,Full Solution Manual For
Managerial Accounting Tools for Business Decision Making 9th Edition
by Jerry J. Weygandt, Paul D. Kimmel, Jill E. Mitchell
CHAPTER 1
Managerial Accounting
Learning Objectives
1. Identify the features of managerial accounting and the functions of management.
2. Describe the classes of manufacturing costs and the differences between product and period
costs.
3. Demonstrate how to compute cost of goods manufactured and prepare financial statements for a
manufacturer.
4. Discuss trends in managerial accounting.
ANSWERS TO QUESTIONS
1. (a) Not true. Managerial accounting is a field of accounting that provides economic and financial
information for managers and other internal users.
(b) Joe is incorrect. Managerial accounting applies to all types of businesses—service,
merchandising, and manufacturing.
LO1 BT: C Difficulty: Easy TOT: 3 min. AACSB: None AICPA FC: Measurement, Analysis and Interpretation IMA: Cost Management
2. (a) Financial accounting is concerned primarily with external users such as stockholders,
creditors, and regulators. In contrast, managerial accounting is concerned primarily with
internal users such as officers and managers.
(b) Financial statements are the end product of financial accounting. These statements are
prepared quarterly and annually. In managerial accounting, internal reports may be
prepared as frequently as needed.
(c) The purpose of financial accounting is to provide general-purpose information for external
users. The purpose of managerial accounting is to provide special-purpose information for
specific internal decisions.
LO1 BT: C Difficulty: Easy TOT: 5 min. AACSB: None AICPA FC: Measurement, Analysis and Interpretation IMA: Cost Management
3. Differences in the content of the reports are as follows:
Financial Managerial
Pertains to business as a whole and is Pertains to subunits of the business and
highly aggregated. may be very detailed.
Limited to accrual accounting and cost data. Extends beyond accrual accounting
Generally accepted accounting principles. system to any relevant data.
Copyright © 2021 John Wiley & Sons, Inc. Weygandt, Managerial Accounting, 9e, Solutions Manual (For Instructor Use Only) 1-1
, Standard is relevance to decisions.
In financial accounting, financial statements are verified annually through an independent audit
by certified public accountants. There are no independent audits of internal reports prepared by
managerial accountants.
LO1 BT: C Difficulty: Easy TOT: 5 min. AACSB: None AICPA FC: Measurement, Analysis and Interpretation IMA: Cost Management
4. Linda 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 a company to
produce a smooth-running operation.
(3) Controlling is the process of keeping the company’s activities on track.
LO1 BT: C Difficulty: Easy TOT: 3 min. AACSB: None AICPA FC: Measurement, Analysis and Interpretation IMA: Cost Management
5. Not true. Decision-making is not a separate management function. Rather, decision-making
involves the exercise of good judgment in performing the three management functions explained
in the answer to question four above.
LO1 BT: C Difficulty: Easy TOT: 2 min. AACSB: None AICPA FC: Measurement, Analysis and Interpretation IMA: Cost Management
6. Employees with line positions are directly involved in the company’s primary revenue generating
operating activities. Examples would include factory managers and supervisors, and the vice
president of operations. In contrast, employees with staff positions are not directly involved in
revenue-generating operating activities, but rather serve in a support capacity to line employees.
Examples include employees in finance, legal, and human resources.
LO1 BT: C Difficulty: Easy TOT: 3 min. AACSB: None AICPA FC: Measurement, Analysis and Interpretation IMA: Cost Management
Questions Chapter 1 (Continued)
7. The difference in balance sheets pertains to the presentation of inventories in the current asset
section. In a merchandising company, only inventory is shown. In a manufacturing company,
three inventory accounts are shown: finished goods, work in process, and raw materials.
LO3 BT: C Difficulty: Easy TOT: 2 min. AACSB: None AICPA FC: Measurement, Analysis and Interpretation IMA: Cost management
8. Manufacturing costs are classified as either direct materials, direct labor, or manufacturing
overhead.
