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

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1-1CHAPTER 1Managerial AccountingASSIGNMENT CLASSIFICATION TABLEStudy ObjectivesSelf-StudyQuestionsDo It!ReviewExercisesAProblemsBProblems*1.Explain thedistinguishing featuresof managerial accounting.1,6, 7, 813, 7, 8*2.Identify the threebroadfunctions ofmanagementandthe role ofmanagement accountants in anorganizational structure.315, 6*3.Explain the importance of businessethics.2, 1014*4.Identify changesand trendsinmanagerial accounting.4, 5, 929

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BLOOM’S TAXONOMY TABLE© 2018For Instructor Use Only1-2Correlation Chart between Bloom’s Taxonomy, Study Objectives and End-of-Chapter Exercises and ProblemsStudy ObjectiveKnowledgeComprehensionApplicationAnalysisSynthesisEvaluation*1.Explain thedistinguishing featuresof managerial accounting.D-1, E-8E-3, E-7*2.Identify the three functions ofmanagement and the role ofmanagement accountants in anorganizational structure.D-1, E-5, E-6*3.Explain the importance ofbusinessethics.D-1, E-4*4.Identify changes trends inmanagerial accounting.D-2, E-9A note about the correlation between CPA competencies and the end-of-chapter exercises and problems.The CPA competencies are divided intoenabling competencies and terminal competencies. Unless otherwise specified, theterminal competency being tested by the end-of-chapter material in this course is cpa-t003 (Management Accounting). Theenabling competency being tested will differ between questions. The following questions test enabling competencycpa-e001Professional and Ethical Behaviour:E1.4,C1.11

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Managerial Accounting: Tools for Business Decision-Making,FifthCanadian EditionWeygandt, Kimmel, Kieso, Aly1-3SOLUTIONS TO DO IT! REVIEWDO IT! REVIEW 1.11.False.Preparation of budgets is part ofmanagerialaccounting.2.False.Financial accounting reports pertain to the entity as a whole and arehighly aggregated. It ismanagerialaccounting reports that pertain to subunitsof the business and are very detailed.3.False.Financialaccountingmust adhere togenerallyacceptedaccountingprinciplesandare subject to an audit by charteredprofessionalaccountants.4.True.5.True.6.True.DO IT! REVIEW 1.21.(f) Just-in-time (JIT) inventory2.(a) Activity-based costing(ABC)3.(c) Total quality management (TQM)4.(d) Research and development, and product design5.(e) Service industries6.(b) Balanced scorecard

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Managerial Accounting: Tools for Business Decision-Making,FifthCanadian EditionWeygandt, Kimmel, Kieso, Aly1-4SOLUTIONS TO EXERCISESEXERCISE 1.3Financial AccountingManagerial AccountingPrimary usersExternal usersInternal usersTypes of reportsFinancial statementsInternal reportsFrequency of reportsQuarterlyand annuallyAs frequently as neededPurpose of reportsGeneral-purposeSpecial-purposeforspecific decisionsContent of reportsHighly aggregatedGenerally acceptedaccounting principlesVery detailedRelevance to decisionsVerificationAnnual audit byCPA(charteredprofessionalaccountant)No independent auditsEXERCISE 1.4The four specific standards are:(1)Competence(2) Confidentiality(3) Integrity(4)CredibilityEXERCISE 1.5(a)(1)Planning(b)(2)Directing(c)(3)Controlling

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Managerial Accounting: Tools for Business Decision-Making,FifthCanadian EditionWeygandt, Kimmel, Kieso, Aly1-5SOLUTIONS TO EXERCISES (Continued)EXERCISE 1.6(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) TreasurerEXERCISE 1.71.F6. M2.M7. F3.F8. F4.M9. M5.F10. FEXERCISE 1.81.False. Financial accounting focuses on providing information toexternalusers.2.True.3.False.Preparation of budgets is part ofmanagerialaccounting.4.False.Managerialaccountingappliestoservice,merchandising,andmanufacturing companies.5.True.6.False. Managerial accounting reports are prepared asfrequently as needed.7.True.8.True.9.False.Financialaccountingreportsmustcomplywithgenerallyacceptedaccountingprinciples.10.False. Managerial accountants are expected to behave ethically,andthereisacode of ethical standards for managerial accountants.

