Solved: Callum Corporation is a diversified manufacturing

company with c

Callum Corporation is a diversified manufacturing company with corporate headquarters in St.

Louis. The three operating divisions are the aerospace division, the ceramic products division,
and the glass products division. Much of the manufacturing activity of the aerospace division is
related to work performed for the National Aeronautics and Space Administration (NASA) under
negotiated contracts. The contracts provide that cost shall be allocated to the contracts in
accordance with the federal government’s Cost Accounting Standards (as promulgated by the
Cost Accounting Standards Board and administered by the General Accounting Office). Callum
Corporation headquarters provide general administrative support and computer services to each
of the three operating divisions. The Cost Accounting Standards provide that the cost of general
administration may be allocated to negotiated defense contracts. Further, the standards provide
that in institutions where computer services are provided by corporate headquarters, the actual
costs (fixed and variable) of operating the computer department may be allocated to the
defense division based on a reasonable measure of computer usage. Another provision of the
Cost Accounting Standards deals with the situation in which a defense division acquires
noncommercial components from a sister division. The standards provide that when there is no
established market price for the component, the component must be transferred to the defense
division at cost without a markup for profit. This provision of the standards applies to Callum
Corporation because the aerospace division purchases custom designed ceramic components
from the ceramic products division. There is no established market price for these custom
components. The general managers of the three divisions are evaluated as profit center
managers based on the before-tax profit of the division. The November 2010 performance
evaluation reports for each of the divisions (in millions of dollars) are shown in the following
table:

Required
1. Review the November performance evaluation reports for the three operating divisions of
Callum Corporation.
a. Identify specific instances where the federal government’s Cost Accounting Standards have
influenced Callum’s divisional performance reporting.
b. For each specific instance identified, discuss whether the use of accounting practices based
on Cost Accounting Standards is desirable for internal reporting and performance evaluation.
2. Considering the accounting practices and reporting methods currently employed by Callum
Corporation, describe the improper decision making that could result for the company as a
whole if the demand for commercial (nondefense related) ceramic products is equal to or
greater than the productive capacity of the ceramic products division.
3. Without a charge for computing services, the operating divisions may not make the most
cost- effective use of the resources of the computer systems department of Callum Corporation.
Outline and discuss methods for charging the operating divisions for the use of computer
services that would promote cost consciousness by the operating divisions and operating
efficiency by the computer systemsdepartment.

Reach out to freelance2040@yahoo.com for enquiry.

 ANSWER
https://solvedquest.com/callum-corporation-is-a-diversified-manufacturing-company-with-c-2/

Reach out to freelance2040@yahoo.com for enquiry.

Powered by TCPDF (www.tcpdf.org)