5.Suppose your firm is currently employing a traditional volume-based product costing system. Further, suppose that you begin to improve this system by incrementally modifying one cost pool at a time by refining its drivers and so on. Would such actions always increase the accuracy of reported product costs? Justify your response.
6.Is the activity “inspect incoming materials for requisite quality” a value-adding activity? Justify.
7.Suppose a firm increased the efficiency of all of its processes. The firm needs fewer resources to produce the same volume and mix of goods and services. However, the firm does not cut spending on the resources freed up as a result. What is the effect of these actions on the firm’s reported profit? What is the key additional step required to translate efficiency improvements into profit gains?
8.Iguana Insurance allows its customers to pay their premiums in full, in four quarterly payments, or as twelve monthly payments. Iguana adds a surcharge of $3 per payment if the customers choose a mode other than annual payment. It offers a rebate of $1 per payment if the customers set up an automatic withdrawal plan with their bank. How might Iguana justify these surcharges and discounts?
9.Airlines have sought to reduce long lines by introducing self-service kiosks and on-line services for passenger check in. What might be the reasoning that underlies the introduction of such initiatives?