Managerial Accounting Tools for Business Decision Making
SOLUTION MANUAL
Managerial Accounting Tools for Business Decision Making
9th Edition by Jerry J. Weygandt, Paul D. Kimmel
Chapters 1 - 14, Complete
,TABLE OF CONTENTS
Chapter 1: Managerial Accounting
Chapter 2: Job Order Costing
Chapter 2A: Job Order Costing: Non-Debit and Credit Approach
Chapter 3: Process Costing
Chapter 3A: Process Costing: Non-Debit and Credit Approach
Chapter 4: Activity-Based Costing
Chapter 5: Cost-Volume-Profit
Chapter 6: Cost-Volume-Profit Analysis: Additional Issues
Chapter 7: Incremental Analysis
Chapter 8: Pricing
Chapter 9: Budgetary Planning
Chapter 10: Budgetary Control and Responsibility Accounting
Chapter 11: Standard Costs and Balanced Scorecard
Chapter 12: Planning for Capital Investments
Chapter 13: Statement of Cash Flows
Chapter 14: Financial Analysis
, Managerial Accounting Tools for Business Decision Making
CHAPTER 1
Managerial Accounting
Learning Objectives
1. Identify the features of managerial accounting and the functions of management.
2. Describe the classes of manufacturing costs and the differences between product and
periodcosts.
3. Demonstrate how to compute cost of goods manufactured and prepare financial statements for
amanufacturer.
4. Discuss trends in managerial accounting.
ANSWERS TO QUESTIONS
1. (a) Not true. Managerial accounting is a field of accounting that provides economic and financial
information for managers and other internal users.
(b) Joe is incorrect. Managerial accounting applies to all types of businesses—service,
merchandising, and manufacturing.
LO1 BT: C Difficulty: Easy TOT: 3 min. AACSB: None AICPA FC: Measurement, Analysis and Interpretation IMA: Cost Management
2. (a) Financial accounting is concerned primarily with external users such as stockholders,
creditors, and regulators. In contrast, managerial accounting is concerned primarily with
internal users such as officers and managers.
(b) Financial statements are the end product of financial accounting. These statements are
prepared quarterly and annually. In managerial accounting, internal reports may be
prepared as frequently as needed.
(c) The purpose of financial accounting is to provide general-purpose information for external
users. The purpose of managerial accounting is to provide special-purpose information for
specific internal decisions.
LO1 BT: C Difficulty: Easy TOT: 5 min. AACSB: None AICPA FC: Measurement, Analysis and Interpretation IMA: Cost Management
3. Differences iin ithe icontent iof ithe ireports iare ias ifollows:
i Financial i Managerial
Pertains i to i business i as i a i whole i and Pertains ito isubunits iof ithe ibusiness
i isihighly iaggregated. iandimay ibe ivery idetailed.
Limited ito iaccrual iaccounting iand icost idata. Extends beyond accrual accounting
Generally iaccepted iaccounting iprinciples. system ito iany irelevant idata.
, Standard iis irelevance ito idecisions.
In i financial i accounting, i financial i statements i are i verified i annually i through i an i independent
i audit iby icertified ipublic iaccountants. iThere iare ino iindependent iaudits iof iinternal ireports
iprepared iby imanagerial iaccountants.
LO1 i BT: iC i Difficulty: iEasy i TOT: i5 imin. i iAACSB: iNone i AICPA i FC: i Measurement, iAnalysis iand iInterpretation iIMA: iCost iManagement
4. Linda ishould iknow ithat ithe imanagement iof ian iorganization iperforms ithree ibroad ifunctions:
(1) Planning irequires imanagement ito ilook iahead iand ito iestablish iobjectives.
(2) Directing iinvolves icoordinating ithe idiverse iactivities iand ihuman iresources iof ia icompany
itoiproduce ia ismooth-running ioperation.
(3) Controlling iis ithe iprocess iof ikeeping ithe icompany’s iactivities ion itrack.
