Solutions Manual for Managerial Accounting:
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Creating Value in a Dynamic BusinessEnviron
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ment, 13th Edition by Hilton
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,Chapter 1: The Changing Role of Managerial Accounting in a Dynamic Business Environme
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ntChapter 2: Basic Cost Management Concepts
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Chapter 3: Product Costing and Cost Accumulation in a Batch Production EnvironmentCha
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pter 4: Process Costing and Hybrid Product-Costing Systems
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Chapter 5: Activity-Based Costing and Management
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Chapter 6: Activity Analysis, Cost Behavior, and Cost Estimatio
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nChapter 7: Cost-Volume-Profit Analysis
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Chapter 8: Variable Costing and the Measurement of ESG and Quality CostsCha
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pter 9: Financial Planning and Analysis: The Master Budget
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Chapter 10: Standard Costing and Analysis of Direct Costs
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Chapter 11: Flexible Budgeting and the Management of Overhead and Support Activity Cost
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sChapter 12: Responsibility Accounting and the Balanced Scorecard
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Chapter 13: Investment Centers and Transfer Pricing Chap
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ter 14: Decision Making: Relevant Costs and Benefits
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Chapter 15: Target Costing and Cost Analysis for Pricing Decisio
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nsChapter 16: Capital Expenditure Decisions
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Chapter 17: Allocation of Support Activity Costs and Joint Costs
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Appendix I: The Sarbanes- hu hu hu
Oxley Act, Internal Controls, and Management AccountingAppendix II: Compound Interest a
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nd the Concept of Present Value
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Appendix III: Inventory Management hu hu hu
,CHAPTER 1 hu
The Crucial Role of Managerial Accounting in a Dy
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namic Business Environment hu hu
FOCUS ON ETHICS (Located before the Chapter Summary in the text.)
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The focus-on-
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ethics inset for Chapter 1 is the IMA Statement of Ethical Professional Practice. Instructors can use
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this list of ethical principles and standards to lead a class discussion. The discussion can
u hu hu hu h u h u hu hu hu hu hu hu hu hu hu hu
also range to consideration of how these standards may have been violated by accountan
hu hu hu hu hu hu hu hu hu hu hu hu hu
ts and managers involved in the various ethical scandals uncovered over the past several ye
hu hu hu hu hu hu h u hu hu hu hu hu hu hu
ars. It is also useful to discuss the pros and cons of the procedures that IMA suggests for its
hu hu hu hu hu hu hu hu hu hu hu hu hu hu hu hu hu hu hu
members when they believe they know about ethical lapses in their organizations.
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ANSWERS TO REVIEW QUESTIONS hu hu hu
1-1 The explosion in e- hu h u h u
commerce will affect managers in significant ways. One effect will be a drastic reduct
h u h u h u hu h u h u h u h u h u hu hu hu hu
ion in paper work. Millions of transactions between businesses are now being condu
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cted electronically with no hard-
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copy documentation. Along withthis method of communicating for business transact
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ions comes the very significant issue of information security. Businesses need to find
hu hu hu hu hu hu hu hu hu hu hu hu hu
ways to protect confidential information in their own computers, in cloud computin
hu hu hu hu hu hu hu hu hu hu hu
g data centers, and while moving across the internet, while at the same time shari
hu hu hu hu hu h u h u h u h u h u hu h u h u h u
ng the information necessary to complete transactions. Another effect of e-
h u h u h u hu hu hu hu hu hu hu
commerce is the dramatically increased speed with which business transactions can b
hu h u h u h u hu hu hu hu hu hu hu
e conducted. In addition, there will be dramatic changes in the way managerial account
hu hu hu hu hu hu hu hu hu hu hu hu hu
ing procedures are carried out, one example being cloud-
hu hu hu hu hu hu hu hu
based budgeting, which is the enterprise- hu hu hu hu hu
wide and electroniccompletion of a company’s budgeting process using cloud-
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h hu hu hu hu hu hu hu
based software and data storage. hu hu hu hu
, 1-2 Plausible goals for the organizations listed are as follows:
h u h u h u h u h u h u h u h u
(a) Amazon.com: (1) To achieve and maintain profitability, and (2) to grow on- hu hu hu hu hu hu hu hu hu hu hu
line sales of their many products. Amazon is also famous (infamous) for wanting to
hu hu hu hu hu hu hu hu hu hu hu hu hu
have every product in the world on its site.
