Complete Solutions Manual — Introduction to Managerial Accounting, 7th Canadian Edition — Peter C. Brewer — (All Chapters Covered 1–14, Solutions Included)

Introduction to Managerial
Accounting 7th Canadian
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Edition
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SOLUTIONS
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MANUAL
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Peter C. Brewer
Ray H. Garrison
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Eric Noreen
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Comprehensive Solutions Manual for Instructors and Students
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© Peter C. Brewer, Ray H. Garrison, Eric Noreen, Suresh Kalagnanam & Ganesh
Vaidyanathan. All rights reserved. Reproduction or distribution without permission is
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prohibited.




© Successhands

, Solutions Manual for Introduction to Managerial Accounting (7th
Canadian Edition)
Peter C. Brewer, Ray H. Garrison, Eric Noreen, Suresh Kalagnanam & Ganesh
Vaidyanathan
ST

1. An Introduction to Managerial Accounting
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PART I: PRODUCT AND SERVICE COSTING
2. Cost Concepts
3. Systems Design: Job-Order Costing
4. Process Costing
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5. Activity-Based Costing

PART II: PLANNING AND DECISION MAKING
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6. Cost Behaviour: Analysis and Use
7. Budgeting
8. Cost-Volume-Profit Relationships
9. Relevant Costs: The Key to Decision Making
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10. Capital Budgeting Decisions

PART III: PERFORMANCE MEASUREMENT
11. Standard Costs and Variance Analysis
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12. Organizational Structure and Performance Measurement
13. “How Well Am I Doing?” – Financial Statement Analysis (online)
14. “How Well Am I Doing?” – Cash Flow Statement (online)
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© Successhands

, Solution Manual for
Introduction to Managerial Accounting 7CE Peter C. Brewer, Ray H.
Garrison, Eric Noreen, Suresh Kalagnanam, Ganesh Vaidyanathan
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Chapter 1
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An Introduction to Managerial Accounting
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Solutions to Questions



1-1 Managerial accounting is concerned with providing information primarily to
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managers for their use internally in the organization for the purposes of strategy,
planning, implementation and control. Financial accounting is concerned with
providing information primarily to investors, creditors, and others outside of the
organization.

1-2 Essentially, the manager carries out three major activities in an organization:
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planning, implementation, and control. All three activities involve decision-
making and use managerial accounting information. This is depicted in Exhibit 1-
1.

1-3 The Planning, Implementation and Control Cycle involves the following steps: (1)
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formulating plans which often includes preparing budgets, (2) overseeing day-to-
day activities which includes organizing, directing and motivating people,
resource allocation and decision making, and (3) controlling which includes
providing feedback via performance reports.

1-4 In contrast to financial accounting, managerial accounting: (1) focuses on the
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needs of the manager; (2) places more emphasis on the future; (3) emphasizes
relevance and timeliness, rather than verifiability and precision; (4) emphasizes
the segments of an organization; (5) is not governed by IFRS or ASPE; and (6) is
not mandatory.
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1-5 The lean business model focuses on continuous improvement by eliminating
waste in the organization. Companies that adopt the lean business model
usually implement one or more of the following management practices.
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 Just-in-time (JIT): A production and inventory control system in which
materials are purchased and units are produced only as needed to meet
actual customer demand.



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Solutions Manual, Chapter 2 1

,  Total quality management (TQM): An approach to continuous
improvement that focuses on serving customers and uses teams of front-
line workers to systematically identify and solve problems.
 Process re-engineering: An approach to improvement that involves
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completely redesigning business processes in order to eliminate
unnecessary steps, reduce errors, and reduce costs.
 Theory of constraints (TOC): A management approach that
emphasizes the importance of managing constraints.
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1-6 Benefits
 Improves operational processes that makes the business efficient
 It leads to reduction or elimination of waste
 It improves profitability and reduces costs
 It reduces the turnaround time to fulfill customer orders improving
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customer satisfaction

Limitations
 Production schedule can get hampered if any external shocks lead to
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supply chain disturbance
 Lean processes must be complimented with agile processes to adapt
swiftly to changing customer needs.
1-7 Pros
 Funds tied up in maintaining inventory can be used elsewhere
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 Areas previously used to store inventories are made available for other
more productive uses
 The time required to fill an order is reduced, resulting in quicker response
to customers and consequentially greater potential sales
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 Defect rates are reduced resulting in less waste and greater customer
satisfaction
 More effective operations

Cons
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 Increased number of purchase orders to buy raw materials and/or other
components used in manufacturing products
 There is little room for errors and defects in products because this could
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throw the production facility off schedule
 There is a high reliance and dependence on suppliers to meet delivery
deadlines as well as supply products that have no defects and require
minimal inspection
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1-8 Agree. Ethical behaviour is the foundation of a successful market economy. If we
cannot trust people to act ethically in their business dealings with us, we will be
inclined to invest less, scrutinize more and waste money and time (scarce
resources) trying to protect ourselves. Ethical standards and Codes of Conduct

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2 Introduction to Manag