Solution Manual t
Managerial Accounting t
by ffiarrison Noreen
Uploaded by t
Mudassar Hassan t
University of Sargodha
t t
,Chapter 1 t
Managerial Accounting and the BusinessE
t t t t t
nvironment
SolutionsttotQuestions
1-1 Managerialtaccountingtistconcernedtwithtpr fromtmakingtonetproductttotmakingtanothertal-
ovidingtinformationttotmanagerstfortusetwithinttheto tlowstthetcompanyttotrespondtmoretquicklyttotcus-
rganization.tFinancialtaccountingtistcon- ttomers.tFinally,tsmallertbatchestmaketitteasierttotspo
tcernedtwithtprovidingtinformationttotstockholders,tc ttmanufacturingtproblemstbeforettheytresulttintatlarg
reditors,tandtotherstoutsidetoftthetorganization. etnumbertoftdefectivetunits.
1-2 Essentially,tmanagerstcarrytouttthreetma- 1-7 ThetmaintbenefitstoftatsuccessfultJITtsys-
tjortactivitiestintantorganization:tplanning,tdirectingta ttemtaretreductionstin:t(1)tfundsttiedtuptintinven-
ndtmotivating,tandtcontrolling.tAlltthreetactivitiestinv ttories;t(2)tspacetrequirements;t(3)tthroughput ttim
olvetdecisiontmaking. e;tandt(4)tdefects.
1-3 ThetPlanningtandtControltCycletinvolvestfor 1-8 TQMtgenerallytapproachestimprovementtint
mulatingtplans,timplementingtplans,tmeasuringtperf atseriestoftsmalltstepstthattaretplannedtandtim-
ormance,tandtevaluatingtdifferencestbetweentplann tplementedtbytteamstoftfront-
edtandtactualtperformance. linetworkers.tProcesstReengineeringtinvolvestcompl
etelytredesigningtbusinesstprocessestfromtthetgrou
1-4 Atlinetpositiontistdirectlytrelatedttotthetachie ndtup—oftentwithtthetusetoftoutsidetconsultants.
vementtoftthetbasictobjectivestoftthetorgani-
tzation.tAtstafftpositiontistnottdirectlytrelatedttotthetac 1-9 IftProcesstReengineeringtistsuccessful,tfe
hievementtoftthosetobjectives;trather,tittistsup- wertworkerstaretneeded.tIftmanagementtre-
tportive,tprovidingtservicestandtassistancettotothertp tspondstbytlayingtofftworkers,tmoraletwilltalmosttc
artstoftthetorganization. ertaintsuffer.
1-5 Intcontrastttotfinancialtaccounting,tmana- 1-10 Sometbenefitstfromtimprovementteffortstc
tgerialtaccounting:t(1)tfocusestontthetneedstoftthe tm ometfromtcosttreductions,tbuttthetprimarytbene-
anager;t(2)tplacestmoretemphasistontthetfuture; tfittistoftentantincreasetintcapacity.tAttnon-con-
(3)temphasizestrelevancetandtflexibility,trathertthant tstraints,tincreasestintcapacitytjusttaddttotthetal-
precision;t(4)temphasizestthetsegmentstoftantorganiz tready-existingtexcesstcapacity.tTherefore,tim-
ation;t(5)tistnottgovernedtbytGAAP;tand tprovementteffortstshouldtordinarilytfocustontthetco
(6) istnottmandatory. nstraint.
1-6 Atnumbertoftbenefitstaccruetfromtreducedtse 1-11 Iftpeopletgenerallytdidtnottacttethicallytintbu
tupttime.tFirst,treducedtsetupttimetallowstatcompanyt siness,tnotonetwouldttrusttanyonetelsetandtpeopletw
totproducetintsmallertbatches,twhichtintturntreducestt ouldtbetreluctantttotentertintotbusinessttransactions.
hetleveltoftinventories.tSecond,tre- tThetresulttwouldtbetlesstfundstraisedtintcapitaltmark
tducedtsetupttimetallowstatcompanyttotspendtmoretti ets,tfewertgoodstandtservicestavail-
metproducingtgoodstandtlessttimetgettingtreadyttotpr tabletfortsale,tlowertquality,tandthighertprices.
oduce.tThird,tthetabilityttotrapidlytchange
©tThetMcGraw-HilltCompanies,tInc.,t2006.
SolutionstManual,tChaptert1 1
,Uploadedtby MudassartHassan
Exercise 1-1 (10 minutes)
t t t
1. Line
2. Directing and motivating
t t
3. Budgets
4. Planning
5. Staff
6. Decentralization
7. Precision; Nonmonetary data
t t
8. Managerial accounting; Financial accounting
t t t
9. Feedback
10. Controller
11. Performance report t
12. Chief Financial Officer
t t
©tThetMcGraw-HilltCompanies,tInc.,t2006.tAlltrightstreserved.
2 ManagerialtAccounting,t11thtEdition
, Exercise 1-2 (10 minutes)
t t t
1. Total quality management; Process reengineering
t t t t
2. Just-In-Time
3. Nonconstraint
4. Benchmarking
5. Setup
6. Constraint
7. Non-value-added activities t
8. Business process
t
©tThetMcGraw-HilltCompanies,tInc.,t2006.tAlltrightstreserved.