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(b) American Red Cross: (1) To raise funds from the general public sufficient to have r
hu hu hu hu hu hu hu hu hu hu hu hu hu hu
esources available to meet any disaster that may occur, and (2) to provide assi
hu hu hu hu hu hu hu hu hu hu hu hu hu
stance to people who are victims of a disaster anywhere in the world on short notice.
hu hu hu hu hu hu hu hu hu hu hu hu hu hu hu
(c) General Motors: (1) To earn income sufficient to provide a good return on the i
hu hu hu hu hu hu hu hu hu hu hu hu hu hu
nvestment of the company's stockholders, and (2) to provide the highest-
hu hu hu hu hu hu hu hu hu hu
quality product possible. hu hu
(d) Wal-
Mart: (1) To penetrate the retail market in virtually every location in the United States, a
hu hu hu hu hu hu hu h u hu hu hu hu hu hu hu
nd (2) to grow over time in terms of number of retail locations, total assets, and earni
hu hu hu hu hu hu hu h u hu hu hu hu h u h u hu hu
ngs. Also, to be competitive with Amazon in the e-retail space.
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(e) City of Seattle: (1) To maintain an urban environment as free of pollution as po
hu hu hu hu hu hu hu hu hu hu hu hu hu hu
ssible, and (2) to provide public safety, police, and fire protection to the city's citiz
hu hu hu hu hu hu hu hu hu hu hu hu hu hu
ens.
(f) Hertz: (1) To be a recognizable household name associated with rental car serv
hu hu hu hu hu hu hu hu hu hu hu hu
ices, and (2) to provide reliable and economical transportation services to the compan
hu hu hu hu hu hu hu hu hu hu hu hu
y's customers.
hu
1-3 The four basic management activities are listed and defined as follows:
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(a) Decision making: Choosing among the available alternatives.
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(b) Planning: Developing a detailed financial and operational description
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ofanticipated operations.
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(c) Directing operations: Running the organization on a day-to-day basis.
h u h u h u h u h u h u h u h u
(d) Controlling: Ensuring that the organization operates in the intended manner
h u h u h u h u h u h u h u hu h u h u
andachieves its goals.
uh hu hu
hu hu hu hu
Creating Value in a Dynamic BusinessEnviron
hu hu hu hu hu h
u
ment, 13th Edition by Hilton
hu hu hu hu
,Chapter 1: The Changing Role of Managerial Accounting in a Dynamic Business Environme
hu hu hu hu hu hu hu hu hu hu hu hu
ntChapter 2: Basic Cost Management Concepts
u
h hu hu hu hu hu
Chapter 3: Product Costing and Cost Accumulation in a Batch Production EnvironmentCha
hu hu hu hu hu hu hu hu hu hu hu u
h
pter 4: Process Costing and Hybrid Product-Costing Systems
hu hu hu hu hu hu hu
Chapter 5: Activity-Based Costing and Management
hu hu hu hu hu
Chapter 6: Activity Analysis, Cost Behavior, and Cost Estimatio
hu hu hu hu hu hu hu hu
nChapter 7: Cost-Volume-Profit Analysis
u
h hu hu hu
Chapter 8: Variable Costing and the Measurement of ESG and Quality CostsCha
hu hu hu hu hu hu hu hu hu hu hu u
h
pter 9: Financial Planning and Analysis: The Master Budget
hu hu hu hu hu hu hu hu
Chapter 10: Standard Costing and Analysis of Direct Costs
hu hu hu hu hu hu hu hu
Chapter 11: Flexible Budgeting and the Management of Overhead and Support Activity Cost
hu hu hu hu hu hu hu hu hu hu hu hu
sChapter 12: Responsibility Accounting and the Balanced Scorecard
u
h hu hu hu hu hu hu hu
Chapter 13: Investment Centers and Transfer Pricing Chap
hu hu hu hu hu hu hu
ter 14: Decision Making: Relevant Costs and Benefits
hu hu hu hu hu hu hu
Chapter 15: Target Costing and Cost Analysis for Pricing Decisio
hu hu hu hu hu hu hu hu hu
nsChapter 16: Capital Expenditure Decisions
u
h hu hu hu hu
Chapter 17: Allocation of Support Activity Costs and Joint Costs
hu hu hu hu hu hu hu hu hu
Appendix I: The Sarbanes- hu hu hu
Oxley Act, Internal Controls, and Management AccountingAppendix II: Compound Interest a
hu hu hu hu hu hu u
h hu hu hu hu
nd the Concept of Present Value
hu hu hu hu hu
Appendix III: Inventory Management hu hu hu
,CHAPTER 1 hu
The Crucial Role of Managerial Accounting in a Dy
hu hu hu hu hu hu hu hu
namic Business Environment hu hu
FOCUS ON ETHICS (Located before the Chapter Summary in the text.)
hu hu hu hu hu hu hu hu hu hu
The focus-on-
hu
ethics inset for Chapter 1 is the IMA Statement of Ethical Professional Practice. Instructors can use
hu hu hu hu hu hu hu hu hu hu hu hu hu hu hu h
this list of ethical principles and standards to lead a class discussion. The discussion can
u hu hu hu h u h u hu hu hu hu hu hu hu hu hu hu
also range to consideration of how these standards may have been violated by accountan
hu hu hu hu hu hu hu hu hu hu hu hu hu
ts and managers involved in the various ethical scandals uncovered over the past several ye
hu hu hu hu hu hu h u hu hu hu hu hu hu hu
ars. It is also useful to discuss the pros and cons of the procedures that IMA suggests for its
hu hu hu hu hu hu hu hu hu hu hu hu hu hu hu hu hu hu hu
members when they believe they know about ethical lapses in their organizations.
