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1. Identify the ethical issues in this case. 2. Who are the stakeholders and what are their stakes?
3. What is your appraisal of the ethics of the travel expense billing practices described in the
case? What are the ethical arguments for and against them? 4. Did Roberts’s complaint to the
ethics department help or no

If Sherron Watkins had blown the whistle to the Houston Chronicle and not to Enron’s CEO
Ken Lay, do you think she would have kept her job at Enron?

Why is employee engagement important and what is its relationship to ethics?

1. What are the ethical issues in this case? 2. Was Martha Stewart guilty of a serious crime, or
was she a scapegoat for other, more serious, CEO malfeasants who had not yet been brought to
justice? 3. Was the media attention given to the Martha Stewart case excessive? Did this help or
hurt her case? 4. Did Ms. Stewart

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1. Identify the ethical issues involved in the case from a consequentialist and deontological
perspective (refer to Chapter 2). 2. Identify the management issues involved in the case. For
example, think about the case in terms of multiple ethical selves, norms, reward systems,
diffusion of responsibility, obedience to

1. What are the ethical issues in this case? 2. What are some reasons the decision maker in this
case might be inclined to go along? Not go along? 3. If you were the decision maker, how would
you handle the situation? 4. Would you report the conversation to your manager? Why or why
not? You’ve recently been promoted

On August 10, 1978, three teenage girls died horribly in an automobile accident. Driving a 1973
Ford Pinto to their church volleyball practice in Goshen, Indiana, they were struck from behind
by a Chevrolet van. The Pinto’s fuel tank ruptured and the car exploded in flames. Two
passengers, Lynn Marie Ulrich, 16, and

1. If the applicant mistakenly thought that her record had been cleared over time and therefore
did not lie intentionally, would that make any difference? 2. Should the fact that the applicant did
not tell the truth on one part of the application automatically disqualify her from further
consideration? 3. Should the su

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1. What are the major and minor ethical issues involved in this case? 2. Who are the stakeholders
and what are their stakes? How do legitimacy, power, and urgency factor in? Do these
companies care about consumers? Discuss. 3. Conduct a CSR analysis of both Firestone and
Ford. How do they measure up in fulfilling their
1. What behavior do you think a system such as Market-Based Management might drive? 2. The
case describes how a number of senior managers were dismissed after the acquisition. How
could employees interpret this? Does this help drive ethical culture? 3. What is more challenging
to fix: a knowledge gap or a values gap?

What effect did the Industrial Revolution have on the gendering of jobs? (Explore the tensions
between the need for cheap labor in the factories and the implications of so many women
working in the public domain. This can be followed through to the role of women during the two
World Wars.)

As Wal-Mart continues its expansion into the international arena, what problems or issues do
you anticipate it will face? Why did Wal-Mart fail in Germany but succeed in so many other
countries? In general, what should Wal-Mart’s approach be in these other countries? Is it
unethical to change another country’s cult

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1. Who are the stakeholders in this case, and what are their stakes? 2. What social responsibility
does the firm have for the environment? How would you assess the firm’s CSR using the
four-part CSR definition presented in Chapter 2? 3. Identify the different competing
“standards” at issue in this case. Which sta

Describe the conditions under which you could hire a college friend.

Imagine that you’re the CEO of a small manufacturing company. An employee has dumped
toxic waste in a nearby stream. Who would you call into your office and what would you want to
know? Develop a short-term and long-term action plan for dealing with the crisis. Who would
you communicate with and why?

1. What are the ethical and social issues in this case? 2. Why should Nike be held responsible for
what happens in factories that it does not own? Does Nike have a responsibility to ensure that
factory workers receive a “living wage”? Do the wage guidelines of FLA or WRC seem
most appropriate to you? Why? 3. Is it

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1. Where do you draw the line? What limits should be placed on corporate lobbying under shell
grassroots organizations? Does your attitude toward “shell” lobbying groups vary with the
extent to which you agree with the causes they are promoting? 2. What, if any, public policy
recommendations would you make? “Sav

Imagine that you’re the CEO of a large firm like any of the ones described in this chapter.
What concrete steps would you take to restore your company’s reputation?
1. Would a place like the Terra Bite Lounge succeed in your community? In what places might
that business model work and in what places might it not? What payment would you give as a
customer of the café? How do you feel about Tina Cooper’s philosophy? 2. Would
“self-determined pricing” work for all musical arti

1. What are the ethical issues in this case? 2. Who are the stakeholders impacted by this
situation? How would you rank their claims? 3. Do you agree with Aflac’s decision? What
are its pros and cons? 4. Should the SEC require companies to allow shareholders to vote on
executive pay packages? Should the votes be bind