LO2 BT: C Difficulty: Easy TOT: 1 min. AACSB: None AICPA FC: Measurement, Analysis and Interpretation IMA: Cost management
9. No, Mel is not correct. The distinction between direct and indirect materials is based on two criteria:
(1) physical association and (2) the convenience of making the physical association. Materials
which cannot be easily associated with the finished product are considered indirect materials.
LO2 BT: C Difficulty: Easy TOT: 2 min. AACSB: None AICPA FC: Measurement, Analysis and Interpretation IMA: Cost management
10. Product costs, or inventoriable costs, are costs that are a necessary and integral part of
producing the finished product, they are classified as manufacturing costs. Period costs are costs
that are identified with a specific time period rather than with a salable product. These costs
relate to nonmanufacturing activities and therefore are not inventoriable costs, they are expensed
as incurred.
LO2 BT: K Difficulty: Easy TOT: 2 min. AACSB: None AICPA FC: Measurement, Analysis and Interpretation IMA: Cost management
11. A merchandising company that uses the periodic inventory system reports beginning inventory,
cost of goods purchased, and ending inventory in the cost of goods section of the income
statement. A manufacturing company reports beginning finished goods inventory, cost of goods
manufactured, and ending finished goods inventory in its determination of cost of goods sold.
LO3 BT: C Difficulty: Easy TOT: 5 min. AACSB: None AICPA FC: Measurement, Analysis and Interpretation IMA: Cost management
12. (a) X = total cost of work in process.
(b) X = cost of goods manufactured.
LO3 BT: C Difficulty: Easy TOT: 2 min. AACSB: None AICPA FC: Measurement, Analysis and Interpretation IMA: Cost management
13. Raw materials inventory, beginning ...................................................................... $12,000
Raw materials purchases...................................................................................... 170,000
, Less: Total raw materials available for use ............................................................ 182,000
Raw materials inventory, ending ............................................................................ 15,000
Direct materials used .................................................................................... $167,000
LO3 BT: AP Difficulty: Easy TOT: 3 min. AACSB: Analytic AICPA FC: Measurement, Analysis and Interpretation IMA: Cost management
($12,000 + $170,000 - $15,000 = $167,000)
(Beg. RM + RM purch. – End. RM = DM used)
14. Direct materials used ............................................................................................. $240,000
Direct labor ........................................................................................................... 220,000
Total manufacturing overhead ............................................................................... 180,000
Total manufacturing costs ............................................................................. $640,000
LO3 BT: AP Difficulty: Easy TOT: 2 min. AACSB: Analytic AICPA FC: Measurement, Analysis and Interpretation IMA: Cost management
($240,000 + $220,000 + $180,000 = $640,000)
(DM used + DL used + Tot. MOH = Tot. mfg. costs)
15. (a) Total cost of work in process ($26,000 + $640,000) ...................................... $666,000
(b) Cost of goods manufactured ($666,000 – $32,000) ...................................... $634,000
LO3 BT: AP Difficulty: Easy TOT: 2 min. AACSB: Analytic AICPA FC: Measurement, Analysis and Interpretation IMA: Cost management
[(a: $26,000 + $640,000 = $666,000); (b: $666,0000 - $32,000 = $634,000)]
[(a: Beg. WIP + Tot. mfg. costs = Tot. cost of WIP); (b: Tot. cost of WIP – End. WIP = COGM)]
16. The order of reporting is finished goods inventory, work in process inventory, and raw materials
inventory.
LO3 BT: K Difficulty: Easy TOT: 1 min. AACSB: None AICPA FC: Measurement, Analysis and Interpretation IMA: Cost management
Questions Chapter 1 (Continued)
17. The products differ in how each are consumed by the customer. Services are consumed as they
are provided; and not capitalized into inventory. Meals at a restaurant are the best example
where they are consumed immediately by the customer. There could be a long lead time before
the product is sold to a customer in a manufacturing environment.