hu hu hu hu hu hu hu hu hu hu hu
ANSWERS TO REVIEW QUESTIONS hu hu hu
1-1 The explosion in e- hu h u h u
commerce will affect managers in significant ways. One effect will be a drastic reduct
h u h u h u hu h u h u h u h u h u hu hu hu hu
ion in paper work. Millions of transactions between businesses are now being condu
hu hu h u h u hu h u hu h u h u hu hu hu
cted electronically with no hard-
hu hu hu hu
copy documentation. Along withthis method of communicating for business transact
hu hu hu u
h hu hu hu hu hu hu
ions comes the very significant issue of information security. Businesses need to find
hu hu hu hu hu hu hu hu hu hu hu hu hu
ways to protect confidential information in their own computers, in cloud computin
hu hu hu hu hu hu hu hu hu hu hu
g data centers, and while moving across the internet, while at the same time shari
hu hu hu hu hu h u h u h u h u h u hu h u h u h u
ng the information necessary to complete transactions. Another effect of e-
h u h u h u hu hu hu hu hu hu hu
commerce is the dramatically increased speed with which business transactions can b
hu h u h u h u hu hu hu hu hu hu hu
e conducted. In addition, there will be dramatic changes in the way managerial account
hu hu hu hu hu hu hu hu hu hu hu hu hu
ing procedures are carried out, one example being cloud-
hu hu hu hu hu hu hu hu
based budgeting, which is the enterprise- hu hu hu hu hu
wide and electroniccompletion of a company’s budgeting process using cloud-
hu hu u
h hu hu hu hu hu hu hu
based software and data storage. hu hu hu hu
, 1-2 Plausible goals for the organizations listed are as follows:
h u h u h u h u h u h u h u h u
(a) Amazon.com: (1) To achieve and maintain profitability, and (2) to grow on- hu hu hu hu hu hu hu hu hu hu hu
line sales of their many products. Amazon is also famous (infamous) for wanting to
hu hu hu hu hu hu hu hu hu hu hu hu hu
have every product in the world on its site.
hu hu hu hu hu hu hu hu hu
(b) American Red Cross: (1) To raise funds from the general public sufficient to have r
hu hu hu hu hu hu hu hu hu hu hu hu hu hu
esources available to meet any disaster that may occur, and (2) to provide assi
hu hu hu hu hu hu hu hu hu hu hu hu hu
stance to people who are victims of a disaster anywhere in the world on short notice.
hu hu hu hu hu hu hu hu hu hu hu hu hu hu hu
(c) General Motors: (1) To earn income sufficient to provide a good return on the i
hu hu hu hu hu hu hu hu hu hu hu hu hu hu
nvestment of the company's stockholders, and (2) to provide the highest-
hu hu hu hu hu hu hu hu hu hu
quality product possible. hu hu
(d) Wal-
Mart: (1) To penetrate the retail market in virtually every location in the United States, a
hu hu hu hu hu hu hu h u hu hu hu hu hu hu hu
nd (2) to grow over time in terms of number of retail locations, total assets, and earni
hu hu hu hu hu hu hu h u hu hu hu hu h u h u hu hu
ngs. Also, to be competitive with Amazon in the e-retail space.
hu hu hu hu hu hu hu hu hu hu
(e) City of Seattle: (1) To maintain an urban environment as free of pollution as po
hu hu hu hu hu hu hu hu hu hu hu hu hu hu
ssible, and (2) to provide public safety, police, and fire protection to the city's citiz
hu hu hu hu hu hu hu hu hu hu hu hu hu hu
ens.
(f) Hertz: (1) To be a recognizable household name associated with rental car serv
hu hu hu hu hu hu hu hu hu hu hu hu
ices, and (2) to provide reliable and economical transportation services to the compan
hu hu hu hu hu hu hu hu hu hu hu hu
y's customers.
hu
1-3 The four basic management activities are listed and defined as follows:
h u h u h u h u h u h u h u h u h u h u
(a) Decision making: Choosing among the available alternatives.
h u h u h u h u h u h u
(b) Planning: Developing a detailed financial and operational description
hu h u h u h u h u hu h u h u
ofanticipated operations.
u
h hu
(c) Directing operations: Running the organization on a day-to-day basis.
h u h u h u h u h u h u h u h u
(d) Controlling: Ensuring that the organization operates in the intended manner
h u h u h u h u h u h u h u hu h u h u
andachieves its goals.
uh hu hu
