Managerial Accounting: Tools For Business Decision-Making, Third Canadian Edition Solution Manual

Page 1 of 16

Managerial Accounting: Tools For Business Decision-Making, Third Canadian Edition Solution Manual - Page 1 preview image

1-1CHAPTER 1Managerial AccountingASSIGNMENT CLASSIFICATION TABLEStudy ObjectivesQuestionsDo It!ReviewExercisesAProblemsBProblems*1.Explain thedistinguishingfeatures of managerialaccounting.1, 2, 31517, 21, 22*2.Identify the three functionsof management and therole of managementaccountants in anorganizational structure.4, 7, 81519, 20*3.Explain the importance ofbusiness ethics.5, 6, 91518*4.Identify changes andtrends in managerialaccounting.10, 11, 12,13, 141623

Page 2 of 16

Managerial Accounting: Tools For Business Decision-Making, Third Canadian Edition Solution Manual - Page 2 preview image

Page 3 of 16

Managerial Accounting: Tools For Business Decision-Making, Third Canadian Edition Solution Manual - Page 3 preview image

BLOOM’S TAXONOMY TABLE© 2012ForUse Only1-2Correlation Chart betweenBloom’s Taxonomy, Study Objectives and End-of-Chapter Exercises and ProblemsStudy ObjectiveKnowledgeComprehensionApplicationAnalysisSynthesisEvaluation*1.Explain the distinguishing featuresof managerial accounting.Q2, Q3, D15,E17, E21,E22Q1* 2.Identify the three functions ofmanagement and the role ofmanagement accountants in anorganizational structure.Q4, D15,E19, E20Q7, Q8* 3.Explain the importance of businessethics.Q5, Q9, D15,E18Q5, Q6* 4.Identify changes trends inmanagerial accounting.Q10, Q11,Q12, Q13,D16, E23Q14

Page 4 of 16

Managerial Accounting: Tools For Business Decision-Making, Third Canadian Edition Solution Manual - Page 4 preview image

1-3ANSWERS TO QUESTIONS1.(a)Disagree.Managerialaccountingisa fieldofaccountingthatprovideseconomic andfinancial information for managers and other internal users.(b)Carolina is incorrect. Managerial accounting applies to all types of businesses—service,merchandising, and manufacturing.2.(a)Financial accounting is concerned primarily with external users such as shareholders, creditors,and regulators. In contrast, managerial accounting is concerned primarily with internal userssuch as officers and managers.(b)Classified financial statements are the end product of financial accounting. The statements areprepared monthly, quarterly and annually. In managerial accounting, internal reports may beprepared daily, weekly, monthly, quarterly, annually, or as needed.(c)The purpose of financial accounting is to provide general-purpose information for all users. Thepurpose of managerial accounting is to provide special-purpose information for a particular userfor a specific decision.3.Differences in the content of the reports are as follows:FinancialManagerial•Pertains to business as a whole and is highlyaggregated.•Limited to double-entry accounting and costdata.•Generally accepted accounting principles.•Pertains to subunits of the business andmay be very detailed.•May extend beyond double-entryaccounting system to any relevant data.•Standard is relevance to decisions.In financial accounting, financial statements are verified annually through an external audit by anindependent professional accountant such as a Chartered Accountant. There are no independentaudits of internal reports issued by managerial accountants.4.Jean-Marc should know that the management of an organization performs three broad functions:(1)Planning requires management to look ahead and to establish objectives.(2)Directing involves coordinating the diverse activities and human resources of acompany to produce a smooth-running operation.(3)Controlling is the process of keeping the company’s activities on track.5.(a) The four categories of ethical standards for management accountants are:Objectivity, confidentiality, competence, and integrity.(b) No. Management accountants should not condone unethical actsby others within their organization.

