ACCT 3311 - Costs / Budgets

CHAPTER 1 

THE MANAGER AND MANAGEMENT ACCOUNTING 

1-4 The business functions in the value chain are 

• Research and development—generating and experimenting with ideas related to new products, services, or processes. 
• Design of products and processes—the detailed planning, engineering, and testing of products and processes. 
• Production—procuring, transporting, storing and assembling resources to produce a product or deliver a service. 
• Marketing—promoting and selling products or services to customers or prospective customers.
• Distribution—processing orders and shipping products or services to customers. 
• Customer service—providing after-sales service to customers.

1-16 Value chain and classification of costs, computer company.

                    Cost Item                              Value Chain Business Function 
                          a.                                               Production
                          b.                                              Distribution
                          c.                                   Design of products and processes
                          d.                                    Research and Development
                          e.                                     Customer Service or Marketing
                          f.                           Design of products and processes (or Research and Development)
                          g.                                              Marketing
                          h.                                               Production

1-24 Planning and control decisions, Internet company. 
1. Planning decisions 
a. Decision to raise monthly subscription fee
c. Decision to upgrade content of online services (later decision to inform subscribers and upgrade online services is an implementation part of control)
e. Decision to decrease monthly subscription fee starting in November.

Control decisions 
b. Decision to inform existing subscribers about the rate of increase—an implementation part of control decisions
d. Dismissal of VP of Marketing—performance evaluation and feedback aspect of control decisions

2. Other planning decisions that may be made at WebNews.com: decision to raise or lower advertising fees; decision to charge a fee from on-line retailers when customers click-through from WebNews.com to the retailers’ websites.

Other control decisions that may be made at WebNews.com: evaluating how customers like the new format for the weather information, working with an outside vendor to redesign the website, and evaluating whether the waiting time for customers to access the website has been reduced.