Question

Select the appropriate objectives for each of the following actions of a cost management information system:

a. Determining how much it costs to perform a heart transplant
b. Calculating the cost of inspecting components from an outside supplier
c. Developing and using a budgeted income statement for a division

Answer 1

The appropriate objectives for each action are to calculate the total cost of a heart transplant, determine the cost per component for inspecting components from an outside supplier, and forecast division's revenue and expenses to analyze profitability.

Step-by-step explanation:

For determining how much it costs to perform a heart transplant, the objective of a cost management information system would be to calculate the total cost of the procedure. This would include the cost of medical equipment, staff salaries, medications, hospital stay, etc.

For calculating the cost of inspecting components from an outside supplier, the objective would be to determine the cost per component by considering the cost of labor, equipment, quality control measures, etc.

For developing and using a budgeted income statement for a division, the objective would be to forecast the division's revenue and expenses, and analyze its profitability. This would involve tracking sales, expenses, and operating costs, and comparing them with the budgeted figures.