisor of the Freemont Corporation's
Machining Department, was visibly upset after
being reprimanded for his department's poor
performance over the prior month. The
department's cost control report is given below:

"I just can't understand all the red ink," Weston
complained to the supervisor of another
department. "When the boss called me in, I
thought he was going to give me a pat on the back
because I know for a fact that my department
worked more efficiently last month than it has ever
worked before, instead, he tore me apart. I thought
for a minute that it might be over the supplies that
were stolen out of our warehouse last month. But
they only amounted to a couple of hundred dollars,
and just look at this report. Everything is
unfavorable." Direct labor wages and supplies are
variable costs; supervision and depreciation are
fixed costs; and maintenance and utilities are
mixed costs. The fixed component of the budgeted
maintenance cost is $92,000; the fixed component
of the budgeted utilities cost is $11,700.
Freemont
Corporation-
Machining
Department
Cost Control Report
For the Month Ended
June 30
Planning
Budget
Actual
Results Variances

Machine-hours 35,000 38,000
Direct labor wages $80,500 $86,100 $5,600 U
Supplies 21,000 23,100 2,100 U
Maintenance 134,000 137,300 3,300 U
Utilities 15,200 15,700 500 U
Supervision 38,000 38,000
Depreciation 80,000 80,000
Total $368,700 $380,200
Evaluate the company's cost control report and
explain why the variances were all
unfavorable.
Prepare a performance report that will help
Mr. Weston's superiors assess how well costs
were controlled in the Machining Department.
Respond to at least two of your fellow students’
postings.
BUS 630 Week 5 Assignment FedEx
Corporation
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What is FedEx’sstrategy for success in the
marketplace? Does the company rely primarily
on acustomer intimacy, operations excellence,
or product leadership customer
valueproposition? What evidence supports
your conclusion?
What are FedEx’sfour main business
segments? Provide two examples of traceable
fixed costs foreach of FedEx’s four business
segments. Provide two examples of common
costs that are not traceable to the
four business segments.
Identify oneexample of a cost center, a profit
center, and an investment center for FedEx.
Provide threeexamples of fixed costs that can
be traceable or common depending on how

FedExdefines its business segments.
Compute themargin, turnover, and return on
investment (ROI) in 2005 for each of
FedEx’sfour business segments (Hint: page 99
reports total segment assets for eachbusiness
segment.)
Assume that FedExestablished a minimum
required rate of return of 15% for each of its
businesssegments. Compute the residual
income earned in 2005 in each of FedEx’s
foursegments.
Assume that thesenior managers of FedEx
Express and FedEx Ground each have an
investmentopportunity that would require $20
million of additional operating assets andthat
would increase operating income by $4
million. If FedEx evaluates all of its senior
managersusing ROI, would the managers of
both segments pursue the
investment opportunity? If FedEx evaluates all
ofits senior managers using residual income,
would the managers of both segmentspursue
the investment opportunity?

BUS 630 Week 5 DQ 1 Variance Analysis in a
Hospital
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630-Week-5-DQ-1-Variance-Analysis-in-a-Hospital
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Complete problem 10-15 in the text and answer the
three required questions. John Fleming, chief
administrator for Valley View Hospital, is concerned
about the costs for tests in the hospital's lab.
Charges for lab tests are consistently higher at
Valley View than at other hospitals and have
resulted in many complaints. Also, because of strict
regulations on amounts reimbursed for lab tests,
payments received from insurance companies and
governmental units have not been high enough to
cover lab costs. Mr. Fleming has asked you to

evaluate costs in the hospital's lab for the past
month. The following information is available:
Two types of tests are performed in the labblood
tests and smears. During the past month,
1,800 blood tests and 2,400 smears were
performed in the lab. Small glass plates are
used in both types of tests. During the past
month, the hospital purchased 12,000 plates at
a cost of $28,200. This cost is net of a 6%
quantity discount. 1,500 of these plates were
unused at the end of the month; no plates
were on hand at the beginning of the month.
During the past month, 1,150 hours of labor
time were recorded in the lab at a cost of
$13,800.
The lab's variable overhead cost last month
totaled $7,820.
Valley View Hospital has never used standard costs.
By searching industry literature, however, you have
determined the following nationwide averages for
hospital labs:
Plates: Two plates are required per lab test. These
plates cost $2.50 each and are disposed of after the
test is completed.
Labor: Each blood test should require 0.3 hours to
complete, and each smear should require 0.15

hours to complete. The average cost of this lab time
is $14 per hour.
Overhead: Overhead cost is based on direct laborhours.
The average rate for variable overhead is $6
per hour.
Compute a materials price variance for the
plates purchased last month and a materials
quantity variance for the plates used last
month.
For labor cost in the lab:
o Compute a labor rate variance and a labor
o
efficiency variance.
In most hospitals, one-half of the workers
in the lab are senior technicians and onehalf
are assistants. In an effort to reduce
costs, Valley View Hospital employs only
one-fourth senior technicians and threefourths
assistants. Would you recommend
that this policy be continued? Explain.
Compute the variable overhead rate and efficiency
variances. Is there any relation between the
variable overhead efficiency variance and the labor
efficiency variance? Explain.

