Solu�ons Manual with Test Bank for Fundamentals of Cost Accoun�ng 7th Edi�on By William Lanen, Shannon Anderson, Michael Maher Part 1: Solu�ons Manual: Chapter 1 -18 Page 1 -1233 Part 2: Test Bank: Chapter 1 -18 Page 1234 -3077 Solutions Manual, Chapter 1 1 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC.1 Cost Accounting: Information for Decision Making Solutions to Review Questions 1-1.
Among the goals of an organization, a central one is to create and increase value . Cost accounting systems are designed to provide information to decision makers in the organization with the information they need to accomplish this goal. Therefore, the designers of the cost accounting system need to understand how value is created in the organization to design systems for their organization. 1-2.
Financial accounting is designed to provide information about the firm to external users. External users include investors, creditors, government authorities, regulators, customers, competitors, suppliers, labor unions, and so on. Cost accounting systems are designed to provide information to internal users (managers). This difference is important, because it affects the design of the systems. Financial accounting systems are based on standards or rules. This allows the user to compare the results of different firms. Managerial accounting systems do not require rules. Ea ch firm is free to develop managerial accounting systems that best serve the needs of the decision makers (managers). 1-3.
B Providing cost information for financial reporting A Identifying the best store in a chain C Determining which plant to use for production 1-4.
The value chain is the set of activities that transforms raw resources into the goods and services end users purchase and consume. The supply chain includes the set of firms and individuals that sell s goods and services to the firm. The distribution chain is the set of firms and individuals that buys and distributes goods and services from the firm. Part 1: Solutions Manual: Chapter 1-18 2 Fundamentals of Cost Accounting , 7/e © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC. 1-5. The customers of cost accounting are managers, from plant managers to the CEO. 1-6. Value -added activities are activities that customers perceive as adding utility to the goods or services they purchase. Nonvalue -added activities do not add value to the goods or services. By classifying costs this way, the cost accounting system can help the manager identify areas (processes) that can be improved, lowering costs and adding value to the organization. 1-7. Answers will vary, but should include some of the following: Title Major Responsibilities and Major Duties Chief financial officer (CFO) .... • Manages entire finance and accounting function Treasurer ................................ . • Manages liquid assets • Conducts business with banks and other financial institutions • Oversees public issues of stock and debt Controller ................................ . • Plans and designs information and incentive systems Internal auditor ......................... • Ensures compliance with laws, regulations, and company policies and procedures • Provides consulting and auditing services within the firm Cost accountant ....................... • Records, measures, estimates, and analyzes costs • Works with financial and operational manager to provide relevant information for decisions Solutions Manual, Chapter 1 3 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC. 1-8. The four questions of the critical thinking framework are: 1. What are the relevant questions (what decisions do I need to make)? 2. What are the data relevant to the analysis and where do I find them? 3. What are the appropriate tools for analyzing data? 4. How can I effectively and persuasively communicate the results of my analysis? 1-9. No. Sarbanes -Oxley is a law and violations of it are legal issues. Codes of ethics are necessary to help accountants and managers identify situations that might develop into ethical conflicts, understand what they could do in these situations, and to learn what to do when they believe that an ethical violation has occurred .
Among the goals of an organization, a central one is to create and increase value . Cost accounting systems are designed to provide information to decision makers in the organization with the information they need to accomplish this goal. Therefore, the designers of the cost accounting system need to understand how value is created in the organization to design systems for their organization. 1-2.
Financial accounting is designed to provide information about the firm to external users. External users include investors, creditors, government authorities, regulators, customers, competitors, suppliers, labor unions, and so on. Cost accounting systems are designed to provide information to internal users (managers). This difference is important, because it affects the design of the systems. Financial accounting systems are based on standards or rules. This allows the user to compare the results of different firms. Managerial accounting systems do not require rules. Ea ch firm is free to develop managerial accounting systems that best serve the needs of the decision makers (managers). 1-3.
B Providing cost information for financial reporting A Identifying the best store in a chain C Determining which plant to use for production 1-4.
The value chain is the set of activities that transforms raw resources into the goods and services end users purchase and consume. The supply chain includes the set of firms and individuals that sell s goods and services to the firm. The distribution chain is the set of firms and individuals that buys and distributes goods and services from the firm. Part 1: Solutions Manual: Chapter 1-18 2 Fundamentals of Cost Accounting , 7/e © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC. 1-5. The customers of cost accounting are managers, from plant managers to the CEO. 1-6. Value -added activities are activities that customers perceive as adding utility to the goods or services they purchase. Nonvalue -added activities do not add value to the goods or services. By classifying costs this way, the cost accounting system can help the manager identify areas (processes) that can be improved, lowering costs and adding value to the organization. 1-7. Answers will vary, but should include some of the following: Title Major Responsibilities and Major Duties Chief financial officer (CFO) .... • Manages entire finance and accounting function Treasurer ................................ . • Manages liquid assets • Conducts business with banks and other financial institutions • Oversees public issues of stock and debt Controller ................................ . • Plans and designs information and incentive systems Internal auditor ......................... • Ensures compliance with laws, regulations, and company policies and procedures • Provides consulting and auditing services within the firm Cost accountant ....................... • Records, measures, estimates, and analyzes costs • Works with financial and operational manager to provide relevant information for decisions Solutions Manual, Chapter 1 3 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC. 1-8. The four questions of the critical thinking framework are: 1. What are the relevant questions (what decisions do I need to make)? 2. What are the data relevant to the analysis and where do I find them? 3. What are the appropriate tools for analyzing data? 4. How can I effectively and persuasively communicate the results of my analysis? 1-9. No. Sarbanes -Oxley is a law and violations of it are legal issues. Codes of ethics are necessary to help accountants and managers identify situations that might develop into ethical conflicts, understand what they could do in these situations, and to learn what to do when they believe that an ethical violation has occurred .