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1. What are the legal and ethical issues in this case? 2. What is your evaluation of the concept of
the “A&F look”? Have you personally observed this concept in practice? 3. Are the
employment practices of A&F discriminatory? Are they unfair? What ethical principles or
precepts guide your analysis? Given that Aberc

1. Identify the ethical culture problem at Texaco in the mid-1990s. 2. Based on the facts in the
case and what you have learned in this chapter, evaluate the culture change effort that is under
way. What cultural systems have been targeted in the culture change effort? What systems are
missing, if any? Does the culture

1. Analyze the ethical culture at TAP. Does the culture appear to be in alignment?
Misalignment? 2. Based on the facts in the case and what you have learned in this chapter,
evaluate the culture change effort that Douglas Durand undertook. What cultural systems did he
target in the culture change effort? What systems w

1. Who are the stakeholders in this situation, and what are their stakes? 2. What social
responsibility, if any, does Ardnak Plastics Inc. have to the city of Hondo? 3. What are the
ethical issues in this case? 4. What should George do? Why? George Mackee thought of himself
as bright, energetic, and with lots of poten

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Do employers have a responsibility to alert other employers to an employee’s wrongdoing by

supplying an unfavorable reference? Why or why not? Discuss the conflict between community
responsibility and self-protection.

1. Identify the issues that are going on in this case with respect to issues management, crisis
management, global business ethics, and stakeholder management. Rank these in terms of their
order of priorities for Coca-Cola and for PepsiCo. 2. Evaluate the corporate social responsibility
(CSR) of Coke and Pepsi in Indi
Why should performance be measured as an ongoing process, and not just as a once-a-year
event?

If you were Bob Stevens, what would you do and why? As the students of Class 35 of the
Marberry Executive MBA program straggled into the classroom for their one-day workshop on
business ethics, they stopped by the front set of seats to drop off their written assignments.
Professor Stevens chatted with a couple of the

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1. What are the ethical issues in this case? 2. Given all the factors, what should Jane have done?
3. What would have been the consequences for Jane and the company if she had accurately
reported her expenses? What would the consequences have been if she had inflated her expense
account as Ann had urged her to do? 4. W

The importance of adhering to a convention such as APA format when writing and researching.
What do you like about it? What would you change about APA if you could? Why?

Imagine that you work as a sales associate for your local Gap store. The work schedule is always
set a month in advance, but you want more flexibility. You ask the four other sales associates in
the store to meet with you, so you can convince them to plan the schedule one week in advance.
You would need the store manag

When other firms in your industry are behaving unethically, how can you buck the trend and
position your company to value ethical behavior? Why is that important? Will it damage your
company’s competitiveness?

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How would you change the culture audit questions if you were planning to use them to conduct
an ethics culture audit of a firm you were considering joining?

1. Should Pat raise this issue with management? If so, what should he say? 2. What if he does
raise the issue and the company does nothing? What should he do then? 3. Does this use of our
technology breach a core value? Or is this a case where we should respect local cultural practice?
Is there some compromise position

1. What are the ethical issues in this case from an employee’s point of view? From
management’s point of view? From a consumer’s point of view? 2. Who are the
stakeholders, and what are their stakes? 3. As a peer review panel member, how would you judge
this case? Do you think Ms. Hatton stole company property? D

In addition to identifying and training good managers, what else could an organization do to
increase levels of employee engagement?
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If you had to create a global code of conduct for your company, what would you include? Which
core values would you state?

1. Why do you think so many American citizens and lawmakers reacted negatively to
Google’s decision in 2006? 2. Does the fact that Google is an Internet company change
societal expectations of it regarding information openness? 3. Was Google facing an ethical
dilemma (values in conflict) in 2006? 4. Analyze the dile

Imagine that someone from another culture asked you to provide information about business
ethics when dealing with American managers. What would you say?

1. Did Swanson plagiarize or was it all just an unintentional, innocent mix-up? What would
happen to a college student who did what Swanson had done? 2. How would you characterize
the ethical leadership style of CEO Swanson? Was Swanson denying responsibility and trying to
blame staffers for the error? 3. In Case 7, Sw

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As high hotel bar department manager, how would you market the bar to the internal and
external target guests?

How can the interests of multiple stakeholders be balanced?

If you were going on your first overseas business assignment, what would you do to ensure that
you were prepared to deal with ethical dilemma you would face? What questions would you ask
your superiors in preparation for the trip?

