Accounting For Decision Making And Control, 9th Edition Solution Manual

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PART II: SOLUTIONS TO PROBLEMS AND CASESCHAPTER1INTRODUCTIONP 1–1:Solution to MBA Students(10 minutes)[Using accounting information for decision making and control]Together the two observations highlight the extremes in thetrade-offs of usingaccounting information for decision and control. In the first case, there is more analysisof opportunity costs that are hard to capture with typical accounting information.In thesecond case, there is less intended interest in opportunity cost and greater emphasis oncontrol.P 1–2:Solution to One Cost System Isn't Enough(15 minutes)[Economic Darwinism]The first part of the quote describes the tension (and conflict) that arises when asingle accounting system is used for multiple purposes.This part of the statement is anaccurate description of practice. However, the quote has a couple of problems, including:•While the quote describes the costs of using a single system ("a single system ...can't perform important managerial functions adequately"), the quote does not describethe benefits derived from using a single system (lower bookkeeping costs, a single audit,less confusion).•Because the quote ignores the benefits of a single system, it ignores the conceptof economic Darwinism.It does not address the question of how surviving (successful)companies can compete if a single system "can't perform important managerial functionsadequately."•Also, the quote assumes that managers are bound to their internal accountingsystems, that no other alternative information sources are available.Often managersdevelop their own ad hoc, "off-line" information systems for decision making.Thesesystems include spreadsheets, informal observation, and "walking around."P 1–3:Solution to U.S. and Japanese Tax Laws(15 minutes)[Influence of conflicting demands on cost systems]Theinternalaccountingsystemsupportsmultipleuses,includingfinancialreporting, taxes, contracting (debt and management compensation), internal decisionmaking, and internal control.Because multiple purposes are served, trade-offs must bemade among the competing demands.When more emphasis is placed on one purpose(taxes), less consideration can be given to other uses (internal decision making andcontrol).By linking taxes to external reporting, Japanese firms’ financial reports will be

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