LO1 i BT: iC i Difficulty: iEasy i TOT: i3 imin. i iAACSB: iNone i AICPA i FC: i Measurement, iAnalysis iand iInterpretation iIMA: iCost iManagement
5. Not itrue. iDecision-making iis inot ia iseparate imanagement ifunction. iRather, idecision-making
iinvolves ithe iexercise iof igood ijudgment iin iperforming ithe ithree imanagement ifunctions
iexplained iin ithe ianswer ito iquestion ifour iabove.
LO1 i BT: iC i Difficulty: iEasy i TOT: i2 imin. i iAACSB: iNone i AICPA iFC: i Measurement, iAnalysis iand iInterpretation iIMA: iCost iManagement
6. Employees iwith iline ipositions iare idirectly iinvolved iin ithe icompany’s iprimary irevenue
igenerating ioperating iactivities. iExamples iwould iinclude ifactory imanagers iand isupervisors, iand
ithe ivice ipresident iof ioperations. iIn icontrast, iemployees iwith istaff ipositions iare inot idirectly
iinvolved iin irevenue-generating ioperating iactivities, ibut irather iserve iin ia isupport icapacity ito
iline iemployees. iExamples iinclude iemployees iin ifinance, ilegal, iand ihuman iresources.
LO1 i BT: iC i Difficulty: iEasy i TOT: i3 imin. iAACSB: iNone i AICPA iFC: i Measurement, iAnalysis iand iInterpretation i IMA: iCost iManagement
Questions iChapter i1 i(Continued)
7. The idifference iin ibalance isheets ipertains ito ithe ipresentation iof iinventories iin ithe icurrent
iasset isection. iIn ia imerchandising icompany, ionly iinventory i is ishown. iIn ia imanufacturing
icompany, ithree iinventory iaccounts iare ishown: ifinished igoods, iwork iin iprocess, iand iraw
imaterials.
LO3 i BT: iC i Difficulty: iEasy i TOT: i2 imin. i iAACSB: iNone i AICPA i FC: i Measurement, iAnalysis iand iInterpretation iIMA: iCost imanagement
8. Manufacturing icosts iare iclassified ias ieither idirect imaterials, idirect ilabor, ior imanufacturing
ioverhead.
LO2 i BT: iC i Difficulty: iEasy i TOT: i1 imin. i iAACSB: iNone i AICPA i FC: i Measurement, iAnalysis iand iInterpretation iIMA: iCost imanagement
9. No, iMel iis inot icorrect. iThe idistinction ibetween idirect iand iindirect imaterials iis ibased ion itwo icriteria:
(1) physical i association i and i (2) i the i convenience i of i making i the i physical i association.
i Materialsiwhich icannot ibe ieasily iassociated iwith ithe ifinished iproduct iare iconsidered iindirect
imaterials.
LO2 i BT: iC i Difficulty: iEasy i TOT: i2 imin. i iAACSB: iNone i AICPA i FC: i Measurement, iAnalysis iand iInterpretation iIMA: iCost imanagement
10. Product icosts, ior iinventoriable icosts, iare icosts ithat iare ia inecessary iand iintegral ipart i of
iproducing ithe ifinished iproduct, ithey iare iclassified ias imanufacturing icosts. iPeriod icosts iare
icosts ithat iare iidentified iwith ia ispecific itime iperiod irather ithan iwith ia i salable iproduct.
i These icosts irelate ito inonmanufacturing iactivities iand itherefore iare inot iinventoriable icosts,
ithey iare iexpensedias iincurred.
