SOLUTION MANUAL FOR h h
Managerial Accounting Creating Value in a DynamicB h h h h h h h
usiness Environment 13e Hilton h h h
Chapter 1-17 With Appendix (I II III) h h h h h h
CHAPTER 1
h h
The Crucial Role of Managerial Accounting in a Dynamic
BusinessEnvironment h
FOCUS ON ETHICS (Located before the Chapter Summary in the text.)
h h h h h h h h h h
The focus-on- h
ethics inset for Chapter 1 is the IMA Statement of Ethical Professional Practice. Instructors c
h h h h h h h h h h h h h h
an use this list of ethical principles and standards to lead a class discussion. The discussion
h h h h h h h h h h h h h h h h
can also range to consideration of how these standards may have been violated by accounta
h h h h h h h h h h h h h h
nts and managers involved in the various ethical scandals uncovered over the past several y
h h h h h h h h h h h h h h
ears. It is also useful to discuss the pros and cons of the procedures for ―Resolving Ethical I
h h h h h h h h h h h h h h h h h
ssues‖that IMA suggests for its members when theybelieve they know about ethical lapses in th
h h h h h h h h h h h h h h h h
eir organizations.
h
We also introduce here the connection to the ―Ethics Unwrapped‖video series that cansupple
h h h h h h h h h h h h h h
ment the discussion of ethics in the context of each chapter. In each chapter of the text, we h
h h h h h h h h h h h h h h h h h h
ave suggested topic videos in the series that align with that chapter. Discussion guidance an
h h h h h h h h h h h h h h
d questions relating to the videos can be found on the ―Ethics Unwrapped‖siteat the URL pr
h h h h h h h h h h h h h h h h h
ovided. This resource is provided by permission from the University of Texas at Austin, McC
h h h h h h h h h h h h h h
ombs School of Business.h h h
ANSWERS TO REVIEW QUESTIONS h h h
1-1 The explosion in e- h h h
commerce will affect managers in significant ways. One effect will bea drastic reduction i
h h h h h h h h h h h h h h
n paperwork. Millions of transactions between businesses are conducted electronically w
h h h h h h h h h h
ith no hard- h h
copy documentation. Along with this method of communicating for business transaction
h h h h h h h h h h
s comes the very significant issue of information security. Businesses need to find ways
h h h h h h h h hhh h h h h
to protect confidential information in their own computers, in cloud computing data cent
h h h h h h h h h h h h h
ers, and while moving across the internet, while at the same time sharing the information
h h h h h h h h h h h h h h h
Managerial Accounting,
necessary 13/e transactions. Another effect of e-
to complete h
h h
h 5-1 h h h h h
© McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LL
h h h h h h h h h h h h h h h h h h h
C.
, commerce is the dramatically increased speed with which business transactions can be c
h h h h h h h h h h h h
onducted. In addition, there will be dramatic changes in the way managerial accounting
h h h h h h h h h h h h
hprocedures are carried out, one example
h h h h h
5-2 SolutionshManual
©hMcGrawhHillhLLC.hAllhrightshreserved.hNohreproductionhorhdistributionhwithouththehpriorhwrittenhconsenthofhMcGrawhHillhL
LC.
, being cloud-based budgeting, which is the enterprise-
h h h h h h
wide and electronic completion ofa company‘s budgeting process using cloud-
h h h h h h h h h h
based software and data storage.
h h h h
1-2 Plausible goals for the organizations listed are as follows:
h h h h h h h h
(a) Amazon.com: (1) To achieve and maintain profitability, and (2) to grow on- h h h h h h h h h h h
line sales of their many products. Amazon is also famous (infamous) for wanting t
h h h h h h h h h h h h h
o have every product in the world on its site.
h h h h h h h h h
(b) American Red Cross: (1) To raise funds from the general public sufficient to haver
h h h h h h h h h h h h h h
esources available to meet any disaster that may occur, and (2) to provide assista
h h h h h h h h h h h h h
nce to people who are victims of a disaster anywhere in the world on short notice.
h h h h h h h h h h h h h h h
(c) General Motors: (1) To earn income sufficient to provide a good return on the inve
h h h h h h h h h h h h h h
stment of the company's stockholders, and (2) to provide the highest-
h h h h h h h h h h
quality product possible. h h
(d) Wal-
Mart: (1) To penetrate the retail market in virtually every location in the United Stat
h h h h h h h h h h h h h h
es, and (2) to grow over time in terms of number of retail locations, total assets, an
h h h h h h h h h h h h h h h h
d earnings. Also, to be competitive with Amazon in the e-retail space.
