Cornerstones Of Managerial Accounting, Third Canadian Edition Solution Manual

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1-1CHAPTER 1INTRODUCTION TO MANAGERIAL ACCOUNTINGDISCUSSION QUESTIONS1.Managerialaccountingistheprovisionofaccounting information for internal users in afirm.2.The three broad objectives of managerialaccountingareplanning,controlling,anddecision making.3.Theusersofmanagerialaccountinginformationaregenerallymanagersandotheremployeesofafirm.Managerialaccountinginformationistypicallynotprovided to outsiders but may be in selectedcases. For example, a bank may requirebudgeting information for the next few yearsbefore agreeing to grant a loan.4.A managerial accounting information systemtypicallyprovidesbothfinancialandnonfinancialinformation.Forexample,financial information on cost of production istracked.Otherinformation,suchasthenumber of warranty returns, may also betrackedbythemanagementinformationsystem.5.Controlling is sometimes called performanceevaluation. It involves comparing the actualoutcome with the expected outcome to seewhat differences, if any, exist.6.Planningoccursfirst.Itrequiressettingobjectivesandidentifyingthemeansofachieving those objectives. Then, the resultsof the plan are compared with the plan, whichiscalledcontrolling.Clearly,itisalsofeedback,inthatanyimpedimentsorunexpectedoccurrencesarenoted.Thisfeedback is then used to develop the plan forthe next period.7.Managerial accounting is internally focused,does not follow mandatory rules, keeps trackof both financial and nonfinancial information,emphasizes the future, and relies on a broadrange of disciplines. Financial accounting isexternallyfocused,followsexternallyimposedrules(suchasGAAP),hasanhistoricalorientation,andprovidesinformation about the company as a whole.8.Hugeimprovementsintechnology,transportation, and communication over thepast50yearshavechangedtheworldsignificantly.Managerialaccountantshavehad to broaden their focus beyond simplefinancial reporting to include the gathering ofinformation on all types of costs and of thevalue of the product or service to customers.These broader costs are used in planningand decision making.9.Customer value is the difference betweenwhat a customer pays for a product or serviceand what the customer receives in return.Thefocusoncustomervalueforcesmanagementaccountingtolookatmanytypes of costs, not simply manufacturing cost.These may include the price of the good orservice, maintenance costs, search costs,learning costs, and disposal costs.10.Today’smanagerialaccountantmustunderstand many functions of the business,frommanufacturingtomarketingtodistribution to customer service, in order toprovide appropriate information for managingthe value chain. Increased international trademeans that the managerial accountant mustbe familiar not only with business practicesand laws in their own country but also in thecountries with which their company trades.11.Enterprise risk management (ERM) refers tothe formal process of identifying the factorsor threats, both internal and external to theorganization,thatmightpreventtheorganizationfromachievingitsstrategicobjectives. The managerial accountant playsan increasingly important role in ERM byprovidingfinancialandnonfinancialmeasuresofthesethreatsandcommunicating them to high-level executives(e.g., chief risk officer, chief financial officer,board of directors) in the organization whomanage these factors.12.Thevaluechainisthesetofactivitiesrequired to design, develop, produce, market,anddeliverproductsandservicestocustomers. It is important because it helpsthe company to understand its role in serving

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