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.
, Abstain from engaging in or supporting any activity that might discredit the profession.
Contribute to a positive ethical culture and place integrity of the profession above personal
interest.
5, cont.
IV. Credibility.
Communicate information fairly and objectively.
Provide all relevant information that could reasonably be expected to influence an intended
user’s understanding of the reports, analyses, or recommendations.
Report any delays or deficiencies in information, timeliness, processing, or internal controlsin
conformance with organization policy and/or applicable law.
Communicate any professional limitations or other constraints that would preclude responsi-
ble judgment or successful performance of an activity.
6. Service companies sell time, skills, and knowledge. Examples of service companies include phone
service companies, banks, cleaning service companies, accounting firms, law firms, medical physicians,
and online auction services.
7. Merchandising companies resell products they buy from suppliers. Merchandisers keep an inventoryof
products, and managers are accountable for the purchasing, storage, and sale of the products. Examples
of merchandising companies include toy stores, grocery stores, and clothing stores.
8. Merchandising scompanies sresell sproducts sthey spreviously sbought sfrom ssuppliers, swhereas
smanufacturing scompanies suse slabor, sequipment, ssupplies, sand sfacilities sto sconvert sraw smaterials
sintosnew sfinished sproducts. sIn scontrast sto smerchandising scompanies, smanufacturing scompanies
shave sa sbroad srange sof sproduction sactivities sthat srequire stracking scosts son sthree skinds sof
sinventory.
9. The sthree sinventory saccounts sused sby smanufacturing scompanies sare sRaw sMaterials sInventory,
sWork-sin-Process sInventory, sand sFinished sGoods sInventory.
Raw sMaterials sInventory sincludes smaterials sused sto smanufacture sa sproduct. sWork-in-Process
sInventory sincludes sgoods sthat shave sbeen sstarted sin sthe smanufacturing sprocess sbut sare snot syet
scomplete. s Finished sGoods sInventory sincludes scompleted sgoods sthat shave snot syet sbeen ssold.
10. A sdirect scost sis sa scost sthat scan sbe seasily sand scost-effectively straced sto sa scost sobject s(which sis
sanything sfor swhich smanagers swant sa sseparate smeasurement sof scost). sAn sindirect scost sis sa scost
sthatscannot sbe seasily sor scost-effectively straced sto sa scost sobject.
11. The sthree smanufacturing scosts sfor sa smanufacturing scompany sare sdirect smaterials, sdirect slabor, sand
smanufacturing soverhead. sDirect smaterials sare smaterials sthat sbecome sa sphysical spart sof sa sfinished
sproduct sand swhose scosts sare seasily straceable sto sthe sfinished sproduct. s Direct slabor sis sthe slabor
scost sofsthe semployees swho sconvert smaterials sinto sfinished sproducts. sManufacturing soverhead
sincludes sall smanufacturing scosts sexcept sdirect smaterials sand sdirect slabor, ssuch sas sindirect
smaterials, sindirect slabor, sfactory sdepreciation, sfactory srent, sand sfactory sproperty staxes.
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.
, Abstain from engaging in or supporting any activity that might discredit the profession.
Contribute to a positive ethical culture and place integrity of the profession above personal
interest.
5, cont.
IV. Credibility.
Communicate information fairly and objectively.
Provide all relevant information that could reasonably be expected to influence an intended
user’s understanding of the reports, analyses, or recommendations.
Report any delays or deficiencies in information, timeliness, processing, or internal controlsin
conformance with organization policy and/or applicable law.
Communicate any professional limitations or other constraints that would preclude responsi-
ble judgment or successful performance of an activity.
6. Service companies sell time, skills, and knowledge. Examples of service companies include phone
service companies, banks, cleaning service companies, accounting firms, law firms, medical physicians,
and online auction services.
7. Merchandising companies resell products they buy from suppliers. Merchandisers keep an inventoryof
products, and managers are accountable for the purchasing, storage, and sale of the products. Examples
of merchandising companies include toy stores, grocery stores, and clothing stores.
8. Merchandising scompanies sresell sproducts sthey spreviously sbought sfrom ssuppliers, swhereas
smanufacturing scompanies suse slabor, sequipment, ssupplies, sand sfacilities sto sconvert sraw smaterials
sintosnew sfinished sproducts. sIn scontrast sto smerchandising scompanies, smanufacturing scompanies
shave sa sbroad srange sof sproduction sactivities sthat srequire stracking scosts son sthree skinds sof
sinventory.
9. The sthree sinventory saccounts sused sby smanufacturing scompanies sare sRaw sMaterials sInventory,
sWork-sin-Process sInventory, sand sFinished sGoods sInventory.
Raw sMaterials sInventory sincludes smaterials sused sto smanufacture sa sproduct. sWork-in-Process
sInventory sincludes sgoods sthat shave sbeen sstarted sin sthe smanufacturing sprocess sbut sare snot syet
scomplete. s Finished sGoods sInventory sincludes scompleted sgoods sthat shave snot syet sbeen ssold.
10. A sdirect scost sis sa scost sthat scan sbe seasily sand scost-effectively straced sto sa scost sobject s(which sis
sanything sfor swhich smanagers swant sa sseparate smeasurement sof scost). sAn sindirect scost sis sa scost
sthatscannot sbe seasily sor scost-effectively straced sto sa scost sobject.
11. The sthree smanufacturing scosts sfor sa smanufacturing scompany sare sdirect smaterials, sdirect slabor, sand
smanufacturing soverhead. sDirect smaterials sare smaterials sthat sbecome sa sphysical spart sof sa sfinished
sproduct sand swhose scosts sare seasily straceable sto sthe sfinished sproduct. s Direct slabor sis sthe slabor
scost sofsthe semployees swho sconvert smaterials sinto sfinished sproducts. sManufacturing soverhead
sincludes sall smanufacturing scosts sexcept sdirect smaterials sand sdirect slabor, ssuch sas sindirect
smaterials, sindirect slabor, sfactory sdepreciation, sfactory srent, sand sfactory sproperty staxes.