h h h h h h h h h h h
(e) City of Seattle: (1) To maintain an urban environment as free of pollution as possib
h h h h h h h h h h h h h h
le, and (2) to provide public safety, police, and fire protection to the city's citizens.
h h h h h h h h h h h h h h
(f) Hertz: (1) To be a recognizable household name associated with rental car service
h h h h h h h h h h h h
s, and (2) to provide reliable and economical transportation services tothe com
h h h h h h h h h h h h
pany's customers. h
1-3 The four basic management activities are listed and defined as follows:
h h h h h h h h h h
(a) Decision making: Choosing among the available alternatives.
h h h h h h
(b) Planning: Developing a detailed financial and operational description ofanticipate
h h h h h h h h h
d operations.
h
(c) Directing operations: Running the organization on a day-to-day basis.
h h h h h h h h
(d) Controlling: Ensuring that the organization operates in the intended manner and
h h h h h h h h h h h
achieves its goals. h h
ManagerialhAccounting,h13/e 5-3
©hMcGrawhHillhLLC.hAllhrightshreserved.hNohreproductionhorhdistributionhwithouththehpriorhwrittenhconsenthofhMcGrawhHillhLL
C.
, 1-4 Examples of the four primary management activities in the context of a national fast-
h h h h h h h h h h h h h
food chain are as follows:
h h h h h
(a) Decision making: Choosing among several possible locations for a new fast-
h h h h h h h h h h
foodoutlet. h
(b) Planning: Developing a cost budget for the food and paper products to be used du
h h h h h h h h h h h h h h
ring the next quarter in a particular fast-food restaurant.
h h h h h h h h
(c) Directing operations: Developing detailed schedules for personnel for the next mo
h h h h h h h h h h
nth to provide counter service in a particular fast-food restaurant.
h h h h h h h h h
(d) Controlling: Comparing the actual cost of paper products used during a particular
h h h h h h h h h h h
month in a restaurant with the anticipated cost of paper products for that same ti
h h h h h h h h h h h h h h h
me period. h
1-5 Examples of the objectives of managerial-
h h h h h
accounting activity in an airline company are described below:
h h h h h h h h
(a) Providing information for decision making and planning, and proactively participa
h h h h h h h h h
ting as part of the management team in the decision making and planning process
h h h h h h h h h h h h h
es: Managerial accountants provide estimates of the cost of adding a flight on the
h h h h h h h h h h h h h h
route from Dallas to Miami and actively participate in making the decision about ad
h h h h h h h h h h h h h
ding the flight. h h
(b) Assisting managers in directing and controlling operations: Managerial accounta
h h h h h h h h
nts provide information about the actual costs of flying the company‘s Asian route
h h h h h h h h h h h h
s during a particular month.
h h h h
(c) Motivating managers and other employees toward the organization's goals: A bud
h h h h h h h h h h
get is provided for the cost of handling baggage at Chicago O'Hare Airport. The bu
h h h h h h h h h h h h h h
dget is given to the airline's baggage handling manager, who is expected to strive
h h h h h h h h h h h h h h
to achieve the budget.
h h h
(d) Measuring the performance of activities, subunits, managers, and other employee
h h h h h h h h h
s within the organization: Quarterly income statements are prepared foreach of th
h h h h h h h h h h h h
e airline's major geographical sectors, and these income reports are used to eval
h h h h h h h h h h h h
uate the earnings performance of each sector during the relevant time period.
h h h h h h h h h h h
(e) Assessing the organization's competitive position and working with other manage
h h h h h h h h h
rs to ensure the organization's long-
h h h h h
run competitiveness in its industry: Information about industry-
h h h h h h h
wide performance standards is obtained and compared with the airline's own perf
h h h h h h h h h h h
ormance. For example, how does the airline stack up against its competitors in tic
h h h h h h h h h h h h h
ket prices, on-
h h
time departures, mishandled baggage, customer complaints, and safety?
h h h h h h h
5-4 SolutionshManual
©hMcGrawhHillhLLC.hAllhrightshreserved.hNohreproductionhorhdistributionhwithouththehpriorhwrittenhconsenthofhMcGrawhHillhL
LC.
