Managerial Accounting , 8th Edition Solution Manual

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11CHAPTER 1INTRODUCTION: THE ROLE, HISTORY, ANDDIRECTION OF MANAGEMENT ACCOUNTINGQUESTIONS FOR WRITING AND DISCUSSION1.A management accounting information sys-tem is an information system that producesoutputs using inputs and processes neededto satisfy specific managerial objectives.2.Theinputsofamanagementaccountinginformationsystemareeconomicevents.The processes transform the inputs into out-puts and are such things as collecting, mea-suring,storing,analyzing,reporting,andmanaging. Typical outputs include specialreports, product costs, customer costs, per-formancereports,budgets,andpersonalcommunication.3.The three objectives of a management ac-counting information system are as follows:To provide information for costing out ser-vices, products, and other objects of interestto management; to provide information forplanning, controlling, evaluation, and conti-nuous improvement; and to provide informa-tion for decision making.4.Allorganizations—manufacturing,mer-chandising,andservices—musthaveagoodmanagementaccountinginformationsystem. Management accounting conceptsand procedures are not restricted to any onetype of organization.5.Theusersofmanagementaccountingin-formation are managers and workers withinthe organization. Anyone internal to an or-ganization is a potential user of manage-ment accounting information.6.Management accounting information is usedto cost out objects (for example, servicesand products) and to aid in planning, control-ling,evaluation,continuousimprovement,and decision making.7.Both financial and nonfinancial informationshould be provided by the management ac-countinginformationsystem.Nonfinancialinformation provides insights useful for con-trolling operations—it is easily used by op-erationalworkers.Financialinformationiscritical for evaluating the success of opera-tional control.8.Continuous improvement means searchingfor ways of increasing overall efficiency andproductivity of activities by reducing waste,increasing quality, and reducing costs.9.Employee empowerment is allowing opera-tional workers to plan, control, and makedecisions without explicit authorization frommiddle- and higher-level managers.10.Operational workers must be informed sothat they can evaluate and monitor the effec-tiveness of their decisions.11.Planningestablishesperformancestan-dards,feedbackcomparesactualperfor-mance with planned performance, and con-trolling uses feedback to evaluate deviationsfrom plans.12.Performance reports are formal reports thatcompare actual data with planned data orbenchmarksandthusprovidesignalstomanagers that allow them to take correctiveactions.13.Management accounting differs from finan-cial accounting in the following major ways:(1)internallyfocused,(2)nomandatedrules, (3) financial and nonfinancial; subjec-tive information possible, (4) emphasis onthe future, (5) internal evaluation and deci-sions based on very detailed information, (6)broad, multidisciplinary.14.The requirement to prepare reports for ex-ternal users created a demand for a particu-lar accounting information system. This sys-tem was geared to produce inventory costs.Aggregate average cost information appar-ently was sufficient for most internal deci-sions.Thus,managementaccountingbe-cameanextensionofthefinancialaccounting system. This outcome was prob-ably due to a favorable cost-benefit tradeoff.The incremental cost of producing

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