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Answer the following regarding costing and overhead

In traditional costing system using a single plant wide overhead recovery system the following occurs:

  1. High volume products will be allocated an unrealistically high amount of overhead
  2. Direct labour as a % of total manufacturing cost will decrease
  3. There will be over-applied overhead at the end of the month
  4. Managers will ignore overhead allocation

The cost of calculating activity cost rates for the first time:

  1. is mandated by Canada Revenue Agency
  2. one of the disadvantages of activity-based costing
  3. one of the advantages of activity-based costing
  4. is only required at inception and never revisited again

One of the cost pools identified by Kingsway Inc is the cost of setting up suitable activity base for allocating this cost pool:

  1. machine hours
  2. machine setup
  3. direct labour hours
  4. direct labour cost

The formula for calculating an activity based overhead rate is:

  1. total direct material divided by total units produced
  2. total overhead divided by total direct labour hours
  3. total cost pool dollars divided by units of activity
  4. total direct labour divided by units of activity
 
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Case Study:

Though Ellen Arnold had been with the firm for less than six weeks, she had already caused considerable problems for Jim Staples, Doris Nusbaum and the architects. Staples was the office manager whose branch of a large architectual firm had 25 architects and 8 personal assistants. While he was in charge of the entire office, Nusbaum was in charge of the personal assistants who were not assigned to work for particular architects, but were assigned by Nusbaum to tasks on an as-needed basis.

Ellen Arnold had been brought to the office by her father, one of the firm’s founders who worked at a different office. The father announced that he had hired his daughter to work for Nusbaum during this and future summer vacations from college. Unfortunately, Ellen had no skills whatsoever that related to the duties required. In addition, the office was fully staffed and did not need any additional help.

Nusbaum was irate when she learned that she was to find work for and supervise Ellen. She was particularly upset that Ellen was hired without the firm following the standard selection process and that Arnold just, “dumped her on her doorstep.” She told Staples, “Ellen has no knowledge of architecture whatsoever. I have no work for her. I don’t want to have anything to do with her!”

On her first day of work, Ellen was shown her desk but was assigned no specific tasks. Within a few days, she introduced herself to all of the architects and started spending more and more time in their offices. Wanting to make a favorable impression on Ellen’s father, the architects willingly talked with her at length. One of the young architects was particularly taken by her, and vice versa. She spent more time in his office than any other. Meanwhile, the other personal assistants were starting to complain about all of the attention that Ellen was receiving and that she was not doing her share of the administrative tasks. In addition, the architects were falling behind in their work. A vicious rumor was circulating that Ellen had a brother who might also be thrust upon the office. During all of this, Nusbaum refused to have anything to do with Ellen and reminded Staples that she was his problem.

Questions:

What are the major problems in this case? If you were Jim Staples, what steps would you take to solve the problems depicted in this case? What are the advantages and disadvantages of having a “no nepotism” policy?

 
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Peer Exchange -In this assignment you will imagine that you need to speak with an employee about an area in which they are not working to expectations. The first half of the you will use the scenario you make up and provide feedback/feedforward. In the second half of the you will do the same thing but use criticism instead. For example, you could pretend you are the supervisor meeting with an employee about being chronically late. In the first half , you demonstrate how you would have that conversation in a more supportive/feedback-driven tone. For the second half, you would demonstrate that same scenario only using a more critical (perhaps blunt) approach. The purpose of the assignment is to help students see and note the differences in approach. Remember that tone, word choice, and posture play a role in how your message will be interpreted by the employee, regardless of your intent.
 
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Sixty-six willing Australian drinkers helped a Federal Court judge decide that

Tooheys did not engage in misleading or deceptive advertising for its 2.2 beer, which contains 2.2

percent alcohol, compared to 6 percent for other beers leading to a claim that could be interpreted

as implying it was non-alcoholic. Drunken driving laws prohibit anyone with a blood-alcohol

level above 0.50 from driving in Australia. An experiment was conducted to see what happens

when a lot of 2.2 is consumed. However, some subjects couldn’t drink the required 10 “middies,”

an Aussie term for a beer of 10 fluid ounces within an hour. Some got sick and were excluded,

and a few more could not even drink the minimum number of drinks. The judged observed that

consuming enough 2.2 in an hour to reach the legal limit was “uncomfortable and therefore and

unlikely process.” Because none of the ads mentioned such extreme quantities, he ruled that the

ads could not be found misleading or deceptive.

  • Who do you think would suggest this experiment?
  • Would this be more valid in a lab or in the ‘field’?
  • Describe an alternative experiment that the judge could use to make a decision on the events in question.
  • Criticize your suggestion as unethical.
  • What is more important: validity or ethics?
 
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