How would you measure performance in each of these areas/ Managerial Accounting
Q1. Balance Sheet Equation
Nordstrom operates 207 fashion specialty retail stores in 28 states. The company’s actual data (slightly simplified) follow for its fiscal year ended January 29, 2011 (in millions of dollars):
| Assets, beginning of period | $6,579 |
| Assets, end of period | E |
| Liabilities, beginning of period | A |
| Liabilities, end of period | 5,441 |
| Paid-in capital, beginning of period | 1,066 |
| Paid-in capital, end of period | D |
| Retained earnings, beginning of period | 506 |
| Retained earnings, end of period | C |
| Revenues | 9,700 |
| Costs and expenses | B |
| Net income | 613 |
| Dividends | 266 |
| Additional investment by stockholders | 102 |
Find the unknowns (in millions), showing computations to support your answers.
Q2. Planning and Control, Management by Exception
Study the framework for planning and control of a Starbucks store in Exhibit 3 2 on page 97. Suppose that for next year a particular store budgeted revenue of $356,400, an 8% increase over the current revenue of $330,000. The actions listed in Exhibit 3-2 resulted in six new budgeted products and a total advertising budget of $3300. Actual results were as follows:
| New products added | 7 |
| Advertising | $35,640 |
| Revenue | $351,400 |
1. Prepare a performance report for revenues and advertising costs using the format of Exhibit 3-3 on page 98.
2. Suppose the remaining cost elements of net income were not available until several months after the store implemented the plan. The net income results were disappointing to management-profits declined even though revenues increased because costs increased by more than revenues. List some factors that might have caused costs to increase so much and that management may not have considered when it formulated the store’s plan.
Q3. Value Chain
Nike is an Oregon-based company that focuses on the design, development, and worldwide marketing of high-quality sports footwear, apparel, equipment, and accessory products. Nike is the largest seller of athletic footwear and athletic apparel in the world. The company sells its products to more than 20,000 retail accounts in the United States and through a mix of independent distributors, licensees, and subsidiaries in approximately 170 countries around the world. Nike contracts with hundreds of factories around the world to manufacture virtually all the company’s products. Nike produces most footwear and branded apparel products outside the United States.
1. Identify one decision that Nike managers make in each of the six value-chain functions.
2. For each decision in requirement 1, identify one piece of accounting information that would aid the manager’s decision.
Q4. Separation of Mixed Costs into Variable and Fixed Components
A staff meeting has been called at SportsLab, a drug-testing facility retained by several professional and college sports leagues and associations. The chief of testing, Dr. Hyde, has demanded an across-the-board increase in prices for a particular test because of the increased testing and precision that are now required.
The administrator of the laboratory has asked you to measure the mixed-cost behavior of this particular testing department and to prepare a short report she can present to Dr. Hyde. Consider the following limited data:
| Average Test Procedures per Month | Averages Monthly Cost of Test Procedures | |
| Monthly averages, 20X7 | 400 | $60,000 |
| Monthly averages, 20X8 | 500 | 80,000 |
| Monthly averages, 20X9 | 600 | 140,000 |
Q5. Multiple Goals and Profitability
The following multiple goals were identified by General Electric:
Profitability
Market position
Productivity
Product leadership
Personnel development
Employment attitudes
Public responsibility
Balance between short-range and long-range goals
General Electric is a huge, highly decentralized corporation. At the time it developed these goals, GE had approximately 170 responsibility centers called departments, but that is a deceptive term. In most other companies, these departments would be called divisions. For example, some GE departments had sales of more than $500 million.
Each department manager’s performance was evaluated was evaluated annually in relation to the specified multiple goals. A special measurements group was set up to devise ways of quantifying accomplishments in each of the areas. In this ways, the evaluation of performance would become more objective as the various measures were developed and improved.
1. How would you measure performance in each of these areas? Be specific.
2. Can the other goals be encompassed as ingredients of a formal measure of profitability? In other word, can profitability per se ve defined to include the other goals?
Attachment:- Problems.rar