Managerial Accounting Creating Value in a DynamicB h h h h h h h
usiness Environment 13e Hilton h h h
Chapter 1-17 With Appendix (I II III) h h h h h h
CHAPTER 1
h h
The Crucial Role of Managerial Accounting in a Dynamic
BusinessEnvironment h
FOCUS ON ETHICS (Located before the Chapter Summary in the text.)
h h h h h h h h h h
The focus-on- h
ethics inset for Chapter 1 is the IMA Statement of Ethical Professional Practice. Instructors c
h h h h h h h h h h h h h h
an use this list of ethical principles and standards to lead a class discussion. The discussion
h h h h h h h h h h h h h h h h
can also range to consideration of how these standards may have been violated by accounta
h h h h h h h h h h h h h h
nts and managers involved in the various ethical scandals uncovered over the past several y
h h h h h h h h h h h h h h
ears. It is also useful to discuss the pros and cons of the procedures for ―Resolving Ethical I
h h h h h h h h h h h h h h h h h
ssues‖that IMA suggests for its members when theybelieve they know about ethical lapses in th
h h h h h h h h h h h h h h h h
eir organizations.
h
We also introduce here the connection to the ―Ethics Unwrapped‖video series that cansupple
h h h h h h h h h h h h h h
ment the discussion of ethics in the context of each chapter. In each chapter of the text, we h
h h h h h h h h h h h h h h h h h h
ave suggested topic videos in the series that align with that chapter. Discussion guidance an
h h h h h h h h h h h h h h
d questions relating to the videos can be found on the ―Ethics Unwrapped‖siteat the URL pr
h h h h h h h h h h h h h h h h h
ovided. This resource is provided by permission from the University of Texas at Austin, McC
h h h h h h h h h h h h h h
ombs School of Business.h h h
ANSWERS TO REVIEW QUESTIONS h h h
1-1 The explosion in e- h h h
commerce will affect managers in significant ways. One effect will bea drastic reduction i
h h h h h h h h h h h h h h
n paperwork. Millions of transactions between businesses are conducted electronically w
h h h h h h h h h h
ith no hard- h h
copy documentation. Along with this method of communicating for business transaction
h h h h h h h h h h
s comes the very significant issue of information security. Businesses need to find ways
h h h h h h h h hhh h h h h
to protect confidential information in their own computers, in cloud computing data cent
h h h h h h h h h h h h h
ers, and while moving across the internet, while at the same time sharing the information
h h h h h h h h h h h h h h h
Managerial Accounting,
necessary 13/e transactions. Another effect of e-
to complete h
h h
h 5-1 h h h h h
© McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LL
h h h h h h h h h h h h h h h h h h h
C.
, commerce is the dramatically increased speed with which business transactions can be c
h h h h h h h h h h h h
onducted. In addition, there will be dramatic changes in the way managerial accounting
h h h h h h h h h h h h
hprocedures are carried out, one example
h h h h h
5-2 SolutionshManual
©hMcGrawhHillhLLC.hAllhrightshreserved.hNohreproductionhorhdistributionhwithouththehpriorhwrittenhconsenthofhMcGrawhHillhL
LC.
, being cloud-based budgeting, which is the enterprise-
h h h h h h
wide and electronic completion ofa company‘s budgeting process using cloud-
h h h h h h h h h h
based software and data storage.
h h h h
1-2 Plausible goals for the organizations listed are as follows:
h h h h h h h h
(a) Amazon.com: (1) To achieve and maintain profitability, and (2) to grow on- h h h h h h h h h h h
line sales of their many products. Amazon is also famous (infamous) for wanting t
h h h h h h h h h h h h h
o have every product in the world on its site.
h h h h h h h h h
(b) American Red Cross: (1) To raise funds from the general public sufficient to haver
h h h h h h h h h h h h h h
esources available to meet any disaster that may occur, and (2) to provide assista
h h h h h h h h h h h h h
nce to people who are victims of a disaster anywhere in the world on short notice.
h h h h h h h h h h h h h h h
(c) General Motors: (1) To earn income sufficient to provide a good return on the inve
h h h h h h h h h h h h h h
stment of the company's stockholders, and (2) to provide the highest-
h h h h h h h h h h
quality product possible. h h
(d) Wal-
Mart: (1) To penetrate the retail market in virtually every location in the United Stat
h h h h h h h h h h h h h h
es, and (2) to grow over time in terms of number of retail locations, total assets, an
h h h h h h h h h h h h h h h h
d earnings. Also, to be competitive with Amazon in the e-retail space.
