SOLUTION MANUAL
2
Horngren's Accounting, 13th Edition Managerial
2 2 2 2
by Tracie Miller-Nobles, Brenda Mattison, AllChapter 1-9
2 2 2 2 2 2 2
,THE MANAGERIAL CHAPTERS
2 2
1. Introduction to Managerial Accounting
2 2 2
2. Job Order Costing
2 2
3. Process Costing 2
4. Cost-Volume-Profit Analysis 2
5. Master Budgets 2
6. Flexible Budgets and Standard Cost Systems
2 2 2 2 2
7. Cost Allocation and Responsibility Accounting
2 2 2 2
8. Short-Term Business Decisions
2 2
9. Capital Investment Decisions
2 2
,Chapter1 2
Introduction to ManagerialAccounting 2 2 2
Review Questions 2
1. The primary purpose of managerial accounting is to provide information to help managers plan,
2 2 2 2 2 2 2 2 2 2 2 2 2
direct, control, and make decisions.
2 2 2 2 2
2. Financial accounting and managerial accounting differ on the following 6 dimensions: (1) primary
2 2 2 2 2 2 2 2 2 2 2 2
users, (2) purpose of information, (3) focus and time dimension of the information, (4) rules and
2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2
restrictions, (5) scope of information, and (6) behavioral.
2 2 2 2 2 2 2 2
3. Line positions are directly involved in providing goods or services to customers. Staff positions
2 2 2 2 2 2 2 2 2 2 2 2 2
support line positions.
2 2 2
4. Planning means choosing goals and deciding how to achieve them. Directing involves running the day-
2 2 2 2 2 2 2 2 2 2 2 2 2 2
to-day operations of a business. Controlling is the process of monitoring operations and keepingthe
2 2 2 2 2 2 2 2 2 2 2 2 2 2
companyon track.
2 2 2
5. The four IMA standards of ethical practice and a description of each follow.
2 2 2 2 2 2 2 2 2 2 2 2
I. Competence.
Maintain an appropriate level of professional leadership and expertise by enhancing 2 2 2 2 2 2 2 2 2 2
knowledge and skills.
2 2 2
Perform professional duties in accordance with relevant laws, regulations, and technical
2 2 2 2 2 2 2 2 2 2
standards. 2
Providedecision support information and recommendations that are accurate, clear, concise,
2 2 2 2 2 2 2 2 2 2
and timely. 2 2
Recognise and help mange risk. 2 2 2 2
II. Confidentiality.
Keep information confidential except when disclosure is authorized or legallyrequired.
2 2 2 2 2 2 2 2 2 2
Inform all relevant parties regardingappropriate use of confidential information. Monitor to
2 2 2 2 2 2 2 2 2 2 2
ensure compliance. 2 2
Refrain from usingconfidential information for unethical or illegal advantage.
2 2 2 2 2 2 2 2 2
III. Integrity.
Mitigate actual conflicts of interest. Regularlycommunicate with business associates to avoid
2 2 2 2 2 2 2 2 2 2 2
apparent conflicts of interest. Advise all parties of anypotential conflicts.
2 2 2 2 22 2 2 2 2 2 2
Refrain from engagingin anyconduct that would prejudice carryingout duties ethically.
2 2 2 2 2 2 2 2 2 2 2 2
, Abstain from engagingin or supporting anyactivitythat might discredit the profession.
2 2 2 2 2 2 2 2 2 2 2 2
Contribute to a positive ethical culture and place integrityof the profession above personal 2 2 2 2 2 2 2 2 2 2 2 2 2
interest.
2
5, cont.
2
IV. Credibility.
Communicate information fairlyand objectively. 2 2 2 2
Provide all relevant information that could reasonablybe expected to influence an intended 2 2 2 2 2 2 2 2 2 2 2 2
user’s understanding of the reports, analyses, or recommendations.
2 2 2 2 2 2 2 2
Report anydelays or deficiencies in information, timeliness, processing, or internal controlsin
2 2 2 2 2 2 2 2 2 2 2 2
conformance with organization policyand/or applicable law.
2 2 2 2 2 2 2
Communicate any professional limitations or other constraints that would preclude responsi- 2 2 2 2 2 2 2 2 2 2
ble judgment or successful performance of an activity.
2 2 2 2 2 2 2 2
6. Service companies sell time, skills, and knowledge. Examples of service companies include phone
2 2 2 2 2 2 2 2 2 2 2 2
service companies, banks, cleaning service companies, accounting firms, law firms, medical
2 2 2 2 2 2 2 2 2 2 2
physicians, and online auction services.