What factors contributed to Johns Manville’s long silence on the dangers of asbestos?

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What conditions would make accepting a gift from a vendor or a client acceptable?

Is diversity management an ethical issue?

Why do certain professionals bankers, accountants, lawyers, physicians, clergy have fiduciary
responsibilities?

As a counselor in an outplacement firm, you’ve been working with Irwin for six months to
find him a new position. During that time, he has completed extensive assessment work to
determine if he’s in an appropriate profession or if he might benefit from a career change.
The results of the assessment indicate that Ir

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Who should make the decision about taking risks with others’ lives in designing products?

1. What are the ethical issues in this case? 2. Is illegal immigration primarily an economic, legal,
ethical, social, or political issue? Explain. 3. Are companies that hire illegal immigrants being
socially responsible? Evaluate this practice using the Pyramid of CSR introduced in Chapter 2. 4.
What are the legal and

How much testing is enough when launching a new product?

Does Nokia have a truly global strategy or just a series of regional strategies?

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1. What are the social or ethical issues in this case? 2. Are the ethical issues in this case those of
the firm or of Bryan? Discuss. 3. Assess the corporate social responsibility of the firm based on
the comments of Bill Gates, the plant supervisor. 4. What ethical responsibility, if any, does
Bryan have in this case?

What would you do if a former subordinate asked you to write him or her a letter of reference on
corporate letterhead?

Having conducted the ethics audit, identify the formal and informal systems that are in need of
attention. Where is the culture out of alignment (if it is)? Design a change program to address
weaknesses and to align formal and informal systems into a strong ethical culture.

What do you think would be appropriate punishment for those found guilty of assault or indecent
exposure in the Tailhook situation? Why?

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1. What are the ethical issues in this case? 2. Who are the stakeholders, and how are they
impacted by this situation? 3. Do you agree with the federal judge’s decision? If you were
the judge, what would you do? 4. A recently passed ordinance in New Orleans prohibits
discrimination against off-the-job cross-dressing.

Have antidiscrimination laws helped or hurt the fair treatment of workers?

1. What are the ethical issues in this case? 2. Who are the primary stakeholders in these
incidents? 3. Is there any justification for the marketing tactics described in the case? Which are
acceptable and which are questionable? 4. What is your evaluation of giving free promotional
items to med students? What are the a

What are the advantages of having an ethics office or officer report to a company’s chief
executive officer, the legal department, human resources, or audit? What are the disadvantages?

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1. Are the consumer groups justified in their negative reaction to Coke Zero? Do you believe
Coke may have had any involvement in the approval of sodium cyclamate for use in Mexico? If
you knew that Coke used influence to have the sweetener approved, would that affect your
assessment of how justified the consumer group

1. What are the major issues in the Liebeck case and in the following incidents? 2. What are
McDonald’s social (economic, legal, and ethical) responsibilities toward consumers in the
Liebeck case and the other cases? What are consumers’ responsibilities when they buy a
product such as hot coffee or hot hamburgers?

1. Should companies be allowed to continue research and development in xenotransplantation?

Do the benefits outweigh the risks? 2. Does xenotransplantation threaten the quality of human
life? If so, what threats exist? Do similar threats exist for other species? Are quality-of-life issues
less important for some specie

Four theoretical approaches to metaphysics dualism, materialism, idealism and alternative views
are competing for the right that they are the correct metaphysical view. Select one of these
theories and construct the strongest possible argument on its behalf in essay 700 - 1400 words.
Describe all four and acknowledge t

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1. As a manager, you are steward of the company’s funds. Are you willing to forgo
departmental improvements and potential salary increases to honor this claim? Remember, there
is no legal obligation to pay. 2. Would you feel an ethical obligation to pay? Would you be
perceived as a weak manager if you did? 3. What ar

1. Go back to the ethical dilemma at the beginning of the case. Which position did you take and
why? Did your position change after you read the case? 2. Was Chiquita justified in making the
extortion payments to protect its employees? Was the company really between a rock and a hard
place? What should it have done? 3.

How do these "Rules" or "Norms" impact a person’s communication behaviours within and
across the personal, social, academic, familial and professional areas of their life?