BUS 630 Week 5 DQ 2 Perverse Affects of Some
Performance Measures
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Complete the following exercise and provide a
recommendation for each of the four scenarios
presented. There is often more than one way to
improve a performance measure. Unfortunately,
some of the actions taken by managers to make
their performance look better may actually harm
the organization. For example, suppose the
marketing department is held responsible only for
increasing the performance measure "total
revenues," Increases in total revenues may be
achieved by working harder and smarter, but they
can also usually be achieved by simply cutting

prices. The increase in volume from cutting prices
almost always results in greater total revenues;
however, it does not always lead to greater total
profits. Those who design performance
measurement systems need to keep in mind that
managers who are under pressure to perform may
take actions to improve performance measures
that have negative consequences elsewhere. For
each of the following situations, describe actions
that managers might take to show improvement in
the performance measure but which do not actually
lead to improvement in the organization's overall
performance.
Concerned with the slow rate at which new
products are brought to market, top
management of a consumer electronics
company introduces a new performance
measure--speed-to-market. The research and
development department is given
responsibility for this performance measure,
which measures the average amount of time a
product is in development before it is released
to the market for sale.
The CEO of a telephone company has been
under public pressure from city officials to fix
the large number of public pay phones that do

not work. The company's repair people
complain that the problem is vandalism and
damage caused by theft of coins from coin
boxes--particularly in high-crime areas in the
city. The CEO says she wants the problem
solved and has pledged to city officials that
there will be substantial improvement by the
end of the year. To ensure that this is done, she
makes the managers in charge of installing and
maintaining pay phones responsible for
increasing the percentage of public pay phones
that are fully functional.
A manufacturing company has been plagued by
the chronic failure to ship orders to customers
by the promised date. To solve this problem,
the production manager has been given the
responsibility of increasing the percentage of
orders shipped on time. When a customer calls
in an order, the production manager and the
customer agree to a delivery date. If the order
is not completed by that date, it is counted as a
late shipment.
Concerned with the productivity of employees,
the board of directors of a large multinational
corporation has dictated that the manager of
each subsidiary will be held responsible for

increasing the revenue per employee of his or
her subsidiary.
Respond to at least two of your fellow students’
postings.
BUS 630 Week 6 Assignment Final Project
Submit a paper on one of the major topics listed
below using one of the recommended
journal articles found in the syllabus as the basis
for the paper and incorporating at least two other
related articles of the student’s choice:
Cost Management
Outsourcing
Supply Chain Management
Cost Cutting
Budgeting
Options
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BUS 630 Week 6 DQ 1 Make Or Buy
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Han Products manufactures 30,000 units of
part S-6 each year for use on its production
line. At this level of activity, the cost per unit
for part S-6 is as follows:
Direct
$ 3.60
materials
Direct labor 10.00
Variable
manufacturing 2.40
overhead
Fixed
manufacturing 9.00
overhead
Total cost per
$25.00
part

An outside supplier has offered to sell 30,000
units of part S-6 each year to Han Products for
$21 per part. If Han Products accepts this
offer, the facilities now being used to
manufacture part S-6 could be rented to
another company at an annual rental of
$80,000. However, Han Products has
determined that two-thirds of the fixed
manufacturing overhead being applied to part
S-6 would continue even if part S-6 were
purchased from the outside supplier. Prepare
computations showing how much profits will
increase or decrease if the outside supplier’s
offer is accepted. Respond to at least two of
your fellow students’ postings.
BUS 630 Week 6 DQ 2 Net Present Value
Analysis
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Complete the following exercise, using this
Excel template, and respond to at least two of
your fellow students’ postings.. In eight years,
Kent Duncan will retire. He is exploring the
possibility of opening a self-service car wash.
The car wash could be managed in the free
time he has available from his regular
occupation, and it could be closed easily when
he retires. After careful study, Mr. Duncan has
determined the following:
A building in which a car wash could be
installed is available under an eight-year
lease at a cost of $1,700 per month.
Purchase and installation costs of
equipment would total $200,000. In eight
years the equipment could be sold for
about 10% of its original cost.
An investment of an additional $2,000
would be required to cover working
capital needs for cleaning supplies, change
funds, and so forth. After. eight years, this

working capital would be released for
investment elsewhere.
Both a wash and a vacuum service would
be offered with a wash costing $2.00 and
the vacuum costing $1.00 per use.
The only variable costs associated with the
operation would be 20 cents per wash for
water and 10 cents per use of the vacuum
for electricity.
In addition to rent, monthly costs of
operation would be: cleaning, $450;
insurance, $75; and maintenance, $500.
Gross receipts from the wash would be
about $1,350 per week. According to the
experience of other car washes, 60% of the
customers using the wash would also use
the vacuum.
Mr. Duncan will not open the car wash unless it
provides at least a 10% return.
Assuming that the car wash will be open
52 weeks a year, compute the expected
annual net cash receipts (gross cash
receipts less cash disbursements) from its
operation. (Do not include the cost of the
equipment, the working capital, or the
salvage value in these computations.)
(Ignore income taxes.)

Would you advise Mr. Duncan to open the
car wash? Show computations using the
net present value method of investment
analysis. Round all dollar figures to the
nearest whole dollar. (Ignore income
taxes.)