SOLUTION MANUAL f
Horngren's Accounting, 13th Edition Managerial
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by Tracie Miller-Nobles, Brenda Mattison, All Chapter 1-9
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,THE MANAGERIAL CHAPTERS
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1. Introduction to Managerial Accounting
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2. Job Order Costing
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3. Process Costing f
4. Cost-Volume-Profit Analysis f
5. Master Budgets
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6. Flexible Budgets and Standard Cost Systems
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7. Cost Allocation and Responsibility Accounting
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8. Short-Term Business Decisions
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9. Capital Investment Decisions
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,Chapter 1 f
Introduction to Managerial Accounting f f f
Review Questions f
1. The primary purpose of managerial accounting is to provide information to help managers
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plan,direct, control, and make decisions.
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2. Financial accounting and managerial accounting differ on the following 6 dimensions: (1) primaryusers,
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(2) purpose of information, (3) focus and time dimension of the information, (4) rules and restrictions,
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(5) scope of information, and (6) behavioral.
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3. Line positions are directly involved in providing goods or services to customers. Staff
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positionssupport line positions.
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4. Planning means choosing goals and deciding how to achieve them. Directing involves running the day-to-
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day operations of a business. Controlling is the process of monitoring operations and keepingthe
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company on track.
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5. The four IMA standards of ethical practice and a description of each follow.
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I. Competence.
Maintain an appropriate level of professional leadership and expertise by f f f f f f f f f
enhancingknowledge and skills.
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Perform professional duties in accordance with relevant laws, regulations, and
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technicalstandards.f f
Provide decision support information and recommendations that are accurate, clear, concise,and
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timely. f
Recognise and help mange risk. f f f f
II. Confidentiality.
Keep information confidential except when disclosure is authorized or legally required.
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Inform all relevant parties regarding appropriate use of confidential information. Monitor
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toensure compliance.
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Refrain from using confidential information for unethical or illegal advantage.
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III. Integrity.
Mitigate actual conflicts of interest. Regularly communicate with business associates to
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avoidapparent conflicts of interest. Advise all parties of any potential conflicts.
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Refrain from engaging in any conduct that would prejudice carrying out duties ethically.
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, Abstain from engaging in or supporting any activity that might discredit the profession.
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Contribute to a positive ethical culture and place integrity of the profession above
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personalinterest.
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5, cont.
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IV. Credibility.
Communicate information fairly and objectively. f f f f
Provide all relevant information that could reasonably be expected to influence an
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intendeduser’s understanding of the reports, analyses, or recommendations.
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Report any delays or deficiencies in information, timeliness, processing, or internal controlsin
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conformance with organization policy and/or applicable law.
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Communicate any professional limitations or other constraints that would preclude responsi-ble f f f f f f f f f f f
judgment or successful performance of an activity.
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6. Service companies sell time, skills, and knowledge. Examples of service companies include
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phoneservice companies, banks, cleaning service companies, accounting firms, law firms, medical
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physicians, and online auction services.
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7. Merchandising companies resell products they buy from suppliers. Merchandisers keep an inventoryof
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products, and managers are accountable for the purchasing, storage, and sale of the products. Examples of
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merchandising companies include toy stores, grocery stores, and clothing stores.
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8. Merchandising companies resell products they previously bought from suppliers, whereas manufacturing
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companies use labor, equipment, supplies, and facilities to convert raw materials intonew finished
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products. In contrast to merchandising companies, manufacturing companies have a broad range of
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production activities that require tracking costs on three kinds of inventory.
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9. The three inventory accounts used by manufacturing companies are Raw Materials Inventory, Work-in-
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Process Inventory, and Finished Goods Inventory.
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Raw Materials Inventory includes materials used to manufacture a product. Work-in-ProcessInventory
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includes goods that have been started in the manufacturing process but are not yet complete. Finished
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Goods Inventory includes completed goods that have not yet been sold.
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10. A direct cost is a cost that can be easily and cost-effectively traced to a cost object (which is anything for
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which managers want a separate measurement of cost). An indirect cost is a cost thatcannot be easily or
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cost-effectively traced to a cost object.
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11. The three manufacturing costs for a manufacturing company are direct materials, direct labor, and
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manufacturing overhead. Direct materials are materials that become a physical part of a finished product
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and whose costs are easily traceable to the finished product. Direct labor is the labor cost ofthe
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employees who convert materials into finished products. Manufacturing overhead includes all
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manufacturing costs except direct materials and direct labor, such as indirect materials, indirect labor,
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factory depreciation, factory rent, and factory property taxes.
f f f f f f f f
Horngren's Accounting, 13th Edition Managerial
f f f f
by Tracie Miller-Nobles, Brenda Mattison, All Chapter 1-9
f f f f f f f
,THE MANAGERIAL CHAPTERS
f f
1. Introduction to Managerial Accounting
f f f
2. Job Order Costing
f f
3. Process Costing f
4. Cost-Volume-Profit Analysis f
5. Master Budgets
f
6. Flexible Budgets and Standard Cost Systems
f f f f f
7. Cost Allocation and Responsibility Accounting
f f f f
8. Short-Term Business Decisions
f f
9. Capital Investment Decisions
f f
,Chapter 1 f
Introduction to Managerial Accounting f f f
Review Questions f
1. The primary purpose of managerial accounting is to provide information to help managers
f f f f f f f f f f f f
plan,direct, control, and make decisions.