1. What are the ethical issues involved in pizza deliveries to dangerous neighborhoods that are
often predominantly inhabited by minorities? What tensions exist between economic and ethical
issues? Whose interests are dominant— consumer stakeholders or employee stakeholders? 2.
Are pizza companies genuinely protectin

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1. Visit the website that is designed to provide more transparency to the earmark process. Does it
give you the information you need to understand current earmarks? 2. Where do you draw the
line? What limits should be placed on earmarks? Does your attitude toward earmarks vary with
the extent to which you agree with th

1. What are the economic, legal, and ethical issues in this case? 2. Who are the stakeholders and
what are their stakes? 3. Do individual employees have the final right to their individuality? To
their appearance? 4. Can employers legally restrict tattoos and body jewelry in the workplace
through dress and appearance c

1. What are the ethical issues in this situation? Which issues must Berlex consider first when
determining how to distribute Betaseron? 2. Given the shortage of the drug, how should Berlex
decide who receives it and who waits? Give a specific plan. 3. How should Berlex handle the
logistics of distribution? 4. How shoul

1. What are the ethical issues in this case? 2. Who are the stakeholders impacted by this
situation? How would you rank their claims? 3. Alcohol and tobacco companies are not
permitted to market on campus. Should credit card companies be banned as well (as some
universities have already done)? Why or why not? 4. What,

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Discuss why communication skills are important to organizational success and why recruiters
focus so much on finding leads with good communication skills. What happens when there are
problems with communications in the workplace (re-work, low morale, product delays,
dissatisfied customers, etc.)? Use at least one resou

1. What are the major ethical issues involved in this case? Is it ethical for an employer to benefit
from the death of an employee if they took out and paid for the policy? 2. How does the idea that
these policies fund executive compensation and/or retiree benefits affect your answer to #1? 3.
Should Congress create mo

1. What are the legal and ethical issues raised in this case? 2. Has sexual harassment occurred in
this case, or just typical, flirtatious talk among fellow workers? 3. What should people like me do
in situations like this? 4. What steps should be taken to prevent problems like this in the future?
While working at a v

Imagine that it’s your responsibility to select an ethics officer for your organization. What
qualities, background, and experience would you look for? Would you ever be interested in such
a position? Why or why not?

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1. What are the ethical issues in this case? 2. Should DTC advertising be judged by the same
criteria as other advertising? If not, how should it be judged differently? 3. What public policy
changes would you advocate regarding DTC? Should the United States and/or New Zealand ban
them? What do Nexium, Lunesta, Vytori

What can we learn about business ethics from the recent financial crisis?

1. Identify and describe the major ethical issues facing Wal-Mart and the stakeholders likely to
be affected. 2. Wal-Mart has been said to have excessive power in its relationship with
communities. How is its manifestation of power with employees similar to or different than with
communities? Which is the most serious

Identify reasons why a person would be interested in being ethical, and classify those reasons in
terms of whether they represent moral motivation or economic motivation.

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How does employee engagement relate to organizational culture? How do managers contribute
to the ethical culture?

1. What are the ethical issues in this case? 2. Do we live today in a “cheating culture?” Do
you agree with Callahan’s analysis of the situation? 3. Is cheating outside of work in
one’s personal life directly or indirectly related to cheating at work? 4. How can a person
hold two sets of ethics and behave consi

1. Based on what you know about developing ethical cultures and programs, identify the
problems presented by this case. 2. Why do you think the corporate counsel has responded in this
way? What will be your response to him, if any? 3. As a consultant, what are your ethical
obligations, if any? 4. How will you proceed?

What role do you think the personality of a CEO plays in the handling of an ethical problem?

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Discuss the importance of trust in business. Can you cite examples? What happens when trust is
lost?

How do you feel about the use of cost-benefit analysis where human life is part of the cost
calculation? Might the infusion of moral language have changed the decision makers’
thinking? For example, what if decision makers had talked about their responsibility for killing
180 human beings?

Your firm is expanding globally and is sending executives overseas for the first time. What will
you do to be sure these individuals are prepared to deal with the ethical dilemmas they will face?

What recommendations would you make for handling frivolous calls to the hotline?

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Haas Company prepares monthly cash budgets. Relevant data from operating budgets for 2011
are: All sales are on account. Collections are expected to be 50% in the month of sale, 30% in
the first month following the sale, and 20% in the second month following the sale. Sixty percent
(60%) of direct materials purchase

Data for the investment centers for Paige Company are given in BE24-9.The centers expect the
following changes in the next year: (I) increase sales 15%; (II) decrease costs $200,000; (III)
decrease average operating assets $400,000. Compute the expected return on investment (ROI)
for each center. Assume center I has a

Dinkle Manufacturing Company manufactures a variety of tools and industrial equipment. The
company operates through three divisions. Each division is an investment center. Operating data
for the Home Division for the year ended December 31, 2010, and relevant budget data are as
follows. Average operating assets for