Page 5 of 16

Managerial Accounting: Tools For Business Decision-Making, Third Canadian Edition Solution Manual - Page 5 preview image

1-4Questions Chapter 1 (Continued)6.Systems and controls sometimes unwittingly create incentives for managers to take unethicalactions. For example, companies prepare budgets to provide direction. Because the budget isalso used as an evaluation tool, some managers try to “game’’ the budgeting process byunderestimating their division’s predicted performance so that it will be easier to meet theirperformance targets. Or, if the budget is set at unattainable levels, managers sometimes takeunethical actions to meet the targets in order to receive higher compensation or, in some cases,keep their jobs.7.Disagree. Decision making is not a separate management function. Rather, decision makinginvolves the exercise of good judgment in performing the three management functions explainedin the answer to question four above.8.Employees with line positions are directly involved in the company’s primary revenue-generatingoperating activities. Examples include plant managers and supervisors, and the vice president ofoperations. In contrast, employees with staff positions are not directly involved in revenue-generatingoperatingactivities,butratherserveinasupportcapacitytolineemployees.Examples include employees in finance, legal, and human resources.9.CEOs and CFOs must now certify that financial statements give a fair presentation of thecompany’s operating results and its financial condition and that the company maintains anadequate system of internal controls. In addition, the composition of the board of directors andaudit committees receives more scrutiny, and penalties for misconduct have increased.10.The value chain refers to all activities associated with providing a product or service. For amanufacturer,thisincludesresearchanddevelopment,productdesign,acquisitionofrawmaterials, production, sales and marketing, delivery, customer relations and subsequent service.11.Anenterpriseresourceplanning(ERP)systemisasoftwaresystemthatprovidesacomprehensive, centralized source of integrated information. Its primary benefits are that itreplaces the many individual systems typically used for receivables, payables, inventory, humanresources, etc. Also, it can be used to get information from, and provide information to, thecompany’s customers and suppliers.12.In a just-in-time inventory system the company has no extra inventory stored. Consequently, ifsome units that are produced are defective, the company will not have enough units to deliver tocustomers.13.Activity-based costing is an approach used to allocate overhead based on each product’s relativeuse of activities in making the product. Activity-based costing is beneficial because it results inmore accurate product costing and in more careful scrutiny of all activities in the value chain.

Page 6 of 16

Managerial Accounting: Tools For Business Decision-Making, Third Canadian Edition Solution Manual - Page 6 preview image

1-5Questions Chapter 1 (Continued)14.The balanced scorecard is called “balanced” because it strives to not over emphasize any oneperformance measure, but rather uses both financial and non-financial measures to evaluate allaspects of a company’s operations in an integrated fashion.

Page 7 of 16

Managerial Accounting: Tools For Business Decision-Making, Third Canadian Edition Solution Manual - Page 7 preview image

1-6SOLUTIONS TO DO IT! REVIEWD1-11.False. Preparation of budgets is part ofmanagerialaccounting.2.False. Financial accounting reports pertain to the entity as a wholeand are highly aggregated.It ismanagerialaccounting reports thatpertain to subunits of the business and are very detailed.3.False.FinancialaccountingmustadheretoGenerallyAcceptedAccountingPrinciplesandaresubjecttoanauditbycharteredaccountants.4.True.5.True.6.True.D1-21.(f) Just-in-time (JIT) inventory2.(a) Activity-based costing3.(c) Total quality management (TQM)4.(d) Research and development, and product design5.(e) Service industries6.(b) Balanced scorecard

Page 8 of 16

Managerial Accounting: Tools For Business Decision-Making, Third Canadian Edition Solution Manual - Page 8 preview image

1-7SOLUTIONS TO EXERCISESE1-1Financial AccountingManagerial AccountingPrimary usersExternal usersInternal usersTypes of reportsFinancial statementsInternal reportsFrequency of reportsMonthly, quarterly andannuallyAs frequently as neededPurpose of reportsGeneral-purposeSpecial-purpose informationfor specific decisionsContent of reportsGenerally acceptedaccounting principlesRelevance to decisionsVerificationAnnual audit byChartered AccountantNo independent auditsE1-2The four specific standards are:(1) Competence(2) Confidentiality(3) Integrity(4) ObjectivityE1-3(a)(1)Planning.(b)(2)Directing.(c)(3)Controlling.SOLUTIONS TO EXERCISES (Continued)

Page 9 of 16

Managerial Accounting: Tools For Business Decision-Making, Third Canadian Edition Solution Manual - Page 9 preview image

