SOLUTION MANUAL
Horngren's Accounting, 13th Edition Managerial
by Tracie Miller-Nobles, Brenda Mattison, All Chapter 1-9
,THE MANAGERIAL CHAPTERS
1. Introduction to Managerial Accounting
2. Job Order Costing
3. Process Costing
4. Cost-Volume-Profit Analysis
5. Master Budgets
6. Flexible Budgets and Standard Cost Systems
7. Cost Allocation and Responsibility Accounting
8. Short-Term Business Decisions
9. Capital Investment Decisions
,Chapter 1
Introduction to Managerial Accounting
Review Questions
1. The primary purpose of managerial accounting is to provide information to help managers plan,
direct, control, and make decisions.
2. Financial accounting and managerial accounting differ on the following 6 dimensions: (1) primary
users, (2) purpose of information, (3) focus and time dimension of the information, (4) rules and
restrictions, (5) scope of information, and (6) behavioral.
3. Line positions are directly involved in providing goods or services to customers. Staff positions
support line positions.
4. Planning means choosing goals and deciding how to achieve them. Directing involves running the day-
to-day operations of a business. Controlling is the process of monitoring operations and keeping the
company on track.
5. The four IMA standards of ethical practice and a description of each follow.
I. Competence.
Maintain an appropriate level of professional leadership and expertise by enhancing
knowledge and skills.
Perform professional duties in accordance with relevant laws, regulations, and technical
standards.
Provide decision support information and recommendations that are accurate, clear, concise,
and timely.
Recognise and help mange risk.
II. Confidentiality.
Keep information confidential except when disclosure is authorized or legally required.
Inform all relevant parties regarding appropriate use of confidential information. Monitor to
ensure compliance.
Refrain from using confidential information for unethical or illegal advantage.
III. Integrity.
Mitigate actual conflicts of interest. Regularly communicate with business associates to avoid
apparent conflicts of interest. Advise all parties of any potential conflicts.
Refrain from engaging in any conduct that would prejudice carrying out duties ethically.
, Abstainjfromjengagingjinjorjsupportingjanyjactivityjthatjmightjdiscreditjthejprofession.
Contributejtojajpositivejethicaljculturejandjplacejintegrityjofjthejprofessionjabovejpersonaljinterest.
5,jcont.
IV. Credibility.
Communicatejinformationjfairlyjandjobjectively.
Providejalljrelevantjinformationjthatjcouldjreasonablyjbejexpectedjtojinfluencejanjintendedjuser’sju
nderstandingjofjthejreports,janalyses,jorjrecommendations.
Reportjanyjdelaysjorjdeficienciesjinjinformation,jtimeliness,jprocessing,jorjinternaljcontrolsjinjconfo
rmancejwithjorganizationjpolicyjand/orjapplicablejlaw.
Communicatejanyjprofessionaljlimitationsjorjotherjconstraintsjthatjwouldjprecludejresponsi-
jblejjudgmentjorjsuccessfuljperformancejofjanjactivity.
6. Servicejcompaniesjselljtime,jskills,jandjknowledge.j Examplesjofjservicejcompaniesjincludejphonejservicejco
mpanies,jbanks,jcleaningjservicejcompanies,jaccountingjfirms,jlawjfirms,jmedicaljphysicians,jandjonlinejauc
tionjservices.
7. Merchandisingjcompaniesjreselljproductsjtheyjbuyjfromjsuppliers.jMerchandisersjkeepjanjinventoryjofjprodu
cts,jandjmanagersjarejaccountablejforjthejpurchasing,jstorage,jandjsalejofjthejproducts.jExamplesjofjmerchan
disingjcompaniesjincludejtoyjstores,jgroceryjstores,jandjclothingjstores.
8. Merchandisingjcompaniesjreselljproductsjtheyjpreviouslyjboughtjfromjsuppliers,jwhereasjmanufacturingjco
mpaniesjusejlabor,jequipment,jsupplies,jandjfacilitiesjtojconvertjrawjmaterialsjintojnewjfinishedjproducts.jInjc
ontrastjtojmerchandisingjcompanies,jmanufacturingjcompaniesjhavejajbroadjrangejofjproductionjactivitiesjt
hatjrequirejtrackingjcostsjonjthreejkindsjofjinventory.