Donnegal Dental Clinic is a medium-sized dental service specializing in family dental care. The
clinic is currently preparing the master budget for the first 2 quarters of 2010. All that remains in
this process is the cash budget. The following information has been collected from other portions
of the master budget and

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1. What are the ethical issues in this case? 2. Do you think that either group, pro-GM or anti-GM
foods, is correct while the other group is wrong? If so, what reasoning do you give for supporting
the position of one group over the other? Is it possible for both to be right? What ethical concepts
help you decide? 3. Is

Lanier Corporation operates on a calendar-year basis. It begins the annual budgeting process in
late August when the president establishes targets for the total dollar sales and net income before
taxes for the next year. The sales target is given first to the marketing department. The marketing
manager formulates a sal

What type of industry is likely to use a job order cost system? Give some examples.

Indicate two behavioral principles that pertain to (a) The manager being evaluated and (b) Top
management?

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Under what circumstances may a static budget be an appropriate basis for evaluating a
manager’s effectiveness in controlling costs?

The Deep South Division operates as a profit center. It reports the following for the year.
Prepare a responsibility report for the Deep South Division at December 31,2010.
Kate Coulter is confused about how a flexible budget is prepared. Identify the steps for Kate.

A static overhead budget based on 40,000 direct labor hours shows Factory Insurance $6,500 as
a fixed cost. At the 50,000 direct labor hours worked in March, factory insurance costs were
$6,200. Is this a favorable or unfavorable performance? Why?

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In the Assembly Department of Cobb Company, budgeted and actual manufacturing overhead
costs for the month of April 2010 were as follows. All costs are controllable by the department
manager. Prepare a responsibility report for April for the costcenter.

What is management by exception? What criteria may be used in identifying exceptions?

The manufacturing overhead budget for Edmonds Company contains the following items. The
budget was based on an estimated 2,000 units being produced. During the past month, 1,500
units were produced, and the following costs incurred. Instructions (a) Determine which items
would be controllable by Mark Farris, the

Pink Martini Corporation is projecting a cash balance of $31,000 in its December 31, 2009,
balance sheet. Pink Martini’s schedule of expected collections from customers for the first
quarter of 2010 shows total collections of $180,000. The schedule of expected payments for
direct materials for the first quarter of 20

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Trusler Company uses flexible budgets to control its selling expenses. Monthly sales are
expected to range from $170,000 to $200,000.Variable costs and their percentage relationship to
sales are: Sales Commissions 5%, Advertising 4%, Traveling 3%, and Delivery 2%. Fixed
selling expenses will consist of Sales Salaries $

It is one thing to prepare a personal budget; it is another thing to stick to it. Financial planners
have suggested various mechanisms to provide support for enforcing personal budgets. One
approach is called “envelope budgeting.” Instructions Read the article provided at
en.wikipedia.org/wiki/Envelope_budgeting,

Distinguish among the three types of responsibility centers.

Lori Quan is confused about controllable margin reported in an income statement for a profit
center. How is this margin computed, and what is its primary purpose?

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What type of industry is likely to use a process cost system? Give some examples.
Pronto Plumbing Company is a newly formed company specializing in plumbing services for
home and business. The owner, Paul Pronto, had divided the company into two segments: Home
Plumbing Services and Business Plumbing Services. Each segment is run by its own supervisor,
while basic selling and administrative services

Bedner & Flott Inc. manufactures ergonomic devices for computer users. Some of their more
popular products include glare screens (for computer monitors), keyboard stands with wrist rests,
and carousels that allow easy access to magnetic disks. Over the past 5 years, they experienced
rapid growth, with sales of all prod

Fuqua Company has accumulated the following budget data for the year 2010. 1. Sales: 30,000
units, unit selling price $80. 2. Cost of one unit of finished goods: Direct materials 2 pounds at
$5 per pound, direct labor 3 hours at $12 per hour, and manufacturing overhead $6 per direct
labor hour. 3. Inventories (raw mate

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What is responsibility accounting? Explain the purpose of responsibility accounting.

The actual selling expenses incurred in March 2010 by Trusler Company are as follows.
Instructions (a) Prepare a flexible budget performance report for March using the budget data in
E24-5, assuming that March sales were $170,000. Expected and actual sales are the same. (b)
Prepare a flexible budget performance rep

Environmental Landscaping Inc. is preparing its budget for the first quarter of 2010. The next
step in the budgeting process is to prepare a cash receipts schedule and a cash payments
schedule. To that end the following information has been collected. Clients usually pay 60% of
their fee in the month that service is pr

Jim Thome has prepared the following list of statements about budgetary control. 1. Budget
reports compare actual results with planned objectives. 2. All budget reports are prepared on a
weekly basis. 3. Management uses budget reports to analyze differences between actual and
planned results and determine their causes.