LO2 iBT: iK i Difficulty: iEasy i TOT: i2 imin. i AACSB: iNone i AICPA i FC: iMeasurement, iAnalysis iand iInterpretation i IMA: iCost imanagement
11. A imerchandising icompany ithat iuses ithe iperiodic iinventory isystem ireports ibeginning
iinventory, icost iof igoods ipurchased, iand iending iinventory iin ithe icost iof igoods isection iof ithe
iincome istatement. iA imanufacturing icompany ireports ibeginning ifinished igoods iinventory, icost
iof igoods imanufactured, iand iending ifinished igoods iinventory i in iits idetermination iof i cost iof
SOLUTION MANUAL
Managerial Accounting Tools for Business Decision Making
9th Edition by Jerry J. Weygandt, Paul D. Kimmel
Chapters 1 - 14, Complete
,TABLE OF CONTENTS
Chapter 1: Managerial Accounting
Chapter 2: Job Order Costing
Chapter 2A: Job Order Costing: Non-Debit and Credit Approach
Chapter 3: Process Costing
Chapter 3A: Process Costing: Non-Debit and Credit Approach
Chapter 4: Activity-Based Costing
Chapter 5: Cost-Volume-Profit
Chapter 6: Cost-Volume-Profit Analysis: Additional Issues
Chapter 7: Incremental Analysis
Chapter 8: Pricing
Chapter 9: Budgetary Planning
Chapter 10: Budgetary Control and Responsibility Accounting
Chapter 11: Standard Costs and Balanced Scorecard
Chapter 12: Planning for Capital Investments
Chapter 13: Statement of Cash Flows
Chapter 14: Financial Analysis
, Managerial Accounting Tools for Business Decision Making
CHAPTER 1
Managerial Accounting
Learning Objectives
1. Identify the features of managerial accounting and the functions of management.
2. Describe the classes of manufacturing costs and the differences between product and
periodcosts.
3. Demonstrate how to compute cost of goods manufactured and prepare financial statements for
amanufacturer.
4. Discuss trends in managerial accounting.
ANSWERS TO QUESTIONS
1. (a) Not true. Managerial accounting is a field of accounting that provides economic and financial
information for managers and other internal users.
(b) Joe is incorrect. Managerial accounting applies to all types of businesses—service,
merchandising, and manufacturing.
LO1 BT: C Difficulty: Easy TOT: 3 min. AACSB: None AICPA FC: Measurement, Analysis and Interpretation IMA: Cost Management
2. (a) Financial accounting is concerned primarily with external users such as stockholders,
creditors, and regulators. In contrast, managerial accounting is concerned primarily with
internal users such as officers and managers.
(b) Financial statements are the end product of financial accounting. These statements are
prepared quarterly and annually. In managerial accounting, internal reports may be
prepared as frequently as needed.
(c) The purpose of financial accounting is to provide general-purpose information for external
users. The purpose of managerial accounting is to provide special-purpose information for
specific internal decisions.
LO1 BT: C Difficulty: Easy TOT: 5 min. AACSB: None AICPA FC: Measurement, Analysis and Interpretation IMA: Cost Management
3. Differences iin ithe icontent iof ithe ireports iare ias ifollows:
i Financial i Managerial
Pertains i to i business i as i a i whole i and Pertains ito isubunits iof ithe ibusiness
i isihighly iaggregated. iandimay ibe ivery idetailed.
Limited ito iaccrual iaccounting iand icost idata. Extends beyond accrual accounting
Generally iaccepted iaccounting iprinciples. system ito iany irelevant idata.
, Standard iis irelevance ito idecisions.
In i financial i accounting, i financial i statements i are i verified i annually i through i an i independent
i audit iby icertified ipublic iaccountants. iThere iare ino iindependent iaudits iof iinternal ireports
iprepared iby imanagerial iaccountants.
LO1 i BT: iC i Difficulty: iEasy i TOT: i5 imin. i iAACSB: iNone i AICPA i FC: i Measurement, iAnalysis iand iInterpretation iIMA: iCost iManagement
4. Linda ishould iknow ithat ithe imanagement iof ian iorganization iperforms ithree ibroad ifunctions:
(1) Planning irequires imanagement ito ilook iahead iand ito iestablish iobjectives.
(2) Directing iinvolves icoordinating ithe idiverse iactivities iand ihuman iresources iof ia icompany
itoiproduce ia ismooth-running ioperation.
(3) Controlling iis ithe iprocess iof ikeeping ithe icompany’s iactivities ion itrack.
