SOLUTION MANUAL
Horngren's Accounting, The Managerial Chapters, 14th Edition
By Tracie Miller-Nobles Brenda Mattison, All Chapters 1 - 9
,Table of contents
1. Introduction to Managerial Accounting
2. Job Order Costing
3. Process Costing
4. Cost-Volume-Profit Analysis
5. Master Budgets
6. Flexible Budgets and Standard Cost Systems
7. Cost Allocation and Responsibility Accounting
8. Short-Term Business Decisions
9. Capital Investment Decisions
,Chapter M:1
Introduction to Managerial Accounting
Review Questions
1. What is the primary purpose of managerial accounting?
The primary purpose of managerial accounting is to provide information to help managers plan,
direct, control, and make decisions.
2. List six differences between financial accounting and managerial accounting.
Financial accounting and managerial accounting differ on the following 6 dimensions: (1) primary
users, (2) purpose of information, (3) focus and time dimension of the information, (4) rules and re-
strictions, (5) scope of information, and (6) behavioral.
3. Explain the difference between line positions and staff positions.
Line positions are directly involved in providing goods or services to customers. Staff positions
support line positions.
4. Explain the differences between planning, directing, and controlling.
Planning means choosing goals and deciding how to achieve them. Directing involves running the day-
to-day operations of a business. Controlling is the process of monitoring operations and keeping the
company on track.
5. List the four IMA standards of ethical practice and briefly describe each.
The four IMA standards of ethical practice and a description of each follow.
I. Competence.
Maintain an appropriate level of professional leadership and expertise by enhancing
knowledge and skills.
Perform professional duties in accordance with relevant laws, regulations, and technical
standards.
Provide decision support information and recommendations that are accurate, clear, concise,
, and timely.
Recognise and help mange risk.
II. Confidentiality.
Keep information confidential except when disclosure is authorized or legally required.
Inform all relevant parties regarding appropriate use of confidential information. Monitor to
ensure compliance.
Refrain from using confidential information for unethical or illegal advantage.
III. Integrity.
Mitigate actual conflicts of interest. Regularly communicate with business associates to avoid
apparent conflicts of interest. Advise all parties of any potential conflicts.
Refrain from engaging in any conduct that would prejudice carrying out duties ethically.
Abstain from engaging in or supporting any activity that might discredit the profession.
Contribute to a positive ethical culture and place integrity of the profession above personal
interest.
5, cont.
IV. Credibility.
Communicate sinformation sfairly sand sobjectively.
Provide sall srelevant sinformation sthat scould sreasonably sbe sexpected sto sinfluence san
sintendedsuser’s sunderstanding sof sthe sreports, sanalyses, sor srecommendations.
Report sany sdelays sor sdeficiencies sin sinformation, stimeliness, sprocessing, sor sinternal
scontrolssin sconformance swith sorganization spolicy sand/or sapplicable slaw.
Communicate sany sprofessional slimitations sor sother sconstraints sthat swould spreclude
sresponsi-sble sjudgment sor ssuccessful sperformance sof san sactivity.
6. Describe sa sservice scompany sand sgive san sexample.
Service scompanies ssell stime, sskills, sand sknowledge. sExamples sof sservice scompanies sinclude sphone
sservice scompanies, sbanks, scleaning sservice scompanies, saccounting sfirms, slaw sfirms, smedical sphysi-
scians, sand sonline sauction sservices.
7. Describe sa smerchandising scompany sand sgive san sexample.
Merchandising scompanies sresell sproducts sthey sbuy sfrom ssuppliers. sMerchandisers skeep san
sinventorysof sproducts, sand smanagers sare saccountable sfor sthe spurchasing, sstorage, sand ssale sof sthe
sproducts. sEx- samples sof smerchandising scompanies sinclude stoy sstores, sgrocery sstores, sand sclothing
sstores.
8. How sdo smanufacturing scompanies sdiffer sfrom smerchandising scompanies?
Merchandising scompanies sresell sproducts sthey spreviously sbought sfrom ssuppliers, swhereas smanufac-
sturing scompanies suse slabor, sequipment, ssupplies, sand sfacilities sto sconvert sraw smaterials sinto snew
sfin-sished sproducts. sIn scontrast sto smerchandising scompanies, smanufacturing scompanies shave sa
sbroad srange sof sproduction sactivities sthat srequire stracking scosts son sthree skinds sof sinventory.
