Why does the company net income increase

Assignment Help Managerial Accounting
Reference no: EM132760776

Problem - Activity-based costing and external reporting - The controller of Tri Con Global Systems Inc. has developed a new costing system that traces the cost of activities to products. The new system is able to measure post-manufacturing activities, such as selling, promotional, and distribution activities, and allocate these activities to products in a manner that provides a more complete view of the company's product costs. This system produces better strategic information about the relative profitability of product lines.

In the course of implementing the new costing system, the controller realized that the company's current-period GAAP net income would increase significantly if the new product cost information were used for inventory valuation on the financial statements. The controller has been under intense pressure to improve the company's net income, and this would be an easy and effective way for her to help meet the company's short-term net income goals. As a result, she has decided to use the new costing system to determine GAAP net income.

a. Why does the company's net income increase when the new costing system is applied?

b. Is the controller acting ethically by using the new costing system for GAAP net income? Explain your answer.

Reference no: EM132760776

Questions Cloud

Identify percentage of under-insured people in your state : Visit the Health Insurance Coverage of the Total Population page on the Kaiser Family Foundation State Health Facts website. Then, on the provided table.
How many units must be sold to reach the goal : Management wants to maintain the same net profit as this year ($1.5 Mill). Assuming all other costs are the same, How many units must be sold to reach this goal
Harmonious diverse team considering the differences : It can become difficult to create a harmonious diverse team considering the differences of all the team members involved.
Write the balanced equation for photosynthesis : 1. Write the balanced equation for photosynthesis. Include the common names of each compound.
Why does the company net income increase : Activity-based costing and external reporting - Why does the company's net income increase when the new costing system is applied
What challenges do medical facilities face : What challenges do medical facilities face when trying to become more culturally competent? What kinds of assumptions do providers sometimes make about people.
Create marketing plan : Concentrate on the changes you will need to make for global promotion efforts. Can any of the current marketing efforts be kept?
What characteristics training & experience make you good fit : What characteristics training & experiences make you a good fit for that position and Include specific examples to provide evidence for at least 3 traits being
Calculate the company contribution margin ratio : Income statement, Assume that management wants a $2,000,000 profit next year. How many production units must be sold to reach this goal?

Reviews

Write a Review

Managerial Accounting Questions & Answers

  Discuss the importance of capacity planning in deciding

Discuss the importance of capacity planning in deciding on the number of police officers or fire trucks to have on duty at a given time.

  Determine the optimal production plan

Determine the optimal production plan. How many items of each product should be produced? Elle 1would like to see the details of developing the optimal solution

  What is previews profit margin on computer monitors

What is Preview's profit margin on computer monitors? Why is the profit margin to thin on computer Tonitors - what are sortie of the steps that Proview International has taken to control costs?

  Find what is the balance in cost of goods sold at july

Find What is the balance in Cost of Goods Sold at July 31 after any underapplied or overapplied overhead is closed out entirely to Cost of Goods Sold?

  Compute the cost per equivalent unit for each product

Compute the cost per equivalent unit for each product cost category in Department Y for the month of February - calculate the cost of goods transferred to the finished goods store at the end of February from Department Y.

  What does a businesss contribution margin represent

What does a businesss Contribution Margin represent? What does the Contribution Margin have to do with Operating Leverage? Please cite any references used

  What is the current net book value of the note

$20,000 is halfway through its six-month life. The initial discount on the note was $1,000. What is the current net book value of the note?

  How do determine amount of overhead over or under applied

During March, 11,500 hours were actually worked. Use this information to determine the amount of overhead over or under applied.

  Should nagambie make the ceiling hangers

Should Nagambie make the ceiling hangers? Would your answer be the same if the factory was selling the ploughs they made for $750 and would have to forgo

  What do we mean by a standard cost

What do we mean by a standard cost - Any examples that you can think of for any type of business - Any examples that you can think of for any type of business

  Find what is the direct labor total variance

What is the direct labor total variance? San Marcos Shade Inc. has direct labor cost standard of $14 per direct labor hour and an efficiency standard

  What is the cost formula for airplane maintenance

What is the cost formula for airplane maintenance? What is the cost formula for airplane depreciation? What is the variable rate for airplane depreciation?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd