1-1 Test Bank for Davis & Davis, Managerial Accounting, 4/e
TEST6BANK
MANAGERIAL6ACCOUNTING64TH6EDITION6
BY6CHARLES6DAVIS6ELIZABETH6DAVIS666CHAPTER616-
613
, 1-2 Test Bank for Davis & Davis, Managerial Accounting, 4/e
Table6Of6Contents
1.6Accounting6as6a6Tool6for6Management
2.Cost6Behavior6and6Cost6Estimation
3.6Cost-Volume-Profit6Analysis6and6Pricing6Decisions
4.6Product6Costs6and6Job6Order6Costing
5.6Planning6and6Forecasting
5A:6Planning6and6Forecasting6in6a6Retail6Setting*6(online6only)
6.6Performance6Evaluation:6Variance6Analysis
7.6Activity-Based6Costing6and6Activity-Based6Management
8.6Using6Accounting6Information6to6Make6Managerial6Decisions
9.6Capital6Budgeting
10.6Decentralization6and6Performance6Evaluation
11.6Performance6Evaluation6Revisited:6A6Balanced6Approach
12.6Financial6Statement6Analysis
13.6Statement6of6Cash6Flows6
,1-3 Test Bank for Davis & Davis, Managerial Accounting, 4/e
Chapter61
Accounting6as6a6Tool6for6Management
CHAPTER6LEARNING6OBJECTIVES
1. Define6managerial6accounting6(Unit61.1)
There6are6several6formal6definitions6of6managerial6accounting.6A6simple6one
6is6“the6generation6of6relevant6information6to6support6management’s6decisio
n-making6activities.”
2. Describe6the6differences6between6managerial6and6financial6accou
nting6(Unit61.1)
Managerial6accounting’s6primary6users6are6managers6and6decision6makers6within6
an6organization,6whereas6financial6accounting6is6aimed6primarily6at6external6users
.6Unlike6GAAP6that6guides6financial6accounting,6there6are6no6mandated6rules6in6
managerial6accounting.6Managerial6accounting6reports6focus6on6operating6segmen
ts,6while6financial6accounting6statements6report6results6for6the6organization6as6a6
whole.6Managerial6accounting6is6concerned6more6with6projecting6future6results6t
han6reporting6past6results.6Managerial6information6is6prepared6to6take6advantage
6of6a6window6of6opportunity,6even6if6some6accuracy6must6be6sacrificed.6Financial
6accounting6information6is6balanced6to6the6penny6and6is6delivered6after6the6end
6of6the6accounting6period.
3. List6and6describe6the6four6functions6of6managers6(Unit61.1)
Planning6means6setting6a6direction6for6the6organization.6Long-
term,6or6strategic6planning6provides6direction6for6a6five-6to6ten-
year6period.6Short-
term6or6operational6planning6provides6more6detailed6guidance6for6the6coming6ye
ar;6it6translates6the6company’s6strategy6into6action6steps.6Controlling6is6the6moni
toring6of6day-to-
day6operations6to6identify6any6problems6that6require6corrective6action.6Evaluating
6is6the6process6of6comparing6a6particular6period’s6actual6results6to6planned6resul
ts,6for6the6purpose6of6assessing6managerial6performance.6Decision6making6means
6choosing6between6alternative6courses6of6action.
4. Explain6how6the6selection6of6a6particular6business6strategy6determin
es6the6information6that6managers6need6to6run6an6organization6effec
tively6(Unit61.2)
To6run6a6business6effectively,6managers6need6information6that6shows6how6we
ll6operations6are6meeting6the6organization’s6strategic6goals.6For6instance,6if6th
e6organization’s6strategy6is6to6be6a6low-
cost6producer,6information6about6product6costs6and6cost6variances6will6be6mo
re6useful6to6managers6than6information6about6research6and6development.
, 1-4 Test Bank for Davis & Davis, Managerial Accounting, 4/e
5. Discuss6the6importance6of6ethical6behavior6in6managerial6accounting
6(Unit61.3)
Ethical6behavior6means6knowing6right6from6wrong6and6then6doing6the6right6thi
ng.6Many6companies6and6most6professional6organizations6have6codes6of6conduct
6to6guide6employees’6actions.6Acting6unethically6can6lead6to6illegal6activity6and6
ultimately6to6the6destruction6of6the6firm.6Furthermore,6research6has6shown6that
6a6public6commitment6to6ethical6behavior6can6lead6to6superior6financial6perform
ance.