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(a) Distinguish between the two types of cost accounting systems. (b) May a company use both
types of cost accounting systems?

Colt Industries had sales in 2010 of $6,400,000 and gross profit of $1,100,000. Management is
considering two alternative budget plans to increase its gross profit in 2011. Plan A would
increase the selling price per unit from $8.00 to $8.40. Sales volume would decrease by 5% from
its 2010 level. Plan B would decrease
The flexible budget formula is fixed costs $40,000 plus variable costs of $4 per direct labor hour.
What is the total budgeted cost at (a) 9,000 hours and (b) 12,345 hours?

The static manufacturing overhead budget based on 40,000 direct labor hours shows budgeted
indirect labor costs of $54,000. During March, the department incurs $65,000 of indirect labor
while working 45,000 direct labor hours. Is this a favorable or unfavorable performance? Why?

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The Mixing Department manager of Crede Company is able to control all overhead costs except
rent, property taxes, and salaries. Budgeted monthly overhead costs for the Mixing Department,
in alphabetical order, are: Actual costs incurred for January 2010 are indirect labor $12,200;
indirect materials $10,200; lubrica

Danner Farm Supply Company manufactures and sells a pesticide called Snare. The following
data are available for preparing budgets for Snare for the first 2 quarters of 2011. 1. Sales:
Quarter 1, 28,000 bags; quarter 2, 42,000 bags. Selling price is $60 per bag. 2. Direct materials:
Each bag of Snare requires 4 pounds

The Transamerica Transportation Company uses a responsibility reporting system to measure the
performance of its three investment centers: Planes, Taxis, and Limos. Segment performance is
measured using a system of responsibility reports and return on investment calculations. The
allocation of resources within the comp

Zelmer Company uses budgets in controlling costs. The August 2010 budget report for the
company’s Assembling Department is as follows. The monthly budget amounts in the report
were based on an expected production of 60,000 units per month or 720,000 units per year. The
Assembling Department manager is pleased with

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In Moore Company’s flexible budget graph, the fixed cost line and the total budgeted cost
line intersect the vertical axis at $90,000. The total budgeted cost line is $330,000 at an activity
level of 60,000 direct labor hours. Compute total budgeted costs at 70,000 direct labor hours.

What is the primary basis for evaluating the performance of the manager of an investment
center? Indicate the formula for this basis.

National Products Corporation participates in a highly competitive industry. In order to meet this
competition and achieve profit goals, the company has chosen the decentralized form of
organization. Each manager of a decentralized investment center is measured on the basis of
profit contribution, market penetration, a

As sales manager, Terry Dewitt was given the following static budget report for selling expenses
in the Clothing Department of Garber Company for the month of October. Instructions (a)
Prepare a responsibility report for the first quarter of 2010 for the Home Plumbing Services
segment. (b) Write a memo to Paul Pron

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Hannon Company expects to produce 1,200,000 units of Product XX in 2010. Monthly

production is expected to range from 80,000 to 120,000 units. Budgeted variable manufacturing
costs per unit are: direct materials $4, direct labor $6, and overhead $8. Budgeted fixed
manufacturing costs per unit for depreciation are $2 an

Raney Company uses a flexible budget for manufacturing overhead based on direct labor hours.
Variable manufacturing overhead costs per direct labor hour are as follows. Indirect labor ...........
$1.00 Indirect materials......... 0.50 Utilities..............0.40 Fixed overhead costs per month are:
Supervision $4,000, De

In Mussatto Company, direct labor is $20 per hour. The company expects to operate at 10,000
direct labor hours each month. In January 2008, direct labor totaling $203,000 is incurred in
working 10,400 hours. Prepare (a) A static budget report and (b) A flexible budget report.
Evaluate the usefulness of each report.