f f f f f f
2. Financial accounting and managerial accounting differ on the following 6 dimensions: (1) primaryusers,
f f f f f f f f f f f f f
(2) purpose of information, (3) focus and time dimension of the information, (4) rules and restrictions,
f f f f f f f f f f f f f f f f
(5) scope of information, and (6) behavioral.
f f f f f f f
3. Line positions are directly involved in providing goods or services to customers. Staff
f f f f f f f f f f f f
positionssupport line positions.
f f f f
4. Planning means choosing goals and deciding how to achieve them. Directing involves running the day-to-
f f f f f f f f f f f f f f
day operations of a business. Controlling is the process of monitoring operations and keepingthe
f f f f f f f f f f f f f f
company on track.
f f f
5. The four IMA standards of ethical practice and a description of each follow.
f f f f f f f f f f f f
I. Competence.
Maintain an appropriate level of professional leadership and expertise by f f f f f f f f f
enhancingknowledge and skills.
f f f f
Perform professional duties in accordance with relevant laws, regulations, and
f f f f f f f f f
technicalstandards.f f
Provide decision support information and recommendations that are accurate, clear, concise,and
f f f f f f f f f f f
timely. f
Recognise and help mange risk. f f f f
II. Confidentiality.
Keep information confidential except when disclosure is authorized or legally required.
f f f f f f f f f f
Inform all relevant parties regarding appropriate use of confidential information. Monitor
f f f f f f f f f f
toensure compliance.
f f f
Refrain from using confidential information for unethical or illegal advantage.
f f f f f f f f f
III. Integrity.
Mitigate actual conflicts of interest. Regularly communicate with business associates to
f f f f f f f f f f
avoidapparent conflicts of interest. Advise all parties of any potential conflicts.
f f f f f ff f f f f f f
Refrain from engaging in any conduct that would prejudice carrying out duties ethically.
f f f f f f f f f f f f
, Abstain from engaging in or supporting any activity that might discredit the profession.
f f f f f f f f f f f f
Contribute to a positive ethical culture and place integrity of the profession above
f f f f f f f f f f f f
personalinterest.
f f
5, cont.
f
IV. Credibility.
Communicate information fairly and objectively. f f f f
Provide all relevant information that could reasonably be expected to influence an
f f f f f f f f f f f
intendeduser’s understanding of the reports, analyses, or recommendations.
f f f f f f f f f
Report any delays or deficiencies in information, timeliness, processing, or internal controlsin
f f f f f f f f f f f f
conformance with organization policy and/or applicable law.
f f f f f f f
Communicate any professional limitations or other constraints that would preclude responsi-ble f f f f f f f f f f f
judgment or successful performance of an activity.
f f f f f f f
6. Service companies sell time, skills, and knowledge. Examples of service companies include
f f f f f f f f f f f
phoneservice companies, banks, cleaning service companies, accounting firms, law firms, medical
f f f f f f f f f f f f
physicians, and online auction services.
f f f f f
7. Merchandising companies resell products they buy from suppliers. Merchandisers keep an inventoryof
f f f f f f f f f f f f
products, and managers are accountable for the purchasing, storage, and sale of the products. Examples of
f f f f f f f f f f f f f f f f
merchandising companies include toy stores, grocery stores, and clothing stores.
f f f f f f f f f f
8. Merchandising companies resell products they previously bought from suppliers, whereas manufacturing
f f f f f f f f f f
companies use labor, equipment, supplies, and facilities to convert raw materials intonew finished
f f f f f f f f f f f f f f
products. In contrast to merchandising companies, manufacturing companies have a broad range of
f f f f f f f f f f f f f
production activities that require tracking costs on three kinds of inventory.
f f f f f f f f f f f
9. The three inventory accounts used by manufacturing companies are Raw Materials Inventory, Work-in-
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Process Inventory, and Finished Goods Inventory.
f f f f f
Raw Materials Inventory includes materials used to manufacture a product. Work-in-ProcessInventory
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includes goods that have been started in the manufacturing process but are not yet complete. Finished
f f f f f f f f f f f f f f f f
Goods Inventory includes completed goods that have not yet been sold.
f f f f f f f f f f f
10. A direct cost is a cost that can be easily and cost-effectively traced to a cost object (which is anything for
f f f f f f f f f f f f f f f f f f f f
which managers want a separate measurement of cost). An indirect cost is a cost thatcannot be easily or
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cost-effectively traced to a cost object.
f f f f f f
11. The three manufacturing costs for a manufacturing company are direct materials, direct labor, and
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manufacturing overhead. Direct materials are materials that become a physical part of a finished product
f f f f f f f f f f f f f f f
and whose costs are easily traceable to the finished product. Direct labor is the labor cost ofthe
f f f f f f f f f f f f f f f f f f
employees who convert materials into finished products. Manufacturing overhead includes all
f f f f f f f f f f f
manufacturing costs except direct materials and direct labor, such as indirect materials, indirect labor,
f f f f f f f f f f f f f f
factory depreciation, factory rent, and factory property taxes.
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