LO4 BT: C Difficulty: Easy TOT: 3 min. AACSB: None AICPA FC: Measurement, Analysis and Interpretation IMA: Cost management
18. The product costing techniques apply equally well to manufacturers and service companies. Each
needs to keep track of the cost of production or services in order to know whether it is generating
a profit. The techniques shown in this chapter, to accumulate manufacturing costs to determine
manufacturing inventory, are equally useful for determining the cost of services.
LO4 BT: K Difficulty: Easy TOT: 3 min. AACSB: None AICPA FC: Measurement, Analysis and Interpretation IMA: Cost management
19. The value chain refers to all activities associated with providing a product or service. For a
manufacturer, these include research and development, product design, acquisition of raw
materials, production, sales and marketing, delivery, customer relations, and subsequent service.
The value chain includes both manufacturing and nonmanufacturing activities and costs.
LO4 BT: C Difficulty: Easy TOT: 3 min. AACSB: None AICPA FC: Decision Modeling IMA: Strategic Planning
20. An enterprise resource planning (ERP) system is an integrated software system that provides a
comprehensive, centralized resource for information. Its primary benefits are that it replaces the
many individual systems typically used for receivables, payables, inventory, human resources,
etc. Also, it can be used to get information from, and provide information to, the company’s
customers and suppliers.
LO4 BT: C Difficulty: Easy TOT: 3 min. AACSB: None AICPA FC: System and Process Management IMA: Strategic Planning
21. In a just-in-time inventory system, the company has no extra inventory stored. Consequently, if
some units that are produced are defective, the company will not have enough units to deliver to
customers.
LO4 BT: C Difficulty: Easy TOT: 2 min. AACSB: None AICPA FC: System and Process Management IMA: Strategic Planning
Copyright © 2021 John Wiley & Sons, Inc. Weygandt, Managerial Accounting, 9e, Solutions Manual (For Instructor Use Only) 1-3
Managerial Accounting Tools for Business Decision Making 9th Edition
by Jerry J. Weygandt, Paul D. Kimmel, Jill E. Mitchell
CHAPTER 1
Managerial Accounting
Learning Objectives
1. Identify the features of managerial accounting and the functions of management.
2. Describe the classes of manufacturing costs and the differences between product and period
costs.
3. Demonstrate how to compute cost of goods manufactured and prepare financial statements for a
manufacturer.
4. Discuss trends in managerial accounting.
ANSWERS TO QUESTIONS
1. (a) Not true. Managerial accounting is a field of accounting that provides economic and financial
information for managers and other internal users.
(b) Joe is incorrect. Managerial accounting applies to all types of businesses—service,
merchandising, and manufacturing.
LO1 BT: C Difficulty: Easy TOT: 3 min. AACSB: None AICPA FC: Measurement, Analysis and Interpretation IMA: Cost Management
2. (a) Financial accounting is concerned primarily with external users such as stockholders,
creditors, and regulators. In contrast, managerial accounting is concerned primarily with
internal users such as officers and managers.
(b) Financial statements are the end product of financial accounting. These statements are
prepared quarterly and annually. In managerial accounting, internal reports may be
prepared as frequently as needed.
(c) The purpose of financial accounting is to provide general-purpose information for external
users. The purpose of managerial accounting is to provide special-purpose information for
specific internal decisions.
LO1 BT: C Difficulty: Easy TOT: 5 min. AACSB: None AICPA FC: Measurement, Analysis and Interpretation IMA: Cost Management
3. Differences in the content of the reports are as follows:
Financial Managerial
Pertains to business as a whole and is Pertains to subunits of the business and
highly aggregated. may be very detailed.
Limited to accrual accounting and cost data. Extends beyond accrual accounting
Generally accepted accounting principles. system to any relevant data.