LO1 i BT: iC i Difficulty: iEasy i TOT: i3 imin. i iAACSB: iNone i AICPA i FC: i Measurement, iAnalysis iand iInterpretation iIMA: iCost iManagement
5. Not itrue. iDecision-making iis inot ia iseparate imanagement ifunction. iRather, idecision-making
iinvolves ithe iexercise iof igood ijudgment iin iperforming ithe ithree imanagement ifunctions
iexplained iin ithe ianswer ito iquestion ifour iabove.
LO1 i BT: iC i Difficulty: iEasy i TOT: i2 imin. i iAACSB: iNone i AICPA iFC: i Measurement, iAnalysis iand iInterpretation iIMA: iCost iManagement
6. Employees iwith iline ipositions iare idirectly iinvolved iin ithe icompany’s iprimary irevenue
igenerating ioperating iactivities. iExamples iwould iinclude ifactory imanagers iand isupervisors, iand
ithe ivice ipresident iof ioperations. iIn icontrast, iemployees iwith istaff ipositions iare inot idirectly
iinvolved iin irevenue-generating ioperating iactivities, ibut irather iserve iin ia isupport icapacity ito
iline iemployees. iExamples iinclude iemployees iin ifinance, ilegal, iand ihuman iresources.
LO1 i BT: iC i Difficulty: iEasy i TOT: i3 imin. iAACSB: iNone i AICPA iFC: i Measurement, iAnalysis iand iInterpretation i IMA: iCost iManagement
Questions iChapter i1 i(Continued)
7. The idifference iin ibalance isheets ipertains ito ithe ipresentation iof iinventories iin ithe icurrent
iasset isection. iIn ia imerchandising icompany, ionly iinventory i is ishown. iIn ia imanufacturing
icompany, ithree iinventory iaccounts iare ishown: ifinished igoods, iwork iin iprocess, iand iraw
imaterials.
LO3 i BT: iC i Difficulty: iEasy i TOT: i2 imin. i iAACSB: iNone i AICPA i FC: i Measurement, iAnalysis iand iInterpretation iIMA: iCost imanagement
8. Manufacturing icosts iare iclassified ias ieither idirect imaterials, idirect ilabor, ior imanufacturing
ioverhead.
LO2 i BT: iC i Difficulty: iEasy i TOT: i1 imin. i iAACSB: iNone i AICPA i FC: i Measurement, iAnalysis iand iInterpretation iIMA: iCost imanagement
9. No, iMel iis inot icorrect. iThe idistinction ibetween idirect iand iindirect imaterials iis ibased ion itwo icriteria:
(1) physical i association i and i (2) i the i convenience i of i making i the i physical i association.
i Materialsiwhich icannot ibe ieasily iassociated iwith ithe ifinished iproduct iare iconsidered iindirect
imaterials.
LO2 i BT: iC i Difficulty: iEasy i TOT: i2 imin. i iAACSB: iNone i AICPA i FC: i Measurement, iAnalysis iand iInterpretation iIMA: iCost imanagement
10. Product icosts, ior iinventoriable icosts, iare icosts ithat iare ia inecessary iand iintegral ipart i of
iproducing ithe ifinished iproduct, ithey iare iclassified ias imanufacturing icosts. iPeriod icosts iare
icosts ithat iare iidentified iwith ia ispecific itime iperiod irather ithan iwith ia i salable iproduct.
i These icosts irelate ito inonmanufacturing iactivities iand itherefore iare inot iinventoriable icosts,
ithey iare iexpensedias iincurred.
LO2 iBT: iK i Difficulty: iEasy i TOT: i2 imin. i AACSB: iNone i AICPA i FC: iMeasurement, iAnalysis iand iInterpretation i IMA: iCost imanagement
11. A imerchandising icompany ithat iuses ithe iperiodic iinventory isystem ireports ibeginning
iinventory, icost iof igoods ipurchased, iand iending iinventory iin ithe icost iof igoods isection iof ithe
iincome istatement. iA imanufacturing icompany ireports ibeginning ifinished igoods iinventory, icost
iof igoods imanufactured, iand iending ifinished igoods iinventory i in iits idetermination iof i cost iof