h h h h h h h h h h h
(e) City of Seattle: (1) To maintain an urban environment as free of pollution as possib
h h h h h h h h h h h h h h
le, and (2) to provide public safety, police, and fire protection to the city's citizens.
h h h h h h h h h h h h h h
(f) Hertz: (1) To be a recognizable household name associated with rental car service
h h h h h h h h h h h h
s, and (2) to provide reliable and economical transportation services tothe com
h h h h h h h h h h h h
pany's customers. h
1-3 The four basic management activities are listed and defined as follows:
h h h h h h h h h h
(a) Decision making: Choosing among the available alternatives.
h h h h h h
(b) Planning: Developing a detailed financial and operational description ofanticipate
h h h h h h h h h
d operations.
h
(c) Directing operations: Running the organization on a day-to-day basis.
h h h h h h h h
(d) Controlling: Ensuring that the organization operates in the intended manner and
h h h h h h h h h h h
achieves its goals. h h
ManagerialhAccounting,h13/e 5-3
©hMcGrawhHillhLLC.hAllhrightshreserved.hNohreproductionhorhdistributionhwithouththehpriorhwrittenhconsenthofhMcGrawhHillhLL
C.
, 1-4 Examples of the four primary management activities in the context of a national fast-
h h h h h h h h h h h h h
food chain are as follows:
h h h h h
(a) Decision making: Choosing among several possible locations for a new fast-
h h h h h h h h h h
foodoutlet. h
(b) Planning: Developing a cost budget for the food and paper products to be used du
h h h h h h h h h h h h h h
ring the next quarter in a particular fast-food restaurant.
h h h h h h h h
(c) Directing operations: Developing detailed schedules for personnel for the next mo
h h h h h h h h h h
nth to provide counter service in a particular fast-food restaurant.
h h h h h h h h h
(d) Controlling: Comparing the actual cost of paper products used during a particular
h h h h h h h h h h h
month in a restaurant with the anticipated cost of paper products for that same ti
h h h h h h h h h h h h h h h
me period. h
1-5 Examples of the objectives of managerial-
h h h h h
accounting activity in an airline company are described below:
h h h h h h h h
(a) Providing information for decision making and planning, and proactively participa
h h h h h h h h h
ting as part of the management team in the decision making and planning process
h h h h h h h h h h h h h
es: Managerial accountants provide estimates of the cost of adding a flight on the
h h h h h h h h h h h h h h
route from Dallas to Miami and actively participate in making the decision about ad
h h h h h h h h h h h h h
ding the flight. h h
(b) Assisting managers in directing and controlling operations: Managerial accounta
h h h h h h h h
nts provide information about the actual costs of flying the company‘s Asian route
h h h h h h h h h h h h
s during a particular month.
h h h h
(c) Motivating managers and other employees toward the organization's goals: A bud
h h h h h h h h h h
get is provided for the cost of handling baggage at Chicago O'Hare Airport. The bu
h h h h h h h h h h h h h h
dget is given to the airline's baggage handling manager, who is expected to strive
h h h h h h h h h h h h h h
to achieve the budget.
h h h
(d) Measuring the performance of activities, subunits, managers, and other employee
h h h h h h h h h
s within the organization: Quarterly income statements are prepared foreach of th
h h h h h h h h h h h h
e airline's major geographical sectors, and these income reports are used to eval
h h h h h h h h h h h h
uate the earnings performance of each sector during the relevant time period.
h h h h h h h h h h h
(e) Assessing the organization's competitive position and working with other manage
h h h h h h h h h
rs to ensure the organization's long-
h h h h h
run competitiveness in its industry: Information about industry-
h h h h h h h
wide performance standards is obtained and compared with the airline's own perf
h h h h h h h h h h h
ormance. For example, how does the airline stack up against its competitors in tic
h h h h h h h h h h h h h
ket prices, on-
h h
time departures, mishandled baggage, customer complaints, and safety?
h h h h h h h
5-4 SolutionshManual
©hMcGrawhHillhLLC.hAllhrightshreserved.hNohreproductionhorhdistributionhwithouththehpriorhwrittenhconsenthofhMcGrawhHillhL
LC.
