Cost Management: A Strategic Emphasis 7th Edition by Edward Blocher,David Stout ,Paul Juras,Gary Cokins

Exercise 52

Research Assignment: Control of Capacity-Related Manufacturing Costs; Strategy Obtain from your library (or instructor or course pack, as appropriate) a copy of the following article: K. Snead, D. Stott, and A. Garcia, "The Causes of Misapplied Capacity-Related Manufacturing Costs and Corresponding Reporting Implications: A Conceptual Perspective," Journal of Accounting Education 28 (2010), pp. 85-102.
Required After reading the above-referenced article, answer the following questions:
1. In general, how does this article relate to the material covered in Chapter 15
2. What do the authors of this article mean when they use the term "misapplied" manufacturing overhead costs
3. Into what components do the authors feel the production volume variance should be decomposed How are each of the component variances calculated and interpreted
4. According to the authors, what is the connection between the variance-decomposition model proposed by the authors and the managerial control of capacity-related costs
5. What do the authors of this article indicate are the financial-reporting consequences of their proposed framework