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Managerial Accounting: Tools for Business Decision-Making,FifthCanadian EditionWeygandt, Kimmel, Kieso, Aly1-6SOLUTIONS TO EXERCISES (Continued)EXERCISE 1.9(a)3. Balanced scorecard(b)4. Value chain(c)2. Just-in-time inventory(d)1. Activity-based costing

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Managerial Accounting: Tools for Business Decision-Making,FifthCanadian EditionWeygandt, Kimmel, Kieso, Aly1-7SOLUTIONS 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)HayleyGeageaNeeds information on sales, perhaps by salespersonand byterritoryLucLemieuxNeeds cost information forhisdepartmentGaryRichardsonNeeds all accounting informationMannyCordozaNeeds product cost informationPatrickDumoulinNeeds information on component costs and costs forhisdepartment(b)Hayley GeageaIncome statementLuc LemieuxSpecialized cost reportsGary RichardsonAllManny CordozaIncomestatementandcostofgoodsmanufacturedschedulePatrick DumoulinSpecialized cost reports(c)Hayley GeageaSalesbyterritory—Detailedinformation,possiblybyproduct line, issued daily or weeklyLuc LemieuxCost ofcomputerprograms—Accumulated cost incurredfor each major program used including maintenance andupdates of program, issued monthlyGary RichardsonCost ofpreparingreports—Detailed analysis of allreportsprovided,theirfrequency,time,andestimatedcosttoprepare, issued monthlyManny CordozaCost ofproduct—Detailed cost by product line,comparingactualwithestimated costs,issuedas each batch ofproduction is completedPatrickDumoulinCost ofproductdesign—Accumulated total costsof eachnew product, issued at end of each project

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Managerial Accounting: Tools for Business Decision-Making,FifthCanadian EditionWeygandt, Kimmel, Kieso, Aly1-8SOLUTIONS TO CASES (Continued)CASE 1.11(1) It is ethical to use different performance measures to evaluate employees, if andonly if, theperformancethatisbeing measuredis performancethatisunderthe direct control or responsibility of the individual being evaluated. This is notas much an ethics problem as it is a management problem—management isresponsible for putting systems in place that are fair to all employees.(2)First,a company can establish acode ofconduct that provides guidelines toemployees who are unsure of what should be done in questionable situations.Second,a companycanpractisetransparent reporting—allow all employees tosee the financial statements, and encourage them to question what they donotunderstand, or what they think might not be right.

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Managerial Accounting: Tools for Business Decision-Making,FifthCanadian EditionWeygandt, Kimmel, Kieso, Aly1-9SOLUTION TO “ALL ABOUT YOU” ACTIVITYCASE 1.12Student responses will vary, especially since this is Chapter 1 and they will nothave been introduced to more sophisticated accounting and business concepts.We have provided some examples that mayrepresent common responses.(a)Students can look in the companies’ annual reports’ financial statements tosee amounts of net income.(b)Students can look up online the relative cost of living, average housing andrent prices, public transitrates, and other costs for each city.(c)Students can look in the companies’ annual reports to see how many yearsthey have been in business, whether profitability has been rising or falling,and management’s discussion of its expectations for the future. They canalso look up online to see whatthe companies’shareprices have been overtime.(d)Students can look in the companies’ annual reports, websites, and newsreleases to see the size of their workforce and whether there have been anyrecent increases or decreases instaffing levels.

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Managerial Accounting: Tools for Business Decision-Making,FifthCanadian EditionWeygandt, Kimmel, Kieso, Aly1-10SOLUTION TO DECISION-MAKING AT CURRENT DESIGNSDM1.1The answers to parts (a) and (b) may vary from student to student.(a)Mike Cichanowski, CEO, needs to know the overall financial picture of thecompany. He also needs to have a general picture of sales by territory andproduct line, and of cost per unit by product line.Diane Buswell, Controller, needs all accounting-related information.Deb Welch, Purchasing Manager, needs to know the costs of thecomponentsfor each product.Bill Johnson, Sales Manager, needs to know sales by territory and product line.Dave Thill, Kayak Plant Manager, needs to know all the costs of producing eachtype of kayak.Rick Thrune, Production Manager for Composite Kayaks, needs to know thecosts related to the composite kayak production.

