Solution Manual for Horngren’s Accounting 13th Edition (Managerial) by Tracie Miller-Nobles & Brenda Mattison | Step-by-Step Solutions with Verified Answers | 100% Guaranteed Pass A+ Guide

SOLUTION MANUAL FOR V V




Horngren's Accounting, 13th Edition Managerial by Tracie Miller-Nobles, Brenda Mattison
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Chapter 1-9 V




Chapter 1 V




Introduction to Managerial Accounting V V V




Review Questions
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1. The primary purpose of managerial accounting is to provide information to help managers plan,
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direct, control, and make decisions.
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2. Financial accounting and managerial accounting differ on the following 6 dimensions: (1) primary
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users, (2) purpose of information, (3) focus and time dimension of the information, (4) rules and
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restrictions, (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 positions
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support line positions.
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4. Planning means choosing goals and deciding how to achieve them. Directing involves running the day-
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to-day operations of a business. Controlling is the process of monitoring operations and keeping the
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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.
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• Maintain an appropriate level of professional leadership and expertise by enhancing
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knowledge and skills.
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• Perform professional duties in accordance with relevant laws, regulations, and technical
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standards. V




• Provide decision support information and recommendations that are accurate, clear, concise,
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and timely. V V




• Recognise and help mange risk. V V V V




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 to
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ensure 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 avoid
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apparent 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 personal
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interest.
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5, cont.
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IV. Credibility.
• Communicate information fairly and objectively. V V V V




• Provide all relevant information that could reasonably be expected to influence an intended
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user’s understanding of the reports, analyses, or recommendations.
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• Report any delays or deficiencies in information, timeliness, processing, or internal controls in
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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- V V V V V V V V V V




ble judgment or successful performance of an activity.
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6. Service companies sell time, skills, and knowledge. Examples of service companies include phone
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service 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 inventory of
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products, and managers are accountable for the purchasing, storage, and sale of the products. Examples
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of 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
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manufacturing companies use labor, equipment, supplies, and facilities to convert raw materials into
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new finished products. In contrast to merchandising companies, manufacturing companies have a
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broad range of 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-Process Inventory
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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
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for which managers want a separate measurement of cost). An indirect cost is a cost that cannot be
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easily or 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
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product and whose costs are easily traceable to the finished product. Direct labor is the labor cost of the
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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.
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,12. Examples of manufacturing overhead include costs of indirect materials, indirect labor, repair and
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Vmaintenance in factory, factory utilities, factory rent, factory insurance, factory property taxes,
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Vmanufacturing plant managers’ salaries, and depreciation on manufacturing buildings and
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Vequipment.

13. Prime costs are direct materials plus direct labor. Conversion costs are direct labor plus
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Vmanufacturing overhead. Note that direct labor is classified as both a prime cost and a conversion
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Vcost.

14. Product costs are the cost of purchasing or making a product. These costs are recorded as an asset and
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Vnot expensed until the product is sold. Product costs include direct materials, direct labor, and
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Vmanufacturing overhead. V




15. Period costs are non-manufacturing costs that are expensed in the same accounting period in which
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Vthey are incurred, whereas product costs are recorded as an asset and not expensed until the
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Vaccounting period in which the product is sold. V V V V V V V




16. Cost of Goods Manufactured is calculated as Beginning Work-in-Process Inventory + Total
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VManufacturing Costs Incurred during the Year – Ending Work-in-Process Inventory. Total V V V V V V V V V V




VManufacturing Costs Incurred during the Year = Direct Materials Used + Direct Labor + V V V V V V V V V V V V V
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VManufacturing Overhead. V
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17. For a manufacturing company, the activity in the Finished Goods Inventory account provides the
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information for determining Cost of Goods Sold. A manufacturing company calculates Cost of
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VGoods Sold as Beginning Finished Goods Inventory + Cost of Goods Manufactured – Ending
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VFinished Good Inventory. In addition, a manufacturing company must track costs from Raw
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VMaterials Inventory and Work-in-Process Inventory in order to compute Cost of Goods
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VManufactured used in the previous equation. V V V V V




For a merchandising company, the activity in the Merchandise Inventory account provides the
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information for determining Cost of Goods Sold. A merchandising company calculates Cost of Goods
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Sold as Beginning Merchandise Inventory + Purchases and Freight In – Ending Merchandise Inventory.
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18. A manufacturing company calculates unit product cost as Cost of Goods Manufactured / Total
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Vnumber of units produced. V V V




19. A service company calculates unit cost per service as Total operating costs / Total number of
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Vservices provided. V




20. A merchandising company calculates unit cost per item as Total cost of goods sold / Total number of
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Vitems sold. V




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, Short Exercises
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a. FA
b. MA
c. MA
d. FA
e. FA


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a. Confidentiality
b. Integrity
c. Competence (skipping the session); Integrity (company-paid conference)
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d. Competence
e. Credibility; Integrity V




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d. 5
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f. 5
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g. 3


S-M:1-4

Glue for frames
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Plant depreciation
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Plant foreman’s salary
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Plant janitor’s wages
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Oil for manufacturing equipment
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Total manufacturing overhead
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