ERAU Week 3 & 4 Cost Management Systems & Cost Volume Profit Discussion Hello, Here are the questions: Question 1: Cost Management Systems ABC Costing

ERAU Week 3 & 4 Cost Management Systems & Cost Volume Profit Discussion Hello,

Here are the questions:

Question 1:

Cost Management Systems

ABC Costing Discussion

Read the following scenario and then thoughtfully discuss the questions.

Calvin Cabello is a new production analyst at Red Duv Aviation, in the division of the company that manufactures three parts used in small airplane engines. One of his first jobs is to update the predetermined overhead allocation rates for factory production costs. Normally this is done once a year. The production analyst takes into consideration the previous year’s actual data along with projected changes and calculates a new rate. Calvin completed his calculations but was confused by what he found. He noticed the activity rate for “maintenance” had almost doubled in one year. Confused by this, he spoke with the factory manager, Priscilla Posey, who proceeded to tell him to just spread the costs out over the other activities. Calvin knew this wasn’t right, but had been newly hired and really needed to keep his job.

Later that week while at the local pub, after work, Calvin overheard some employees that worked at Red Duv talking about making extra money on the weekends helping Priscilla restore an old airplane. It occurred to Calvin that the reason the maintenance activity rate was so high, was because Priscilla had been using factory labor, tools, and supplies to have her personal airplane restored.

Discuss

Besides finding irregularities, such as the case of the unusual increase in this situation, discuss other ways that ABC cost data can be useful for manufacturing companies.
Discuss the primary standard from the IMA statement of Ethical Professional Practice that Priscilla violated in this scenario.
Would Priscilla have been able to do this if Traditional Costing methods had been used?
What would you recommend Calvin do?

Question 2:

Cost-Volume-Profit Analysis

Cost-Volume-Profit Analysis and Break Even Discussion

Read the following scenario and then thoughtfully discuss the questions.

In a recent news report, the following statement was made: “A report put out by brokerage house CLSA about Jet Airways said that the fall in ATF (fuel) prices has brought down the load factors (flight occupancy) required for the airlines to break even from 78 percent to 63 percent.” The load factor is the percentage of available seats on a flight that are occupied.

Discuss

What are some important assumptions commonly made in CVP analysis?
What significant assumptions and limitations should be considered when using this piece of information?
Do these assumptions impose serious limitations on the analysis? Why or why not?

Just like last time, these are for a discussion board so I don’t need a cover page and 250 words should be good enough. Thanks!