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 dcompanies dresell dproducts dthey dpreviously dbought dfrom dsuppliers, dwhereas
dmanufacturing dcompanies duse dlabor, dequipment, dsupplies, dand dfacilities dto dconvert draw dmaterials
dintodnew dfinished dproducts. dIn dcontrast dto dmerchandising dcompanies, dmanufacturing dcompanies
dhave da dbroad drange dof dproduction dactivities dthat drequire dtracking dcosts don dthree dkinds dof
dinventory.
9. The dthree dinventory daccounts dused dby dmanufacturing dcompanies dare dRaw dMaterials dInventory,
dWork-din-Process dInventory, dand dFinished dGoods dInventory.
Raw dMaterials dInventory dincludes dmaterials dused dto dmanufacture da dproduct. dWork-in-Process
dInventory dincludes dgoods dthat dhave dbeen dstarted din dthe dmanufacturing dprocess dbut dare dnot dyet
dcomplete. d Finished dGoods dInventory dincludes dcompleted dgoods dthat dhave dnot dyet dbeen dsold.
10. A ddirect dcost dis da dcost dthat dcan dbe deasily dand dcost-effectively dtraced dto da dcost dobject d(which
dis danything dfor dwhich dmanagers dwant da dseparate dmeasurement dof dcost). dAn dindirect dcost dis da
dcost dthatdcannot dbe deasily dor dcost-effectively dtraced dto da dcost dobject.
11. The dthree dmanufacturing dcosts dfor da dmanufacturing dcompany dare ddirect dmaterials, ddirect dlabor,
dand dmanufacturing doverhead. dDirect dmaterials dare dmaterials dthat dbecome da dphysical dpart dof da
dfinished dproduct dand dwhose dcosts dare deasily dtraceable dto dthe dfinished dproduct. d Direct dlabor dis
dthe dlabor dcost dofdthe demployees dwho dconvert dmaterials dinto dfinished dproducts. dManufacturing
doverhead dincludes dall dmanufacturing dcosts dexcept ddirect dmaterials dand ddirect dlabor, dsuch das
dindirect dmaterials, dindirect dlabor, dfactory ddepreciation, dfactory drent, dand dfactory dproperty dtaxes.
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 dcompanies dresell dproducts dthey dpreviously dbought dfrom dsuppliers, dwhereas
dmanufacturing dcompanies duse dlabor, dequipment, dsupplies, dand dfacilities dto dconvert draw dmaterials
dintodnew dfinished dproducts. dIn dcontrast dto dmerchandising dcompanies, dmanufacturing dcompanies
dhave da dbroad drange dof dproduction dactivities dthat drequire dtracking dcosts don dthree dkinds dof
dinventory.
9. The dthree dinventory daccounts dused dby dmanufacturing dcompanies dare dRaw dMaterials dInventory,
dWork-din-Process dInventory, dand dFinished dGoods dInventory.
Raw dMaterials dInventory dincludes dmaterials dused dto dmanufacture da dproduct. dWork-in-Process
dInventory dincludes dgoods dthat dhave dbeen dstarted din dthe dmanufacturing dprocess dbut dare dnot dyet
dcomplete. d Finished dGoods dInventory dincludes dcompleted dgoods dthat dhave dnot dyet dbeen dsold.
10. A ddirect dcost dis da dcost dthat dcan dbe deasily dand dcost-effectively dtraced dto da dcost dobject d(which
dis danything dfor dwhich dmanagers dwant da dseparate dmeasurement dof dcost). dAn dindirect dcost dis da
dcost dthatdcannot dbe deasily dor dcost-effectively dtraced dto da dcost dobject.
11. The dthree dmanufacturing dcosts dfor da dmanufacturing dcompany dare ddirect dmaterials, ddirect dlabor,
dand dmanufacturing doverhead. dDirect dmaterials dare dmaterials dthat dbecome da dphysical dpart dof da
dfinished dproduct dand dwhose dcosts dare deasily dtraceable dto dthe dfinished dproduct. d Direct dlabor dis
dthe dlabor dcost dofdthe demployees dwho dconvert dmaterials dinto dfinished dproducts. dManufacturing
doverhead dincludes dall dmanufacturing dcosts dexcept ddirect dmaterials dand ddirect dlabor, dsuch das
dindirect dmaterials, dindirect dlabor, dfactory ddepreciation, dfactory drent, dand dfactory dproperty dtaxes.