TEST6BANK
MANAGERIAL6ACCOUNTING64TH6EDITION6
BY6CHARLES6DAVIS6ELIZABETH6DAVIS666CHAPTER616-
613
, 1-2 Test Bank for Davis & Davis, Managerial Accounting, 4/e
Table6Of6Contents
1.6Accounting6as6a6Tool6for6Management
2.Cost6Behavior6and6Cost6Estimation
3.6Cost-Volume-Profit6Analysis6and6Pricing6Decisions
4.6Product6Costs6and6Job6Order6Costing
5.6Planning6and6Forecasting
5A:6Planning6and6Forecasting6in6a6Retail6Setting*6(online6only)
6.6Performance6Evaluation:6Variance6Analysis
7.6Activity-Based6Costing6and6Activity-Based6Management
8.6Using6Accounting6Information6to6Make6Managerial6Decisions
9.6Capital6Budgeting
10.6Decentralization6and6Performance6Evaluation
11.6Performance6Evaluation6Revisited:6A6Balanced6Approach
12.6Financial6Statement6Analysis
13.6Statement6of6Cash6Flows6
,1-3 Test Bank for Davis & Davis, Managerial Accounting, 4/e
Chapter61
Accounting6as6a6Tool6for6Management
CHAPTER6LEARNING6OBJECTIVES
1. Define6managerial6accounting6(Unit61.1)
There6are6several6formal6definitions6of6managerial6accounting.6A6simple6one
6is6“the6generation6of6relevant6information6to6support6management’s6decisio
n-making6activities.”
2. Describe6the6differences6between6managerial6and6financial6accou
nting6(Unit61.1)
Managerial6accounting’s6primary6users6are6managers6and6decision6makers6within6
an6organization,6whereas6financial6accounting6is6aimed6primarily6at6external6users
.6Unlike6GAAP6that6guides6financial6accounting,6there6are6no6mandated6rules6in6
managerial6accounting.6Managerial6accounting6reports6focus6on6operating6segmen
ts,6while6financial6accounting6statements6report6results6for6the6organization6as6a6
whole.6Managerial6accounting6is6concerned6more6with6projecting6future6results6t
han6reporting6past6results.6Managerial6information6is6prepared6to6take6advantage
6of6a6window6of6opportunity,6even6if6some6accuracy6must6be6sacrificed.6Financial
6accounting6information6is6balanced6to6the6penny6and6is6delivered6after6the6end
6of6the6accounting6period.
3. List6and6describe6the6four6functions6of6managers6(Unit61.1)
Planning6means6setting6a6direction6for6the6organization.6Long-
term,6or6strategic6planning6provides6direction6for6a6five-6to6ten-
year6period.6Short-
term6or6operational6planning6provides6more6detailed6guidance6for6the6coming6ye
ar;6it6translates6the6company’s6strategy6into6action6steps.6Controlling6is6the6moni
toring6of6day-to-
day6operations6to6identify6any6problems6that6require6corrective6action.6Evaluating
6is6the6process6of6comparing6a6particular6period’s6actual6results6to6planned6resul
ts,6for6the6purpose6of6assessing6managerial6performance.6Decision6making6means
6choosing6between6alternative6courses6of6action.
4. Explain6how6the6selection6of6a6particular6business6strategy6determin
es6the6information6that6managers6need6to6run6an6organization6effec
tively6(Unit61.2)
To6run6a6business6effectively,6managers6need6information6that6shows6how6we
ll6operations6are6meeting6the6organization’s6strategic6goals.6For6instance,6if6th
e6organization’s6strategy6is6to6be6a6low-
cost6producer,6information6about6product6costs6and6cost6variances6will6be6mo
re6useful6to6managers6than6information6about6research6and6development.
, 1-4 Test Bank for Davis & Davis, Managerial Accounting, 4/e
5. Discuss6the6importance6of6ethical6behavior6in6managerial6accounting
6(Unit61.3)
Ethical6behavior6means6knowing6right6from6wrong6and6then6doing6the6right6thi
ng.6Many6companies6and6most6professional6organizations6have6codes6of6conduct
6to6guide6employees’6actions.6Acting6unethically6can6lead6to6illegal6activity6and6
ultimately6to6the6destruction6of6the6firm.6Furthermore,6research6has6shown6that
6a6public6commitment6to6ethical6behavior6can6lead6to6superior6financial6perform
ance.
