Solution Manual For
Introduction to Managerial Accounting
Author: Ganesh Vaidyanathan Peter C. Brewer, Ray H. Garrison
7th Canadian Edition
Solutions Manual, Chapter 2 1
,TABLE OF CONTENT:
Chapter 1 An Introduction to Managerial Accounting
Chapter 2 Cost Concepts
Chapter 3 Systems Design: Job-Order Costing Chapter 4
Process Costing
Chapter 5 Activity-Based Costing
Chapter 6 Cost Behaviour: Analysis and Use
Chapter 7 Budgeting
Chapter 8 Cost-Volume-Profit Relationships
Chapter 9 Relevant Costs: The Key to Decision Making Chapter 10
Capital Budgeting Decisions
Chapter 11 Standard Costs and Variance Analysis
Chapter 12 Organizational Structure and Performance Measurement Chapter 13
“How Well Am I Doing?” – Financial Statement Analysis Chapter 14 “How Well
Am I Doing?” – Cash Flow Statement
2 Introduction to Manage
,Solution Manual For
Introduction To Managerial Accounting 7CE Peter C. Brewer, Ray H. Garrison, Eric
Noreen, Suresh Kalagnanam, Ganesh Vaidyanathan
Chapter 1
An Introduction To Managerial Accounting
Solutions To Questions
1-1 Managerial Accounting Is Concerned With Providing Information Primarily To Managers For Their
Use Internally In The Organization For The Purposes Of Strategy, Planning, Implementation And
Control. Financial Accounting Is Concerned With Providing Information Primarily To Investors,
Creditors, And Others Outside Of The Organization.
1-2 Essentially, The Manager Carries Out Three Major Activities In An Organization: Planning,
Implementation, And Control. All Three Activities Involve Decision- Making And Use Managerial
Accounting Information. This Is Depicted In Exhibit 1-
1.
1-3 The Planning, Implementation And Control Cycle Involves The Following Steps: (1) Formulati
Plans Which Often Includes Preparing Budgets, (2) Overseeing Day-To- Day Activities Which Includ
Organizing, Directing And Motivating People,
Resource Allocation And Decision Making, And (3) Controlling Which Includes Providing
Feedback Via Performance Reports.
1-4 In Contrast To Financial Accounting, Managerial Accounting: (1) Focuses On The Needs Of The
Manager; (2) Places More Emphasis On The Future; (3) Emphasizes Relevance And Timeliness,
Rather Than Verifiability And Precision; (4) Emphasizes The Segments Of An Organization; (5) Is
Not Governed By IFRS Or ASPE; And (6) Is Not Mandatory.
1-5 The Lean Business Model Focuses On Continuous Improvement By Eliminating Waste In The
Organization. Companies That Adopt The Lean Business Model Usually Implement One Or
More Of The Following Management Practices.
• Just-In-Time (JIT): A Production And Inventory Control System In Which Materials Are
Purchased And Units Are Produced Only As Needed To Meet Actual Customer Demand.
• Total Quality Management (TQM): An Approach To Continuous
Improvement That Focuses On Serving Customers And Uses Teams Of Front-
Line Workers To Systematically Identify And Solve Problems.
• Process Re-Engineering: An Approach To Improvement That
Solutions Manual, Chapter 2 3
, Involves Completely Redesigning Business Processes In Order To
Eliminate Unnecessary Steps, Reduce Errors, And Reduce Costs.
• Theory Of Constraints (TOC): A Management Approach That
Emphasizes The Importance Of Managing Constraints.
1-6 Benefits
• Improves Operational Processes That Makes The Business Efficient
• It Leads To Reduction Or Elimination Of Waste
• It Improves Profitability And Reduces Costs
• It Reduces The Turnaround Time To Fulfill Customer Orders
Improving Customer Satisfaction
Limitations
Production Schedule Can Get Hampered If Any External Shocks Lead To
Supply Chain Disturbance
Lean Processes Must Be Complimented With Agile Processes To Adapt
Swiftly To Changing Customer Needs.
1-7 Pros
Funds Tied Up In Maintaining Inventory Can Be Used Elsewhere Areas
Previously Used To Store Inventories Are Made Available For Other More
Productive Uses
The Time Required To Fill An Order Is Reduced, Resulting In Quicker
Response To Customers And Consequentially Greater Potential Sales Defect
Rates Are Reduced Resulting In Less Waste And Greater Customer
Satisfaction
More Effective Operations
Cons
Increased Number Of Purchase Orders To Buy Raw Materials And/Or
Components Used In Manufacturing Products
There Is Little Room For Errors And Defects In Products Because This Could
Throw The Production Facility Off Schedule
There Is A High Reliance And Dependence On Suppliers To Meet Delivery
Deadlines As Well As Supply Products That Have No Defects And Require
1-8 Agree. Ethical Behaviour Is The Foundation Of A Successful Market Economy. If We
Cannot Trust People To Act Ethically In Their Business Dealings With Us, We Will Be
Inclined To Invest Less, Scrutinize More And Waste Money And Time (Scarce Resources)
Trying To Protect Ourselves. Ethical Standards And Codes Of Conduct
© The Mcgraw-Hill Companies, Inc., 2002. All Rights Reserved.