Horngren's Accounting, The Managerial Chapters, 14th Edition
By Tracie Miller-Nobles Brenda Mattison, All Chapters 1 - 9
,Table of contents
1. Introduction to Managerial Accounting
2. Job Order Costing
3. Process Costing
4. Cost-Volume-Profit Analysis
5. Master Budgets
6. Flexible Budgets and Standard Cost Systems
7. Cost Allocation and Responsibility Accounting
8. Short-Term Business Decisions
9. Capital Investment Decisions
,Chapter M:1
Introduction to Managerial Accounting
Review Questions
1. What is the primary purpose of managerial accounting?
The primary purpose of managerial accounting is to provide information to help managers plan,
direct, control, and make decisions.
2. List six differences between financial accounting and managerial accounting.
Financial accounting and managerial accounting differ on the following 6 dimensions: (1) primary
users, (2) purpose of information, (3) focus and time dimension of the information, (4) rules and re-
strictions, (5) scope of information, and (6) behavioral.
3. Explain the difference between line positions and staff positions.
Line positions are directly involved in providing goods or services to customers. Staff positions
support line positions.
4. Explain the differences between planning, directing, and controlling.
Planning means choosing goals and deciding how to achieve them. Directing involves running the day-
to-day operations of a business. Controlling is the process of monitoring operations and keeping the
company on track.
5. List the four IMA standards of ethical practice and briefly describe each.
The four IMA standards of ethical practice and a description of each follow.
I. Competence.
Maintain an appropriate level of professional leadership and expertise by enhancing
knowledge and skills.
Perform professional duties in accordance with relevant laws, regulations, and technical
standards.
Provide decision support information and recommendations that are accurate, clear, concise,
, and timely.
Recognise and help mange risk.
II. Confidentiality.
Keep information confidential except when disclosure is authorized or legally required.
Inform all relevant parties regarding appropriate use of confidential information. Monitor to
ensure compliance.
Refrain from using confidential information for unethical or illegal advantage.
III. Integrity.
Mitigate actual conflicts of interest. Regularly communicate with business associates to avoid
apparent conflicts of interest. Advise all parties of any potential conflicts.
Refrain from engaging in any conduct that would prejudice carrying out duties ethically.
Abstain from engaging in or supporting any activity that might discredit the profession.
Contribute to a positive ethical culture and place integrity of the profession above personal
interest.
5, cont.
IV. Credibility.
Communicate sinformation sfairly sand sobjectively.
Provide sall srelevant sinformation sthat scould sreasonably sbe sexpected sto sinfluence san
sintendedsuser’s sunderstanding sof sthe sreports, sanalyses, sor srecommendations.
Report sany sdelays sor sdeficiencies sin sinformation, stimeliness, sprocessing, sor sinternal
scontrolssin sconformance swith sorganization spolicy sand/or sapplicable slaw.
Communicate sany sprofessional slimitations sor sother sconstraints sthat swould spreclude
sresponsi-sble sjudgment sor ssuccessful sperformance sof san sactivity.
6. Describe sa sservice scompany sand sgive san sexample.
Service scompanies ssell stime, sskills, sand sknowledge. sExamples sof sservice scompanies sinclude sphone
sservice scompanies, sbanks, scleaning sservice scompanies, saccounting sfirms, slaw sfirms, smedical sphysi-
scians, sand sonline sauction sservices.
7. Describe sa smerchandising scompany sand sgive san sexample.
Merchandising scompanies sresell sproducts sthey sbuy sfrom ssuppliers. sMerchandisers skeep san
sinventorysof sproducts, sand smanagers sare saccountable sfor sthe spurchasing, sstorage, sand ssale sof sthe
sproducts. sEx- samples sof smerchandising scompanies sinclude stoy sstores, sgrocery sstores, sand sclothing
sstores.
8. How sdo smanufacturing scompanies sdiffer sfrom smerchandising scompanies?
Merchandising scompanies sresell sproducts sthey spreviously sbought sfrom ssuppliers, swhereas smanufac-
sturing scompanies suse slabor, sequipment, ssupplies, sand sfacilities sto sconvert sraw smaterials sinto snew
sfin-sished sproducts. sIn scontrast sto smerchandising scompanies, smanufacturing scompanies shave sa
sbroad srange sof sproduction sactivities sthat srequire stracking scosts son sthree skinds sof sinventory.