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Managerial Accounting: Tools for Business Decision-Making,FifthCanadian EditionWeygandt, Kimmel, Kieso, Aly1-11DM1.1 (Continued)(b)ManagerName ofreportInformation reportwould containHow frequentlyshould it beissued?MikeCichanowskiAnalysis ofproposednewproductlineProjected revenuesand expenses for apossible new productlineAs needed andrequestedDiane BuswellCompany-wide budgetanalysisRevenues, expenses,andnet incomecompared to thebudgeted amounts foreachMonthlyDeb WelchPurchasingHistoryList of itemspurchased and mostrecent cost for eachitemMonthly oravailable on-lineBill JohnsonSalesSummarySales by product lineand by customerMonthly orweeklyDave ThillCost ofProductionReportDirect materials,directlabour, andmanufacturingoverhead costsassigned to eachproduct lineMonthly orweeklyRick ThruneCost ofProductionReport forCompositeKayaksDetailed directmaterials,directlabour, andmanufacturingoverheadcosts forthe composite kayaksWeekly

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Managerial Accounting: Tools for Business Decision-Making,FifthCanadian EditionWeygandt, Kimmel, Kieso, Aly1-12

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2-1CHAPTER 2ASSIGNMENT CLASSIFICATION TABLEStudy ObjectivesSelf-StudyQuestionsBriefExercisesDo It!ReviewExercisesProblems1. Define the three classes ofmanufacturing costs anddifferentiate between product andperiod costs.5, 6, 7, 81, 2, 3, 9,111418, 19, 20,21, 22, 29,3540A, 41A, 45A,48A, 49B, 50B,53B,2. Explainvariable,fixed, andmixed costs and the relevantrange.1, 24, 51523, 24,26,2847A, 55B3.Apply the high-low method todetermine the components ofmixed costs.3, 44, 6, 7, 81625, 274. Demonstrate how to calculatecost of goods manufactured andprepare financial statements for amanufacturer.9, 1010, 12, 131730, 31, 32,33, 34, 35,36, 37, 38,3942A, 43A, 44A,45A, 46A, 48A,51B, 52B, 53B,54B, 56B, 57B,58B

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2-2ASSIGNMENT CHARACTERISTICS TABLEProblemNumberDescriptionDifficultyLevelTimeAllotted(min.)40AClassify manufacturing costs intodifferent 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 statement.Moderate30–4045ACalculate cost of goods manufactured, and cost of goodssold.Moderate20–3046ACalculate raw materials purchased, cost of goodsmanufactured, and cost of goods sold.Moderate20–3047ADetermine missing amounts in the cost of goodsmanufactured and sold schedule and compare fixed andvariable costs.Challenging30–4048ADetermine missing amounts and calculateselectedcostsfor schedules of cost of goods manufactured and sold.Challenging30–4049BClassify manufacturing costs into different categories andcalculate the unit cost.Simple20–3050BClassify manufacturing costs into different categories andcalculate the unit cost.Simple20–3051BIndicate the missing amount of different cost items, andprepare a condensed cost of goods manufactured schedule,anincome statement, and a partial balance sheet.Moderate30–4052BPrepare a cost of goods manufactured schedule, a partialincome statement, and a partial balance sheet.Moderate30–40

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2-3ASSIGNMENT CHARACTERISTICS TABLE(Continued)ProblemNumberDescriptionDifficultyLevelTimeAllotted(min.)53BCalculate prime cost, conversion cost and cost of goodsmanufactured.Moderate20–3054BPrepare income statement schedules for cost of goodssold and cost of goodsmanufactured.Moderate30–4055BDetermine missing amounts in the cost of goodsmanufactured and sold schedule and compare fixed andvariable costs.Challenging20–3056BPrepare a cost of goods manufactured schedule and acorrect incomestatement.Moderate30–4057BCalculate selected costs for the income statement, andschedules of cost of goods manufactured and sold.Moderate20–3058BDetermine missing amounts, prepare cost of goodsmanufactured and calculateinventory values.Challenging40–50

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