4 Introduction to Manage
Introduction to Managerial Accounting
Author: Ganesh Vaidyanathan Peter C. Brewer, Ray H. Garrison
7th Canadian Edition
Solutions Manual, Chapter 2 1
,TABLE OF CONTENT:
Chapter 1 An Introduction to Managerial Accounting
Chapter 2 Cost Concepts
Chapter 3 Systems Design: Job-Order Costing Chapter 4
Process Costing
Chapter 5 Activity-Based Costing
Chapter 6 Cost Behaviour: Analysis and Use
Chapter 7 Budgeting
Chapter 8 Cost-Volume-Profit Relationships
Chapter 9 Relevant Costs: The Key to Decision Making Chapter 10
Capital Budgeting Decisions
Chapter 11 Standard Costs and Variance Analysis
Chapter 12 Organizational Structure and Performance Measurement Chapter 13
“How Well Am I Doing?” – Financial Statement Analysis Chapter 14 “How Well
Am I Doing?” – Cash Flow Statement
2 Introduction to Manage
,Solution Manual For
Introduction To Managerial Accounting 7CE Peter C. Brewer, Ray H. Garrison, Eric
Noreen, Suresh Kalagnanam, Ganesh Vaidyanathan
Chapter 1
An Introduction To Managerial Accounting
Solutions To Questions
1-1 Managerial Accounting Is Concerned With Providing Information Primarily To Managers For Their
Use Internally In The Organization For The Purposes Of Strategy, Planning, Implementation And
Control. Financial Accounting Is Concerned With Providing Information Primarily To Investors,
Creditors, And Others Outside Of The Organization.
1-2 Essentially, The Manager Carries Out Three Major Activities In An Organization: Planning,
Implementation, And Control. All Three Activities Involve Decision- Making And Use Managerial
Accounting Information. This Is Depicted In Exhibit 1-
1.
1-3 The Planning, Implementation And Control Cycle Involves The Following Steps: (1) Formulati
Plans Which Often Includes Preparing Budgets, (2) Overseeing Day-To- Day Activities Which Includ
Organizing, Directing And Motivating People,
Resource Allocation And Decision Making, And (3) Controlling Which Includes Providing
Feedback Via Performance Reports.
1-4 In Contrast To Financial Accounting, Managerial Accounting: (1) Focuses On The Needs Of The
Manager; (2) Places More Emphasis On The Future; (3) Emphasizes Relevance And Timeliness,
Rather Than Verifiability And Precision; (4) Emphasizes The Segments Of An Organization; (5) Is
Not Governed By IFRS Or ASPE; And (6) Is Not Mandatory.
1-5 The Lean Business Model Focuses On Continuous Improvement By Eliminating Waste In The
Organization. Companies That Adopt The Lean Business Model Usually Implement One Or
More Of The Following Management Practices.
• Just-In-Time (JIT): A Production And Inventory Control System In Which Materials Are
Purchased And Units Are Produced Only As Needed To Meet Actual Customer Demand.
• Total Quality Management (TQM): An Approach To Continuous
Improvement That Focuses On Serving Customers And Uses Teams Of Front-
Line Workers To Systematically Identify And Solve Problems.
• Process Re-Engineering: An Approach To Improvement That
Solutions Manual, Chapter 2 3
, Involves Completely Redesigning Business Processes In Order To
Eliminate Unnecessary Steps, Reduce Errors, And Reduce Costs.
• Theory Of Constraints (TOC): A Management Approach That
Emphasizes The Importance Of Managing Constraints.
1-6 Benefits
• Improves Operational Processes That Makes The Business Efficient
• It Leads To Reduction Or Elimination Of Waste
• It Improves Profitability And Reduces Costs
• It Reduces The Turnaround Time To Fulfill Customer Orders
Improving Customer Satisfaction
Limitations
Production Schedule Can Get Hampered If Any External Shocks Lead To
Supply Chain Disturbance
Lean Processes Must Be Complimented With Agile Processes To Adapt
Swiftly To Changing Customer Needs.
1-7 Pros
Funds Tied Up In Maintaining Inventory Can Be Used Elsewhere Areas
Previously Used To Store Inventories Are Made Available For Other More
Productive Uses
The Time Required To Fill An Order Is Reduced, Resulting In Quicker
Response To Customers And Consequentially Greater Potential Sales Defect
Rates Are Reduced Resulting In Less Waste And Greater Customer
Satisfaction
More Effective Operations
Cons
Increased Number Of Purchase Orders To Buy Raw Materials And/Or
Components Used In Manufacturing Products
There Is Little Room For Errors And Defects In Products Because This Could
Throw The Production Facility Off Schedule
There Is A High Reliance And Dependence On Suppliers To Meet Delivery
Deadlines As Well As Supply Products That Have No Defects And Require
1-8 Agree. Ethical Behaviour Is The Foundation Of A Successful Market Economy. If We
Cannot Trust People To Act Ethically In Their Business Dealings With Us, We Will Be
Inclined To Invest Less, Scrutinize More And Waste Money And Time (Scarce Resources)
Trying To Protect Ourselves. Ethical Standards And Codes Of Conduct
© The Mcgraw-Hill Companies, Inc., 2002. All Rights Reserved.
4 Introduction to Manage