2 2 2 2 2
7. Merchandising companies resell products they buy from suppliers. Merchandisers keep an inventoryof 2 2 2 2 2 2 2 2 2 2 2 2
products, and managers are accountable for the purchasing, storage, and sale of the products. Examples
2 2 2 2 2 2 2 2 2 2 2 2 2 2 2
of merchandising companies include toy stores, grocerystores, and clothing stores.
2 2 2 2 2 2 2 2 2 2 2
8. Merchandising companies resell products they previously bought from suppliers, whereas 2 2 2 2 2 2 2 2 2
manufacturing companies use labor, equipment, supplies, and facilities to convert raw materials into
2 2 2 2 2 2 2 2 2 2 2 2 2
new finished products. In contrast to merchandising companies, manufacturing companies have a
2 2 2 2 2 2 2 2 2 2 2 2
broad range of production activities that require tracking costs on three kinds of inventory.
2 2 2 2 2 2 2 2 2 2 2 2 2 2
9. The three inventory accounts used by manufacturing companies are Raw Materials Inventory, Work-in-
2 2 2 2 2 2 2 2 2 2 2 2 2
Process Inventory, and Finished Goods Inventory.
2 2 2 2 2
Raw Materials Inventory includes materials used to manufacture a product. Work-in-ProcessInventory
2 2 2 2 2 2 2 2 2 2 2
includes goods that have been started in the manufacturing process but are not yet complete. Finished
2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2
Goods Inventoryincludes completed goods that have not yet been sold.
2 2 2 2 2 2 2 2 2 2 2
10. A direct cost is a cost that can be easily and cost-effectively traced to a cost object (which is anything for
2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2
which managers want a separate measurement of cost). An indirect cost is a cost thatcannot be easily
2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2
or cost-effectivelytraced to a cost object.
2 2 2 2 2 2 2
11. The three manufacturing costs for a manufacturing company are direct materials, direct labor, and
2 2 2 2 2 2 2 2 2 2 2 2 2
manufacturing overhead. Direct materials are materials that become a physical part of a finished
2 2 2 2 2 2 2 2 2 2 2 2 2 2
product and whose costs are easilytraceable to the finished product. Direct labor is the labor cost ofthe
2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2
employees who convert materials into finished products. Manufacturing overhead includes all
2 2 2 2 2 2 2 2 2 2 2
2
Horngren's Accounting, 13th Edition Managerial
2 2 2 2
by Tracie Miller-Nobles, Brenda Mattison, AllChapter 1-9
2 2 2 2 2 2 2
,THE MANAGERIAL CHAPTERS
2 2
1. Introduction to Managerial Accounting
2 2 2
2. Job Order Costing
2 2
3. Process Costing 2
4. Cost-Volume-Profit Analysis 2
5. Master Budgets 2
6. Flexible Budgets and Standard Cost Systems
2 2 2 2 2
7. Cost Allocation and Responsibility Accounting
2 2 2 2
8. Short-Term Business Decisions
2 2
9. Capital Investment Decisions
2 2
,Chapter1 2
Introduction to ManagerialAccounting 2 2 2
Review Questions 2
1. The primary purpose of managerial accounting is to provide information to help managers plan,
2 2 2 2 2 2 2 2 2 2 2 2 2
direct, control, and make decisions.
2 2 2 2 2
2. Financial accounting and managerial accounting differ on the following 6 dimensions: (1) primary
2 2 2 2 2 2 2 2 2 2 2 2
users, (2) purpose of information, (3) focus and time dimension of the information, (4) rules and
2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2
restrictions, (5) scope of information, and (6) behavioral.
2 2 2 2 2 2 2 2
3. Line positions are directly involved in providing goods or services to customers. Staff positions
2 2 2 2 2 2 2 2 2 2 2 2 2
support line positions.
2 2 2
4. Planning means choosing goals and deciding how to achieve them. Directing involves running the day-
2 2 2 2 2 2 2 2 2 2 2 2 2 2
to-day operations of a business. Controlling is the process of monitoring operations and keepingthe
2 2 2 2 2 2 2 2 2 2 2 2 2 2
companyon track.
2 2 2
5. The four IMA standards of ethical practice and a description of each follow.
2 2 2 2 2 2 2 2 2 2 2 2
I. Competence.
Maintain an appropriate level of professional leadership and expertise by enhancing 2 2 2 2 2 2 2 2 2 2
knowledge and skills.
