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