1-8E1-4(a) (6) Chief executive officer(b) (5) Line position(c) (2) Chief financial officer(d) (1) Board of directors(e) (7) Staff position(f)(4) Controller(g) (3) TreasurerE1-51.F2.M3.F4.M5.F6.M7.F8.F9.M10.FE1-61.False. Financial accounting focuses on providing information toexternalusers.2.True.3.False. Preparation of budgets is part ofmanagerialaccounting.4.False. Managerial accounting applies to service, merchandising andmanufacturing companies.5.True.6.False. Managerial accounting reports are prepared asfrequently asneeded.7.True.8.True.9.False.Financialaccounting reports must comply with Generally AcceptedAccounting Principles.SOLUTIONS TO EXERCISES (Continued)

Page 10 of 16

Managerial Accounting: Tools For Business Decision-Making, Third Canadian Edition Solution Manual - Page 10 preview image

1-910.False. Managerial accountants are expected to behave ethically,and thereis acode of ethical standards for managerial accountants.E1-7(a) 3. Balanced scorecard(b) 4. Value chain(c) 2. Just-in-time inventory(d) 1. Activity-based costing

Page 11 of 16

Managerial Accounting: Tools For Business Decision-Making, Third Canadian Edition Solution Manual - Page 11 preview image

1-10SOLUTIONS TO CASESCASE 1-10Since the questions were fairly open-ended, the following are only suggestedresults. The class may be able to think of others, or of more items for each one.(a)Hayley GeageaNeeds information on sales, perhaps by salespersonand by territory.Luc LemieuxNeeds cost information for his department.Gary RichardsonNeeds all accounting information.Manny CordozaNeeds product cost information.Patrick DumoulinNeeds information on component costs and costsfor his department.(b)Hayley GeageaIncome statementLuc LemieuxNone.Gary RichardsonAll.Manny CordozaIncome statement and cost of goods manufacturedschedule.Patrick DumoulinNone.(c)Hayley GeageaSales by Territory—Detailed information, possiblyby product line, issued daily or weekly.Luc LemieuxCost of Computer Programs—Accumulated costincurred for each major program used includingmaintenanceandupdatesofprogram,issuedmonthly.Gary RichardsonCost of Preparing Reports—Detailed analysis of allreports provided, their frequency, time, and estimatedcost to prepare, issued monthly.Manny CordozaCost of Product—Detailed cost by product line,comparing actual with estimated costs. Issued aseach batch of production is completed.Patrick DumoulinCost of Product Design—Accumulated total costsof each new product, issued at end of each project.SOLUTIONS TO CASES (Continued)

Page 12 of 16

Managerial Accounting: Tools For Business Decision-Making, Third Canadian Edition Solution Manual - Page 12 preview image

1-11CASE 1-11(1)Itisethicaltousedifferentperformancemeasurestoevaluateemployees, if and only if, the performance that is being measured isperformance that is under the direct control or responsibility of theindividual being evaluated. This is not as much an ethics problem as itis a management problem—management is responsible for puttingsystems in place that are fair to all employees.(2)Firstly, a company can establish a Code of Conduct that providesguidelines to employees who are unsure of what should be done inquestionablesituations.Secondly,acompanycanpracticetransparentreporting—allowallemployeestoseethefinancialstatements,andencouragethemtoquestionwhattheydon’tunderstand, or what they think might not be right.

Page 13 of 16

Managerial Accounting: Tools For Business Decision-Making, Third Canadian Edition Solution Manual - Page 13 preview image

1-12WCP-1

Page 14 of 16

Managerial Accounting: Tools For Business Decision-Making, Third Canadian Edition Solution Manual - Page 14 preview image

1-13Legal NoticeCopyrightCopyright © 2012 by John Wiley & Sons Canada, Ltd. or related companies.The data contained in these files are protected by copyright. This manual is furnished under licence andmay be used only in accordance with the terms of such licence.The material provided herein may not be downloaded, reproduced, stored in a retrieval system,modified, made available on a network, used to create derivative works, or transmitted in any form or byany means, electronic, mechanical, photocopying, recording, scanning, or otherwise without the priorwritten permission of John Wiley & Sons Canada, Ltd.