Speier Industries has sales in 2010 of $5,600,000 (800,000 units) and gross profit of $1,344,000.
Management is considering two alternative budget plans to increase its gross profit in 2011. Plan
A would increase the selling price per unit from $7.00 to $7.60. Sales volume would decrease by
10% from its 2010 level. Pla

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The Medina and Ortiz Dental Clinic provides both preventive and orthodontic dental services.
The two owners, Martin Medina and Olga Ortiz, operate the clinic as two separate investment
centers: Preventive Services and Orthodontic Services. Each of them is in charge of one of the
centers: Martin for Preventive Services

Durham Inc. is preparing its annual budgets for the year ending December 31, 2010. Accounting
assistants furnish the following data. An accounting assistant has prepared the detailed
manufacturing overhead budget and the selling and administrative expense budget. The latter
shows selling expenses of $750,000 for pro

NIU Company’s budgeted sales and direct materials purchases are as follows. NIU’s
sales are 40% cash and 60% credit. Credit sales are collected 10% in the month of sale, 50% in
the month following sale, and 36% in the second month following sale; 4% are uncollectible.
NIU’s purchases are 50% cash and 50% on ac

The Sports Equipment Division of Brandon McCarthy Company is operated as a profit center.
Sales for the division were budgeted for 2010 at $900,000. The only variable costs budgeted for
the division were cost of goods sold ($440,000) and selling and administrative ($60,000). Fixed
costs were budgeted at $100,000 for co

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Ogleby Company estimates that 240,000 direct labor hours will be worked during 2010 in the
Assembly Department. On this basis, the following budgeted manufacturing overhead data are
computed. It is estimated that direct labor hours worked each month will range from 18,000 to
24,000 hours. During January, 20,000 dire

The following purposes are part of a budgetary reporting system: (a) Determine efficient use of
materials. (b) Control overhead costs. (c) Determine whether income objectives are being met.
For each purpose, indicate the name of the report, the frequency of the report, and the primary
recipient(s) of the report.

Fultz Company manufactures tablecloths. Sales have grown rapidly over the past 2 years. As a
result, the president has installed a budgetary control system for 2010.The following data were
used in developing the master manufacturing overhead budget for the Ironing Department, which
is based on an activity index of dire

Pargo Company budgeted selling expenses of $30,000 in January, $35,000 in February, and
$40,000 in March. Actual selling expenses were $31,000 in January, $34,500 in February, and
$47,000 in March. Instructions (a) Prepare a selling expense report that compares budgeted and
actual amounts by month and for the year to

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Suppan Farm Supply Company manufactures and sells a fertilizer called Basic II. The following
data are available for preparing budgets for Basic II for the first 2 quarters of 2010. 1. Sales:
Quarter 1, 40,000 bags; quarter 2, 50,000 bags. Selling price is $65 per bag. 2. Direct materials:
Each bag of Basic II requires

Ann Wilkins is studying for an accounting examination. Describe for Ann what conditions are
necessary for responsibility accounting to be used effectively.

The Green Division of Frizell Company reported the following data for the current year.
Sales ...............$3,000,000 Variable costs ............. 1,950,000 Controllable fixed costs ..........
600,000 Average operating assets .........5,000,000 Top management is unhappy with the
investment center’s return on inve

Chickasaw Company expects to produce 50,000 units of product IOA during the current year.
Budgeted variable manufacturing costs per unit are direct materials $7, direct labor $12, and
overhead $18. Annual budgeted fixed manufacturing overhead costs are $96,000 for depreciation
and $45,000 for supervision. In the curren
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Malone Company estimates that 360,000 direct labor hours will be worked during the coming
year, 2010, in the Packaging Department. On this basis, the following budgeted manufacturing
overhead cost data are computed for the year. It is estimated that direct labor hours worked each
month will range from 27,000 to 36,0

The budget committee of Deleon Company collects the following data for its San Miguel Store
in preparing budgeted income statements for May and June 2011. 1. Sales for May are expected
to be $800,000. Sales in June and July are expected to be 10% higher than the preceding month.
2. Cost of goods sold is expected to be

Fernetti Company uses budgets in controlling costs. The May 2010 budget report for the
company’s Packaging Department is as follows. . The monthly budget amounts in the report
were based on an expected production of 50,000 units per month or 600,000 units per year. The
company president was displeased with the depa

In order to better serve their rural patients, Drs. Dan and Jack Fleming (brothers) began giving
safety seminars. Especially popular were their “emergency-preparedness” talks given to
farmers. Many people asked whether the “kit” of materials the doctors recommended for
common farm emergencies was commercially a

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Using the information in E24-3, assume that in July 2010, Raney Company incurs the following
manufacturing overhead costs. Instructions (a) Prepare a flexible budget performance report,
assuming that the company worked 9,000 direct labor hours during the month. (b) Prepare a
flexible budget performance report, assu

What is the relationship, if any, between a responsibility reporting system and a company’s
organization chart?

