SOLUTION MANUAL
Horngren's Accounting, The Managerial Chapters, 14th Edition
By Tracie Miller-Nobles Brenda Mattison, All Chapters 1 - 9
,Table of contents
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 M:1
Introduction to Managerial Accounting
Review Questions
1. What is the primary purpose of managerial accounting?
The primary purpose of managerial accounting is to provide information to help managers plan,
direct, control, and make decisions.
2. List six differences between financial accounting and managerial accounting.
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 re-
strictions, (5) scope of information, and (6) behavioral.
3. Explain the difference between line positions and staff positions.
Line positions are directly involved in providing goods or services to customers. Staff positions
support line positions.
4. Explain the differences between planning, directing, and controlling.
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. List the four IMA standards of ethical practice and briefly describe each.
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 dinformation dfairly dand dobjectively.
Provide dall drelevant dinformation dthat dcould dreasonably dbe dexpected dto dinfluence dan
dintendedduser’s dunderstanding dof dthe dreports, danalyses, dor drecommendations.
Report dany ddelays dor ddeficiencies din dinformation, dtimeliness, dprocessing, dor dinternal
dcontrolsdin dconformance dwith dorganization dpolicy dand/or dapplicable dlaw.
Communicate dany dprofessional dlimitations dor dother dconstraints dthat dwould dpreclude
dresponsi-dble djudgment dor dsuccessful dperformance dof dan dactivity.
6. Describe da dservice dcompany dand dgive dan dexample.
Service dcompanies dsell dtime, dskills, dand dknowledge. dExamples dof dservice dcompanies dinclude
dphone dservice dcompanies, dbanks, dcleaning dservice dcompanies, daccounting dfirms, dlaw dfirms,
dmedical dphysi-dcians, dand donline dauction dservices.
7. Describe da dmerchandising dcompany dand dgive dan dexample.
Merchandising dcompanies dresell dproducts dthey dbuy dfrom dsuppliers. dMerchandisers dkeep dan
dinventorydof dproducts, dand dmanagers dare daccountable dfor dthe dpurchasing, dstorage, dand dsale dof
dthe dproducts. dEx- damples dof dmerchandising dcompanies dinclude dtoy dstores, dgrocery dstores, dand
dclothing dstores.
8. How ddo dmanufacturing dcompanies ddiffer dfrom dmerchandising dcompanies?
Merchandising dcompanies dresell dproducts dthey dpreviously dbought dfrom dsuppliers, dwhereas
dmanufac- dturing dcompanies duse dlabor, dequipment, dsupplies, dand dfacilities dto dconvert draw
dmaterials dinto dnew dfin-dished dproducts. dIn dcontrast dto dmerchandising dcompanies, dmanufacturing
dcompanies dhave da dbroad drange dof dproduction dactivities dthat drequire dtracking dcosts don dthree
Horngren's Accounting, The Managerial Chapters, 14th Edition
By Tracie Miller-Nobles Brenda Mattison, All Chapters 1 - 9
,Table of contents
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 M:1
Introduction to Managerial Accounting
Review Questions
1. What is the primary purpose of managerial accounting?
The primary purpose of managerial accounting is to provide information to help managers plan,
direct, control, and make decisions.
2. List six differences between financial accounting and managerial accounting.
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 re-
strictions, (5) scope of information, and (6) behavioral.
3. Explain the difference between line positions and staff positions.
Line positions are directly involved in providing goods or services to customers. Staff positions
support line positions.
4. Explain the differences between planning, directing, and controlling.
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. List the four IMA standards of ethical practice and briefly describe each.
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 dinformation dfairly dand dobjectively.
Provide dall drelevant dinformation dthat dcould dreasonably dbe dexpected dto dinfluence dan
dintendedduser’s dunderstanding dof dthe dreports, danalyses, dor drecommendations.
Report dany ddelays dor ddeficiencies din dinformation, dtimeliness, dprocessing, dor dinternal
dcontrolsdin dconformance dwith dorganization dpolicy dand/or dapplicable dlaw.
Communicate dany dprofessional dlimitations dor dother dconstraints dthat dwould dpreclude
dresponsi-dble djudgment dor dsuccessful dperformance dof dan dactivity.
6. Describe da dservice dcompany dand dgive dan dexample.
Service dcompanies dsell dtime, dskills, dand dknowledge. dExamples dof dservice dcompanies dinclude
dphone dservice dcompanies, dbanks, dcleaning dservice dcompanies, daccounting dfirms, dlaw dfirms,
dmedical dphysi-dcians, dand donline dauction dservices.
7. Describe da dmerchandising dcompany dand dgive dan dexample.
Merchandising dcompanies dresell dproducts dthey dbuy dfrom dsuppliers. dMerchandisers dkeep dan
dinventorydof dproducts, dand dmanagers dare daccountable dfor dthe dpurchasing, dstorage, dand dsale dof
dthe dproducts. dEx- damples dof dmerchandising dcompanies dinclude dtoy dstores, dgrocery dstores, dand
dclothing dstores.
8. How ddo dmanufacturing dcompanies ddiffer dfrom dmerchandising dcompanies?
Merchandising dcompanies dresell dproducts dthey dpreviously dbought dfrom dsuppliers, dwhereas
dmanufac- dturing dcompanies duse dlabor, dequipment, dsupplies, dand dfacilities dto dconvert draw
dmaterials dinto dnew dfin-dished dproducts. dIn dcontrast dto dmerchandising dcompanies, dmanufacturing
dcompanies dhave da dbroad drange dof dproduction dactivities dthat drequire dtracking dcosts don dthree