Page 15 of 16

Managerial Accounting: Tools For Business Decision-Making, Third Canadian Edition Solution Manual - Page 15 preview image

2-1CHAPTER 2ASSIGNMENT CLASSIFICATION TABLEStudy ObjectivesQuestionsBriefExercisesDo It!ReviewExercisesProblems1. Define the three classes ofmanufacturing costs anddistinguish between productand period costs.10, 11, 12,131, 2, 3, 9,10, 121418, 19, 20,21, 22, 29,3540A, 41A,45A, 46A,48A, 49B,50B, 53B,2. Explain how costs areaffected by changes in thelevels of business activity.1, 2, 3, 4, 5,6, 74, 5, 6, 7, 815, 16, 1723, 24, 25,26, 27, 2847A, 55B3. Explain the differencebetween a merchandisingincome statement and amanufacturing incomestatement.8, 14, 15,16, 17, 181330, 31, 32,33, 34, 35,36, 37, 38,3942A, 43A,45A, 46A,48A, 51B,52B, 54B,56B, 57B,58B4. Explain the differencebetween a merchandisingbalance sheet and amanufacturing balance sheet.9, 191137, 38, 3942A, 43A,51B, 52B,53B

Page 16 of 16

Managerial Accounting: Tools For Business Decision-Making, Third Canadian Edition Solution Manual - Page 16 preview image

2-2ASSIGNMENT CHARACTERISTICS TABLEProblemNumberDescriptionDifficultyLevelTimeAllotted(min.)40AClassify manufacturing costs into different categories andcalculate the unit cost.Simple20–3041AClassify manufacturing costs into different categories andcalculate the unit cost.Simple20–3042AIndicate the missing amount of different cost items, andprepare a condensed cost of goods manufactured schedule,an income statement, and a partial balance sheet.Moderate30–4043APrepare a cost of goods manufactured schedule, a partialincome statement, and a partial balance sheet.Moderate30–4044APrepare a cost of goods manufactured schedule and acorrect income statementModerate30–4045ACalculate raw materials purchased, cost of goodsmanufactured, and cost of goods sold.Moderate20–3046ACalculate raw materials purchased, cost of goodsmanufactured, and cost of goods sold.Moderate20–3047ADetermine missing amounts in the cost of goodsmanufactured and sold schedules and compare fixed andvariable costs.Challenging30–4048ADetermine missing amounts and calculate costs forschedules of cost of goods manufactured and sold.Challenging30–4049BClassify manufacturing costs into different categories andcalculatethe unit cost.Simple20–3050BClassify manufacturing costs into differentcategories andcalculate the unit cost.Simple20–3051BIndicate the missing amount of different cost items, andprepare a condensed cost of goods manufactured schedule,an income statement, and a partial balance sheet.Moderate30–4052BPrepare a cost of goods manufactured schedule, a partialincome statement, and a partial balance sheet.Moderate30–4053BCalculate prime cost, conversion cost and cost of goodsmanufactured.Moderate20–3054BPrepare income statement schedules forcost of goodssold and cost of goods manufactured.Moderate30–4055BDetermine missing amounts in the cost of goodsmanufactured and sold schedules and compare fixed andvariable costs.Challenging20–3056BPrepare a cost of goods manufactured schedule and acorrect income statementModerate30–4057BCalculate selected costs for the income statement, andschedules of cost of goods manufactured and sold.Moderate20–3058BDetermine missing amounts, prepare cost of goodsmanufactured and calculate inventory values.Challenging40–50

Preview Mode

This document has 1004 pages. Sign in to access the full document!

Report

Learning Tools

Writing Tools

Browse Resources

Managerial Accounting: Tools For Business Decision-Making, Third Canadian Edition Solution Manual - Page 1

Study Now!

Document Details

Related Documents

Solution Manual for Managerial Accounting: Tools for Business Decision-Making, Fifth Canadian Edition

Managerial Accounting: Tools for Business Decision Making, 6th Edition Test Bank

Accounting Principles II – Traditional Cost Systems

Accounting Principles II – Statement of Cash Flows

Accounting Principles II – Partnerships

Accounting Principles II – Managerial and Cost Accounting Concepts

Accounting Principles II – Long-Term Liabilities

Accounting Principles II – Investments

Accounting Principles II – Incremental Analysis

Accounting Principles II – Flexible Budgets and Standard Costs

Company

Explore

Study Tools