Which Of The Following Assets Would Not Be Included I 241421

Which Of The Following Assets WouldnotbeIncluded In Average Operat

Identify which of the given assets would not be included in average operating assets used to calculate Return on Investment (ROI), considering options such as buildings, equipment used in production, equipment no longer in use, and factory machinery.

Determine characteristics of a bottom-up budget environment, particularly which statements do not align with this approach, including the roles of executive management and participative budgeting.

Understand the nature of irrelevant information in decision-making, specifically how such information relates to past, present, and future differences among alternatives.

Assess the advantages of ideal standards, focusing on employee motivation, pride, morale, and whether these are actually benefits of such standards.

Analyze reasons why a company might accept new business at a loss, including impacts on fixed costs, variable costs, and customer influence.

Identify which budgets would be affected if a company’s sales forecast is inaccurate, specifically the direct labor budget, production budget, and budgeted income statement.

Understand the requirements for calculating the weighted-average cost of capital, including necessary information about capital sources and rates of return.

Determine which costs are relevant when deciding to accept a special order, with options including direct materials, variable overhead, and both or neither.

Identify which attributes are not characteristic of a participative budget, such as efficiency, accuracy, commitment, and time consumption.

Recognize reasons why companies outsource operations, excluding those related to component production, financial infusion, cost savings, and risk transfer.

Classify costs based on whether they support the entire company or are specific to a segment, distinguishing common costs from traceable costs.

Determine which costs should be considered in outsourcing decisions, including sunk, recurring, and relevant costs.

Identify what a cost incurred for a specific segment is called, comparing common, traceable, allocated, and unavoidable costs.

Understand the steps involved in the theory of constraints to improve value chain performance, noting that determining customer demand is not explicitly part of the process.

In the context of manufacturing swimwear, identify what factors beyond fabric cost, such as shipping, discounts, and taxes, are included in standard material prices.

Recognize common managerial mistakes when deciding to close a division, including the influence of allocated fixed costs, qualitative issues, and avoidable costs.

Identify the type of organizational structure exemplified by evaluating divisions like service, retail, and home office separately, focusing on segmented or decentralized decision-making.

Understand behavioral issues associated with a top-down budgeting environment, such as perceived unfairness, lack of motivation, padding, and resource wastage.

Determine how performance is evaluated in responsibility accounting, focusing on controllable items and whether it accounts for costs and revenues.

Identify which costs, such as common costs, depreciation, variable overhead, and allocated overhead, are avoidable in decisions to add or eliminate a product or service.

Paper For Above instruction

Calculating the ROI and understanding the framing of assets that contribute to operational efficiency is fundamental for financial analysis within organizations. In the context of asset inclusion, only assets actively engaged in operations are considered when assessing average operating assets. For instance, buildings and factory machinery are integral, but equipment no longer in use would generally be excluded as it does not contribute to current operations (Brigham & Ehrhardt, 2019). This distinction ensures accurate ROI calculations, which are pivotal for managerial decision-making.

Budgeting approaches significantly influence organizational planning and control. A bottom-up budget environment is characterized by participative processes where lower-level managers develop budgets that are subsequently reviewed and potentially modified by higher management. This participative nature fosters accuracy and ownership, unlike top-down budgets directed solely by executive management (Hansen & Mowen, 2014). A characteristic not fitting this model would be an environment where only executives create budgets without input from lower levels, contradicting the participative essence.

Regarding decision-making, irrelevant information is defined by its lack of impact on the future decision. Typically, such information remains constant among alternatives or pertains solely to past data that does not influence current choices (Horngren et al., 2014). For example, sunk costs are irrelevant because they cannot alter future decisions, aligning with the principle that only future relevant costs should influence managerial choices.

Standards are benchmarks used to measure performance; ideal standards represent perfect conditions but may not always motivate employees. Nonetheless, they can foster pride and high morale, given that employees strive to achieve perfect performance despite potential drawbacks (Garrison, Noreen, & Brewer, 2018). Conversely, the assertion that ideal standards motivate employees is debated, but they can positively impact morale in certain contexts.

The acceptance of new business ventures, even at a loss, is often justified if the venture leads to indirect benefits like reducing fixed costs or influencing customer behavior. For example, accepting a loss on a new business segment could be strategic if it locks in future sales frequency (Kaplan & Atkinson, 2015). This approach must be balanced with an understanding of contributions, especially variable costs, to ensure decisions are economically sound.

Budget inaccuracies stemming from sales forecast errors cascade through related plans—production, direct labor, and income statements—highlighting the interconnectedness of the financial planning process. Misjudgments in sales estimation can significantly distort these budgets, emphasizing the importance of accurate forecasting (Anthony, Hawkins, & Merchant, 2014).

The weighted-average cost of capital (WACC) is essential for investment decisions. Calculating WACC requires knowledge of each source’s proportion relative to total capital, the risk profile, and the rate of return required. The date of each capital source, however, is unnecessary unless considering the timing of capital raising or specific market conditions (Damodaran, 2012).