9. ThejthreejinventoryjaccountsjusedjbyjmanufacturingjcompaniesjarejRawjMaterialsjInventory,jWork-jin-
ProcessjInventory,jandjFinishedjGoodsjInventory.
RawjMaterialsjInventoryjincludesjmaterialsjusedjtojmanufacturejajproduct.jWork-in-
ProcessjInventoryjincludesjgoodsjthatjhavejbeenjstartedjinjthejmanufacturingjprocessjbutjarejnotjyetjcomplet
e.j FinishedjGoodsjInventoryjincludesjcompletedjgoodsjthatjhavejnotjyetjbeenjsold.
10. Ajdirectjcostjisjajcostjthatjcanjbejeasilyjandjcost-
effectivelyjtracedjtojajcostjobjectj(whichjisjanythingjforjwhichjmanagersjwantjajseparatejmeasurementjofjco
st).jAnjindirectjcostjisjajcostjthatjcannotjbejeasilyjorjcost-effectivelyjtracedjtojajcostjobject.
11. Thejthreejmanufacturingjcostsjforjajmanufacturingjcompanyjarejdirectjmaterials,jdirectjlabor,jandjmanufactu
ringjoverhead.jDirectjmaterialsjarejmaterialsjthatjbecomejajphysicaljpartjofjajfinishedjproductjandjwhosejcost
sjarejeasilyjtraceablejtojthejfinishedjproduct.j Directjlaborjisjthejlaborjcostjofjthejemployeesjwhojconvertjmater
ialsjintojfinishedjproducts.jManufacturingjoverheadjincludesjalljmanufacturingjcostsjexceptjdirectjmaterialsja
ndjdirectjlabor,jsuchjasjindirectjmaterials,jindirectjlabor,jfactoryjdepreciation,jfactoryjrent,jandjfactoryjproper
tyjtaxes.
Horngren's Accounting, 13th Edition Managerial
by Tracie Miller-Nobles, Brenda Mattison, All Chapter 1-9
,THE MANAGERIAL CHAPTERS
1. Introduction to Managerial Accounting
2. Job Order Costing
3. Process Costing
4. Cost-Volume-Profit Analysis
5. Master Budgets
6. Flexible Budgets and Standard Cost Systems
7. Cost Allocation and Responsibility Accounting
8. Short-Term Business Decisions
9. Capital Investment Decisions
,Chapter 1
Introduction to Managerial Accounting
Review Questions
1. The primary purpose of managerial accounting is to provide information to help managers plan,
direct, control, and make decisions.
2. Financial accounting and managerial accounting differ on the following 6 dimensions: (1) primary
users, (2) purpose of information, (3) focus and time dimension of the information, (4) rules and
restrictions, (5) scope of information, and (6) behavioral.
3. Line positions are directly involved in providing goods or services to customers. Staff positions
support line positions.
4. Planning means choosing goals and deciding how to achieve them. Directing involves running the day-
to-day operations of a business. Controlling is the process of monitoring operations and keeping the
company on track.
5. The four IMA standards of ethical practice and a description of each follow.
I. Competence.
Maintain an appropriate level of professional leadership and expertise by enhancing
knowledge and skills.
Perform professional duties in accordance with relevant laws, regulations, and technical
standards.
Provide decision support information and recommendations that are accurate, clear, concise,
and timely.
Recognise and help mange risk.
II. Confidentiality.
Keep information confidential except when disclosure is authorized or legally required.
Inform all relevant parties regarding appropriate use of confidential information. Monitor to
ensure compliance.
Refrain from using confidential information for unethical or illegal advantage.
III. Integrity.
Mitigate actual conflicts of interest. Regularly communicate with business associates to avoid
apparent conflicts of interest. Advise all parties of any potential conflicts.
Refrain from engaging in any conduct that would prejudice carrying out duties ethically.
, Abstainjfromjengagingjinjorjsupportingjanyjactivityjthatjmightjdiscreditjthejprofession.
Contributejtojajpositivejethicaljculturejandjplacejintegrityjofjthejprofessionjabovejpersonaljinterest.
5,jcont.
IV. Credibility.
Communicatejinformationjfairlyjandjobjectively.
Providejalljrelevantjinformationjthatjcouldjreasonablyjbejexpectedjtojinfluencejanjintendedjuser’sju
nderstandingjofjthejreports,janalyses,jorjrecommendations.
Reportjanyjdelaysjorjdeficienciesjinjinformation,jtimeliness,jprocessing,jorjinternaljcontrolsjinjconfo
rmancejwithjorganizationjpolicyjand/orjapplicablejlaw.
Communicatejanyjprofessionaljlimitationsjorjotherjconstraintsjthatjwouldjprecludejresponsi-
jblejjudgmentjorjsuccessfuljperformancejofjanjactivity.
6. Servicejcompaniesjselljtime,jskills,jandjknowledge.j Examplesjofjservicejcompaniesjincludejphonejservicejco
mpanies,jbanks,jcleaningjservicejcompanies,jaccountingjfirms,jlawjfirms,jmedicaljphysicians,jandjonlinejauc
tionjservices.
7. Merchandisingjcompaniesjreselljproductsjtheyjbuyjfromjsuppliers.jMerchandisersjkeepjanjinventoryjofjprodu
cts,jandjmanagersjarejaccountablejforjthejpurchasing,jstorage,jandjsalejofjthejproducts.jExamplesjofjmerchan
disingjcompaniesjincludejtoyjstores,jgroceryjstores,jandjclothingjstores.
8. Merchandisingjcompaniesjreselljproductsjtheyjpreviouslyjboughtjfromjsuppliers,jwhereasjmanufacturingjco
mpaniesjusejlabor,jequipment,jsupplies,jandjfacilitiesjtojconvertjrawjmaterialsjintojnewjfinishedjproducts.jInjc
ontrastjtojmerchandisingjcompanies,jmanufacturingjcompaniesjhavejajbroadjrangejofjproductionjactivitiesjt
hatjrequirejtrackingjcostsjonjthreejkindsjofjinventory.
9. ThejthreejinventoryjaccountsjusedjbyjmanufacturingjcompaniesjarejRawjMaterialsjInventory,jWork-jin-
ProcessjInventory,jandjFinishedjGoodsjInventory.
RawjMaterialsjInventoryjincludesjmaterialsjusedjtojmanufacturejajproduct.jWork-in-
ProcessjInventoryjincludesjgoodsjthatjhavejbeenjstartedjinjthejmanufacturingjprocessjbutjarejnotjyetjcomplet
e.j FinishedjGoodsjInventoryjincludesjcompletedjgoodsjthatjhavejnotjyetjbeenjsold.
10. Ajdirectjcostjisjajcostjthatjcanjbejeasilyjandjcost-
effectivelyjtracedjtojajcostjobjectj(whichjisjanythingjforjwhichjmanagersjwantjajseparatejmeasurementjofjco
st).jAnjindirectjcostjisjajcostjthatjcannotjbejeasilyjorjcost-effectivelyjtracedjtojajcostjobject.
11. Thejthreejmanufacturingjcostsjforjajmanufacturingjcompanyjarejdirectjmaterials,jdirectjlabor,jandjmanufactu
ringjoverhead.jDirectjmaterialsjarejmaterialsjthatjbecomejajphysicaljpartjofjajfinishedjproductjandjwhosejcost
sjarejeasilyjtraceablejtojthejfinishedjproduct.j Directjlaborjisjthejlaborjcostjofjthejemployeesjwhojconvertjmater
ialsjintojfinishedjproducts.jManufacturingjoverheadjincludesjalljmanufacturingjcostsjexceptjdirectjmaterialsja
ndjdirectjlabor,jsuchjasjindirectjmaterials,jindirectjlabor,jfactoryjdepreciation,jfactoryjrent,jandjfactoryjproper
tyjtaxes.
