LO 2.1In a team of two or three students, interview the manager/owner of a local business. In this interview, ask the manager/owner the following questions:
- Does the business collect and use cost information to make decisions?
- Does it have a specialist in cost estimation who works with this cost data? If not, who is responsible for the collection of cost information? Be as specific as possible.
- What type of cost information does the business collect and how is each type of information used?
- How important does the owner/manager believe cost information is to the success of the business?
Then, write a report to the instructor summarizing the results of the interview.
Content of the memo must include
- date of the interview,
- the name and title of the person interviewed,
- name and location of the business,
- type of business (service, merchandising, manufacturing) and brief description of the goods/services provided by the business, and
- responses to questions A–D.
- Classify each of these items as direct materials, direct labor, or overhead.
- Glue used to attach labels to bottles containing a patented medicine.
- Compressed air used in operating paint sprayers for Student Painters, a company that paints houses and apartments.
- Insurance on a factory building and equipment.
- A production department supervisor’s salary.
- Rent on factory machinery.
- Iron ore in a steel mill.
- Oil, gasoline, and grease for forklift trucks in a manufacturing company’s warehouse.
- Services of painters in building construction.
- Cutting oils used in machining operations.
- Cost of paper towels in a factory employees’ washroom.
- Payroll taxes and fringe benefits related to direct labor.
- The plant electricians’ salaries.
- Crude oil to an oil refinery.
- Copy editor’s salary in a book publishing company.
- Assume your classifications could be challenged in a court case. Indicate to your attorneys which of your answers for part a might be successfully disputed by the opposing attorneys and why. In which answers are you completely confident?
- 7Attribution: Modification of work by Roger Hermanson, James Edwards, and Michael Maher. Accounting Principles: A Business Perspective. 2011, CC BY. Source: Available at https://open.umn.edu/opentextbooks/textbooks/383.