(a) Joe Delong is not sure about the difference between cost accounting and a cost accounting
system. Explain the difference to Joe. (b) What is an important feature of a cost accounting
system?

For the quarter ended March 31, 2010, Voorhees Company accumulates the following sales data
for its product, Garden-Tools: $310,000 budget; $304,000 actual. Prepare a static budget report
for the quarter.

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(a) What is budgetary control? (b) Greg Gilligan is describing budgetary control. What steps
should be included in Greg’s description?
Schwinn Manufacturing Company manufactures a variety of garden and lawn equipment. The
company operates through three divisions. Each division is an investment center. Operating data
for the Lawnmower Division for the year ended December 31, 2010, and relevant budget data
are as follows. Average operating assets for

Your roommate asks your help in understanding the major steps in the flow of costs in a job
order cost system. Identify the steps for your roommate.

Pletcher Company’s manufacturing overhead budget for the first quarter of 2010 contained
the following data. Actual variable costs were: indirect materials $13,800, indirect labor $9,600,
utilities $8,700, and maintenance $4,900. Actual fixed costs equaled budgeted costs except for
property taxes and insurance, wh

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Jantzen Manufacturing Inc. operates the Patio Furniture Division as a profit center. Operating
data for this division for the year ended December 31, 2010, are as shown below. In addition,
Jantzen Manufacturing incurs $180,000 of indirect fixed costs that were budgeted at $175,000.
Twenty percent (20%) of these cost

Parcells Manufacturing Company produces one product, Olpe. Because of wide fluctuations in
demand for Olpe, the Assembly Department experiences significant variations in monthly
production levels. The annual master manufacturing overhead budget is based on 300,000 direct
labor hours. In July 27,500 labor hours were wor

The service division of Retro Industries reported the following results for 2010. Sales ...........
$500,000 Variable costs .......300,000 Controllable fixed costs .....75,000 Average operating
assets ..450,000 Management is considering the following independent courses of action in 2011
in order to maximize the return

Tyson Chandler Company’s sales budget projects unit sales of part 198Z of 10,000 units in
January, 12,000 units in February, and 13,000 units in March. Each unit of part 198Z requires 2
pounds of materials, which cost $3 per pound. Tyson Chandler Company desires its ending raw
materials inventory to equal 40% of the

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The All About You feature in this chapter emphasizes that in order to get your personal finances
under control, you need to prepare a personal budget. Assume that you have compiled the
following information regarding your expected cash flows for a typical month. Instructions
Using the information above, prepare a p

Nieto Company uses a responsibility reporting system. It has divisions in Denver, Seattle, and
San Diego. Each division has three production departments: Cutting, Shaping, and Finishing.
The responsibility for each department rests with a manager who reports to the division
production manager. Each division manager rep

In May 2010, the budget committee of Dalby Stores assembles the following data in preparation
of budgeted merchandise purchases for the month of June. 1. Expected sales: June $500,000,
July $600,000. 2. Cost of goods sold is expected to be 70% of sales. 3. Desired ending
merchandise inventory is 40% of the following (n

Data for Hannon Company are given in BE24-4. In March 2010, the company incurs the
following costs in producing 100,000 units: direct materials $425,000, direct labor $590,000, and
variable overhead $805,000. Prepare a flexible budget report for March. Were costs controlled?

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Distinguish between controllable and non-controllable costs.

Data for Voorhees Company are given in BE24-1. In the second quarter, budgeted sales were
$380,000, and actual sales were $383,000. Prepare a static budget report for the second quarter
and for the year to date.

Rensing Company has two production departments, Fabricating and Assembling. At a

department managers’ meeting, the controller uses flexible budget graphs to explain total
budgeted costs. Separate graphs based on direct labor hours are used for each department. The
graphs show the following. 1. At zero direct labor ho

Computer Associates International, Inc., the world’s leading business software company,
delivers the end-to-end infrastructure to enable e-business through innovative technology,
services, and education. CA has 19,000 employees worldwide and recently had revenue of over
$6 billion. Presented below is information from

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How do responsibility reports differ from budget reports?

Lovell Company’s organization chart includes the president; the vice president of
production; three assembly plants—Dallas, Atlanta, and Tucson; and two departments within
each plant— Machining and Finishing. Budget and actual manufacturing cost data for July 2010
are as follows: Finishing Department—Dallas: Di

Larussa Inc. is preparing its annual budgets for the year ending December 31, 2011. Accounting
assistants furnish the data shown below. An accounting assistant has prepared the detailed
manufacturing overhead budget and the selling and administrative expense budget. The latter
shows selling expenses of $660,000 for