SolutionstManual,tChaptert1 3
Managerial Accounting t
by ffiarrison Noreen
Uploaded by t
Mudassar Hassan t
University of Sargodha
t t
,Chapter 1 t
Managerial Accounting and the BusinessE
t t t t t
nvironment
SolutionsttotQuestions
1-1 Managerialtaccountingtistconcernedtwithtpr fromtmakingtonetproductttotmakingtanothertal-
ovidingtinformationttotmanagerstfortusetwithinttheto tlowstthetcompanyttotrespondtmoretquicklyttotcus-
rganization.tFinancialtaccountingtistcon- ttomers.tFinally,tsmallertbatchestmaketitteasierttotspo
tcernedtwithtprovidingtinformationttotstockholders,tc ttmanufacturingtproblemstbeforettheytresulttintatlarg
reditors,tandtotherstoutsidetoftthetorganization. etnumbertoftdefectivetunits.
1-2 Essentially,tmanagerstcarrytouttthreetma- 1-7 ThetmaintbenefitstoftatsuccessfultJITtsys-
tjortactivitiestintantorganization:tplanning,tdirectingta ttemtaretreductionstin:t(1)tfundsttiedtuptintinven-
ndtmotivating,tandtcontrolling.tAlltthreetactivitiestinv ttories;t(2)tspacetrequirements;t(3)tthroughput ttim
olvetdecisiontmaking. e;tandt(4)tdefects.
1-3 ThetPlanningtandtControltCycletinvolvestfor 1-8 TQMtgenerallytapproachestimprovementtint
mulatingtplans,timplementingtplans,tmeasuringtperf atseriestoftsmalltstepstthattaretplannedtandtim-
ormance,tandtevaluatingtdifferencestbetweentplann tplementedtbytteamstoftfront-
edtandtactualtperformance. linetworkers.tProcesstReengineeringtinvolvestcompl
etelytredesigningtbusinesstprocessestfromtthetgrou
1-4 Atlinetpositiontistdirectlytrelatedttotthetachie ndtup—oftentwithtthetusetoftoutsidetconsultants.
vementtoftthetbasictobjectivestoftthetorgani-
tzation.tAtstafftpositiontistnottdirectlytrelatedttotthetac 1-9 IftProcesstReengineeringtistsuccessful,tfe
hievementtoftthosetobjectives;trather,tittistsup- wertworkerstaretneeded.tIftmanagementtre-
tportive,tprovidingtservicestandtassistancettotothertp tspondstbytlayingtofftworkers,tmoraletwilltalmosttc
artstoftthetorganization. ertaintsuffer.
1-5 Intcontrastttotfinancialtaccounting,tmana- 1-10 Sometbenefitstfromtimprovementteffortstc
tgerialtaccounting:t(1)tfocusestontthetneedstoftthe tm ometfromtcosttreductions,tbuttthetprimarytbene-
anager;t(2)tplacestmoretemphasistontthetfuture; tfittistoftentantincreasetintcapacity.tAttnon-con-
(3)temphasizestrelevancetandtflexibility,trathertthant tstraints,tincreasestintcapacitytjusttaddttotthetal-
precision;t(4)temphasizestthetsegmentstoftantorganiz tready-existingtexcesstcapacity.tTherefore,tim-
ation;t(5)tistnottgovernedtbytGAAP;tand tprovementteffortstshouldtordinarilytfocustontthetco
(6) istnottmandatory. nstraint.
1-6 Atnumbertoftbenefitstaccruetfromtreducedtse 1-11 Iftpeopletgenerallytdidtnottacttethicallytintbu
tupttime.tFirst,treducedtsetupttimetallowstatcompanyt siness,tnotonetwouldttrusttanyonetelsetandtpeopletw
totproducetintsmallertbatches,twhichtintturntreducestt ouldtbetreluctantttotentertintotbusinessttransactions.
hetleveltoftinventories.tSecond,tre- tThetresulttwouldtbetlesstfundstraisedtintcapitaltmark
tducedtsetupttimetallowstatcompanyttotspendtmoretti ets,tfewertgoodstandtservicestavail-
metproducingtgoodstandtlessttimetgettingtreadyttotpr tabletfortsale,tlowertquality,tandthighertprices.
oduce.tThird,tthetabilityttotrapidlytchange
©tThetMcGraw-HilltCompanies,tInc.,t2006.
SolutionstManual,tChaptert1 1
,Uploadedtby MudassartHassan
Exercise 1-1 (10 minutes)
t t t
1. Line
2. Directing and motivating
t t
3. Budgets
4. Planning
5. Staff
6. Decentralization
7. Precision; Nonmonetary data
t t
8. Managerial accounting; Financial accounting
t t t
9. Feedback
10. Controller
11. Performance report t
12. Chief Financial Officer
t t
©tThetMcGraw-HilltCompanies,tInc.,t2006.tAlltrightstreserved.
2 ManagerialtAccounting,t11thtEdition
, Exercise 1-2 (10 minutes)
t t t
1. Total quality management; Process reengineering
t t t t
2. Just-In-Time
3. Nonconstraint
4. Benchmarking
5. Setup
6. Constraint
7. Non-value-added activities t
8. Business process
t
©tThetMcGraw-HilltCompanies,tInc.,t2006.tAlltrightstreserved.
SolutionstManual,tChaptert1 3