Copyright © 2021 John Wiley & Sons, Inc. Weygandt, Managerial Accounting, 9e, Solutions Manual (For Instructor Use Only) 1-1
, Standard is relevance to decisions.
In financial accounting, financial statements are verified annually through an independent audit
by certified public accountants. There are no independent audits of internal reports prepared by
managerial accountants.
LO1 BT: C Difficulty: Easy TOT: 5 min. AACSB: None AICPA FC: Measurement, Analysis and Interpretation IMA: Cost Management
4. Linda 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 a company to
produce a smooth-running operation.
(3) Controlling is the process of keeping the company’s activities on track.
LO1 BT: C Difficulty: Easy TOT: 3 min. AACSB: None AICPA FC: Measurement, Analysis and Interpretation IMA: Cost Management
5. Not true. Decision-making is not a separate management function. Rather, decision-making
involves the exercise of good judgment in performing the three management functions explained
in the answer to question four above.
LO1 BT: C Difficulty: Easy TOT: 2 min. AACSB: None AICPA FC: Measurement, Analysis and Interpretation IMA: Cost Management
6. Employees with line positions are directly involved in the company’s primary revenue generating
operating activities. Examples would include factory managers and supervisors, and the vice
president of operations. In contrast, employees with staff positions are not directly involved in
revenue-generating operating activities, but rather serve in a support capacity to line employees.
Examples include employees in finance, legal, and human resources.
LO1 BT: C Difficulty: Easy TOT: 3 min. AACSB: None AICPA FC: Measurement, Analysis and Interpretation IMA: Cost Management
Questions Chapter 1 (Continued)
7. The difference in balance sheets pertains to the presentation of inventories in the current asset
section. In a merchandising company, only inventory is shown. In a manufacturing company,
three inventory accounts are shown: finished goods, work in process, and raw materials.
LO3 BT: C Difficulty: Easy TOT: 2 min. AACSB: None AICPA FC: Measurement, Analysis and Interpretation IMA: Cost management
8. Manufacturing costs are classified as either direct materials, direct labor, or manufacturing
overhead.
LO2 BT: C Difficulty: Easy TOT: 1 min. AACSB: None AICPA FC: Measurement, Analysis and Interpretation IMA: Cost management
9. No, Mel is not correct. The distinction between direct and indirect materials is based on two criteria:
(1) physical association and (2) the convenience of making the physical association. Materials
which cannot be easily associated with the finished product are considered indirect materials.
LO2 BT: C Difficulty: Easy TOT: 2 min. AACSB: None AICPA FC: Measurement, Analysis and Interpretation IMA: Cost management
10. Product costs, or inventoriable costs, are costs that are a necessary and integral part of
producing the finished product, they are classified as manufacturing costs. Period costs are costs
that are identified with a specific time period rather than with a salable product. These costs
relate to nonmanufacturing activities and therefore are not inventoriable costs, they are expensed
as incurred.
LO2 BT: K Difficulty: Easy TOT: 2 min. AACSB: None AICPA FC: Measurement, Analysis and Interpretation IMA: Cost management
11. A merchandising company that uses the periodic inventory system reports beginning inventory,
cost of goods purchased, and ending inventory in the cost of goods section of the income
statement. A manufacturing company reports beginning finished goods inventory, cost of goods
manufactured, and ending finished goods inventory in its determination of cost of goods sold.
LO3 BT: C Difficulty: Easy TOT: 5 min. AACSB: None AICPA FC: Measurement, Analysis and Interpretation IMA: Cost management
12. (a) X = total cost of work in process.
(b) X = cost of goods manufactured.