2 2 2
Perform professional duties in accordance with relevant laws, regulations, and technical
2 2 2 2 2 2 2 2 2 2
standards. 2
Providedecision support information and recommendations that are accurate, clear, concise,
2 2 2 2 2 2 2 2 2 2
and timely. 2 2
Recognise and help mange risk. 2 2 2 2
II. Confidentiality.
Keep information confidential except when disclosure is authorized or legallyrequired.
2 2 2 2 2 2 2 2 2 2
Inform all relevant parties regardingappropriate use of confidential information. Monitor to
2 2 2 2 2 2 2 2 2 2 2
ensure compliance. 2 2
Refrain from usingconfidential information for unethical or illegal advantage.
2 2 2 2 2 2 2 2 2
III. Integrity.
Mitigate actual conflicts of interest. Regularlycommunicate with business associates to avoid
2 2 2 2 2 2 2 2 2 2 2
apparent conflicts of interest. Advise all parties of anypotential conflicts.
2 2 2 2 22 2 2 2 2 2 2
Refrain from engagingin anyconduct that would prejudice carryingout duties ethically.
2 2 2 2 2 2 2 2 2 2 2 2
, Abstain from engagingin or supporting anyactivitythat might discredit the profession.
2 2 2 2 2 2 2 2 2 2 2 2
Contribute to a positive ethical culture and place integrityof the profession above personal 2 2 2 2 2 2 2 2 2 2 2 2 2
interest.
2
5, cont.
2
IV. Credibility.
Communicate information fairlyand objectively. 2 2 2 2
Provide all relevant information that could reasonablybe expected to influence an intended 2 2 2 2 2 2 2 2 2 2 2 2
user’s understanding of the reports, analyses, or recommendations.
2 2 2 2 2 2 2 2
Report anydelays or deficiencies in information, timeliness, processing, or internal controlsin
2 2 2 2 2 2 2 2 2 2 2 2
conformance with organization policyand/or applicable law.
2 2 2 2 2 2 2
Communicate any professional limitations or other constraints that would preclude responsi- 2 2 2 2 2 2 2 2 2 2
ble judgment or successful performance of an activity.
2 2 2 2 2 2 2 2
6. Service companies sell time, skills, and knowledge. Examples of service companies include phone
2 2 2 2 2 2 2 2 2 2 2 2
service companies, banks, cleaning service companies, accounting firms, law firms, medical
2 2 2 2 2 2 2 2 2 2 2
physicians, and online auction services.
2 2 2 2 2
7. Merchandising companies resell products they buy from suppliers. Merchandisers keep an inventoryof 2 2 2 2 2 2 2 2 2 2 2 2
products, and managers are accountable for the purchasing, storage, and sale of the products. Examples
2 2 2 2 2 2 2 2 2 2 2 2 2 2 2
of merchandising companies include toy stores, grocerystores, and clothing stores.
2 2 2 2 2 2 2 2 2 2 2
8. Merchandising companies resell products they previously bought from suppliers, whereas 2 2 2 2 2 2 2 2 2
manufacturing companies use labor, equipment, supplies, and facilities to convert raw materials into
2 2 2 2 2 2 2 2 2 2 2 2 2
new finished products. In contrast to merchandising companies, manufacturing companies have a
2 2 2 2 2 2 2 2 2 2 2 2
broad range of production activities that require tracking costs on three kinds of inventory.
2 2 2 2 2 2 2 2 2 2 2 2 2 2
9. The three inventory accounts used by manufacturing companies are Raw Materials Inventory, Work-in-
2 2 2 2 2 2 2 2 2 2 2 2 2
Process Inventory, and Finished Goods Inventory.
2 2 2 2 2
Raw Materials Inventory includes materials used to manufacture a product. Work-in-ProcessInventory
2 2 2 2 2 2 2 2 2 2 2
includes goods that have been started in the manufacturing process but are not yet complete. Finished
2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2
Goods Inventoryincludes completed goods that have not yet been sold.
2 2 2 2 2 2 2 2 2 2 2
10. A direct cost is a cost that can be easily and cost-effectively traced to a cost object (which is anything for
2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2
which managers want a separate measurement of cost). An indirect cost is a cost thatcannot be easily
2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2
or cost-effectivelytraced to a cost object.
2 2 2 2 2 2 2
11. The three manufacturing costs for a manufacturing company are direct materials, direct labor, and
2 2 2 2 2 2 2 2 2 2 2 2 2
manufacturing overhead. Direct materials are materials that become a physical part of a finished
2 2 2 2 2 2 2 2 2 2 2 2 2 2
product and whose costs are easilytraceable to the finished product. Direct labor is the labor cost ofthe
2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2
employees who convert materials into finished products. Manufacturing overhead includes all
2 2 2 2 2 2 2 2 2 2 2