In decision-making, relevant costs—those that will change depending on the decision—are crucial. When evaluating a special order, direct materials and variable overhead costs are both pertinent, as they vary with the order, whereas fixed costs are generally irrelevant (McKeithen, 2014). This distinction guides managers to focus on costs that influence the incremental profit or loss.

Participative budgeting encourages staff involvement, leading to more accurate budgets through collective input and higher commitment levels. However, it is also more time-consuming and less efficient than imposed budgets, which may be prepared quickly but risk lower buy-in and motivation (Hermanson & Rappaport, 2013). Therefore, organizations must weigh accuracy and commitment against efficiency when choosing a budget approach.

Outsourcing decision criteria include considerations such as cost savings, capacity utilization, and strategic focus. Among the reasons companies outsource, cost reduction and accessing specialized expertise are primary motivators. Selling assets or transferring risk are less common reasons cited but can also influence outsourcing decisions (Quinn, 2016).

Costs supporting entire organizations, such as corporate overhead, are termed common costs, as they are not attributable to a specific segment. Conversely, costs incurred directly for a segment are traceable costs, which help evaluate segment performance independently (Drury, 2018). Recognizing this distinction is vital for accurate performance evaluation and decision-making.

In outsourcing, relevant costs exclude sunk costs, which are unrecoverable, and focus on recurring and relevant costs that will be affected by the decision (Lanen, 2020). This approach ensures that decision-making is based solely on costs and benefits that can be influenced by the outsourcing choice.

Cost classification within segments includes traceable costs incurred specifically for a segment, such as segment-specific materials and labor, whereas allocated costs are assigned centrally and are often non-controllable by segment managers. Accurate classification informs decision-making and performance assessments.

The theory of constraints emphasizes identifying the bottleneck in a process to improve overall performance. Steps include identifying the constraint, deciding how to exploit it, and subordinating other processes accordingly. Determining customer demand, while relevant to planning, is not explicitly a step within the structure of improving throughput, bottleneck management, or constraint control (Goldratt & Cox, 2016).

In manufacturing swimwear, standard costs should encompass all relevant expenses associated with materials, including costs like shipping, discounts, and taxes, which affect the total standard material price (Kaplan & Norton, 2001). Accurate standard costing supports cost control and pricing strategies.

The decision to close a division can be misguided if managers consider unavoidable or allocated fixed costs that do not disappear with closure, leading to an overestimation of losses. Proper decision-making involves evaluating only avoidable costs—those directly attributable and controllable—since fixed costs allocated or fixed and unavoidable do not necessarily impact the decision (Kaplan & Atkinson, 2015).

Organizational structures that evaluate divisions separately and across geographic or functional lines exemplify decentralized or segmented decision-making models. Such structures empower segment leaders but require careful performance measurement and coordination (Anthony & Govindarajan, 2014).

Behavioral issues under top-down budgets include employee dissatisfaction, lack of motivation, and budget padding, which can impair organizational efficiency. These challenges highlight the importance of involving employees in budgeting to foster commitment and reduce resource wastage (Shim & Siegel, 2018).

Responsibility accounting evaluates managers based on controllable items—costs and revenues over which they have influence—fostering accountability and performance improvement. It excludes uncontrollable factors to accurately reflect managerial performance (Drury, 2018).

In decisions regarding adding or eliminating products or services, relevant costs are those that can be avoided if the decision is made, such as variable overhead and other avoidable expenses. Fixed or allocated costs generally are not avoidable and thus are not relevant in incremental decision-making (Garrison, Noreen, & Brewer, 2018).

References

• Anthony, R. N., & Govindarajan, V. (2014). Management Control Systems. McGraw-Hill Education.
• Brigham, E. F., & Ehrhardt, M. C. (2019). Financial Management: Theory & Practice. Cengage Learning.
• Damodaran, A. (2012). Investment valuation: Tools and techniques for determining the value of any asset. Wiley.
• Garrison, R. H., Noreen, E. W., & Brewer, P. C. (2018). Managerial Accounting. McGraw-Hill Education.
• Goldratt, E. M., & Cox, J. (2016). The Goal: A Process of Ongoing Improvement. North River Press.
• Hermanson, D. R., & Rappaport, J. (2013). Managerial Accounting. Pearson Education.
• Hansen, D. R., & Mowen, M. M. (2014). Cost Management: Accounting and Control. Cengage Learning.
• Kaplan, R. S., & Norton, D. P. (2001). The Strategy-Focused Organization. Harvard Business Review Press.
• Kaplan, R. S., & Atkinson, A. A. (2015). Advanced Management Accounting. Pearson.
• Lanen, W. N. (2020). Cost Management: A Strategic Emphasis. Pearson.
• McKeithen, J. (2014). Managerial Accounting: An Introduction to Concepts, Methods, and Uses. Wiley.
• Quinn, J. B. (2016). Strategic Outsourcing: The New Competitive Advantage. Sloan Management Review.
• Shim, J. K., & Siegel, J. G. (2018). Budgeting Basics and Beyond. Wiley.