LO3 BT: C Difficulty: Easy TOT: 2 min. AACSB: None AICPA FC: Measurement, Analysis and Interpretation IMA: Cost management
13. Raw materials inventory, beginning ...................................................................... $12,000
Raw materials purchases...................................................................................... 170,000
, Less: Total raw materials available for use ............................................................ 182,000
Raw materials inventory, ending ............................................................................ 15,000
Direct materials used .................................................................................... $167,000
LO3 BT: AP Difficulty: Easy TOT: 3 min. AACSB: Analytic AICPA FC: Measurement, Analysis and Interpretation IMA: Cost management
($12,000 + $170,000 - $15,000 = $167,000)
(Beg. RM + RM purch. – End. RM = DM used)
14. Direct materials used ............................................................................................. $240,000
Direct labor ........................................................................................................... 220,000
Total manufacturing overhead ............................................................................... 180,000
Total manufacturing costs ............................................................................. $640,000
LO3 BT: AP Difficulty: Easy TOT: 2 min. AACSB: Analytic AICPA FC: Measurement, Analysis and Interpretation IMA: Cost management
($240,000 + $220,000 + $180,000 = $640,000)
(DM used + DL used + Tot. MOH = Tot. mfg. costs)
15. (a) Total cost of work in process ($26,000 + $640,000) ...................................... $666,000
(b) Cost of goods manufactured ($666,000 – $32,000) ...................................... $634,000
LO3 BT: AP Difficulty: Easy TOT: 2 min. AACSB: Analytic AICPA FC: Measurement, Analysis and Interpretation IMA: Cost management
[(a: $26,000 + $640,000 = $666,000); (b: $666,0000 - $32,000 = $634,000)]
[(a: Beg. WIP + Tot. mfg. costs = Tot. cost of WIP); (b: Tot. cost of WIP – End. WIP = COGM)]
16. The order of reporting is finished goods inventory, work in process inventory, and raw materials
inventory.
LO3 BT: K Difficulty: Easy TOT: 1 min. AACSB: None AICPA FC: Measurement, Analysis and Interpretation IMA: Cost management
Questions Chapter 1 (Continued)
17. The products differ in how each are consumed by the customer. Services are consumed as they
are provided; and not capitalized into inventory. Meals at a restaurant are the best example
where they are consumed immediately by the customer. There could be a long lead time before
the product is sold to a customer in a manufacturing environment.
LO4 BT: C Difficulty: Easy TOT: 3 min. AACSB: None AICPA FC: Measurement, Analysis and Interpretation IMA: Cost management
18. The product costing techniques apply equally well to manufacturers and service companies. Each
needs to keep track of the cost of production or services in order to know whether it is generating
a profit. The techniques shown in this chapter, to accumulate manufacturing costs to determine
manufacturing inventory, are equally useful for determining the cost of services.
LO4 BT: K Difficulty: Easy TOT: 3 min. AACSB: None AICPA FC: Measurement, Analysis and Interpretation IMA: Cost management
19. The value chain refers to all activities associated with providing a product or service. For a
manufacturer, these include research and development, product design, acquisition of raw
materials, production, sales and marketing, delivery, customer relations, and subsequent service.
The value chain includes both manufacturing and nonmanufacturing activities and costs.
LO4 BT: C Difficulty: Easy TOT: 3 min. AACSB: None AICPA FC: Decision Modeling IMA: Strategic Planning
20. An enterprise resource planning (ERP) system is an integrated software system that provides a
comprehensive, centralized resource for information. Its primary benefits are that it replaces the
many individual systems typically used for receivables, payables, inventory, human resources,
etc. Also, it can be used to get information from, and provide information to, the company’s
customers and suppliers.
LO4 BT: C Difficulty: Easy TOT: 3 min. AACSB: None AICPA FC: System and Process Management IMA: Strategic Planning
21. In a just-in-time inventory system, the company has no extra inventory stored. Consequently, if
some units that are produced are defective, the company will not have enough units to deliver to
customers.
LO4 BT: C Difficulty: Easy TOT: 2 min. AACSB: None AICPA FC: System and Process Management IMA: Strategic Planning
Copyright © 2021 John Wiley & Sons, Inc. Weygandt, Managerial Accounting, 9e, Solutions Manual (For Instructor Use Only) 1-3
