Solution Manual for Horngren’s Accounting, 13th Edition by Tracie Miller-Nobles & Brenda Mattison

g

,THE MANAGERIAL CHAPTERS
g g




1. Introduction to Managerial Accounting
g g g




2. Job Order Costing
g g




3. Process Costingg




4. Cost-Volume-Profit Analysis g




5. Master Budgets
g




6. Flexible Budgets and Standard Cost Systems
g g g g g




7. Cost Allocation and Responsibility Accounting
g g g g




8. Short-Term Business Decisions
g g




9. Capital Investment Decisions
g g

,Chapter1 g



Introductionto Managerial Accounting g g




Review Questions g




1. The primary purpose of managerial accounting is to provide information to help
g g g g g g g g g g g


managers plan, direct, control, and make decisions.
g g g g g g




2. Financial accounting and managerial accounting differ on the following 6 dimensions: (1)
g g g g g g g g g g g


primary
g users, (2) purpose of information, (3) focus and time dimension of the
g g g g g g g g g g g


information, (4) rules and restrictions, (5) scope of information, and (6) behavioral.
g g g g g g g g g g g g




3. Line positions are directly involved in providing goods or services to customers. Staff
g g g g g g g g g g g g


positions support line positions.
g g g




4. Planning means choosing goals and deciding how to achieve them. Directing involves running the
g g g g g g g g g g g g g


day- to-day operations of a business. Controlling is the process of monitoring operations and
g g g g g g g g g g g g g g


keepingthe
g company on track. g g g g




5. The four IMA standards of ethical practice and a description of each follow.
g g g g g g g g g g g g



I. Competence.
Maintain an appropriate level of professional leadership and expertise by
g g g g g g g g g


enhancing knowledge and skills.
g g g


Perform professional duties in accordance with relevant laws, regulations, and
g g g g g g g g g


technical standards.
g


Provide decision support information and recommendations that are accurate, clear,
g g g g g g g g g


concise, and timely.
g g


Recognise and help mange risk. g g g g


II. Confidentiality.
Keep information confidential except when disclosure is authorized or legally required.
g g g g g g g g g g


Inform all relevant parties regarding appropriate use of confidential information.
g g g g g g g g g


Monitor to ensure compliance.
g g g


Refrain from using confidential information for unethical or illegal advantage.
g g g g g g g g g


III. Integrity.
Mitigate actual conflicts of interest. Regularly communicate with business associates to avoid
g g g g g g g g g g g


apparent conflicts of interest. Advise all parties of any potential conflicts.
g g g g g g g g g g


Refrain from engaging in any conduct that would prejudice carrying out duties ethically.
g g g g g g g g g g g g

, Abstain from engaging in or supporting any activity that might discredit the profession.
g g g g g g g g g g g g


gContribute to a positive ethical culture and place integrity of the profession above
g g g g g g g g g g g g


gpersonal interest.
5, cont.
g


IV. Credibility.
Communicate information fairly and objectively. g g g g


Provide all relevant information that could reasonably be expected to influence an
g g g g g g g g g g g


intended user’s understanding of the reports, analyses, or recommendations.
g g g g g g g g


Report any delays or deficiencies in information, timeliness, processing, or internal
g g g g g g g g g g


controlsin conformance with organization policy and/or applicable law.
g g g g g g g


Communicate any professional limitations or other constraints that would preclude responsi- g g g g g g g g g g


ble judgment or successful performance of an activity.
g g g g g g g g




6. Service companies sell time, skills, and knowledge. Examples of service companies include
g g g g g g g g g g g


phone service companies, banks, cleaning service companies, accounting firms, law firms,
g g g g g g g g g g g


medical physicians, and online auction services.
g g g g g g g




7. Merchandising companies resell products they buy from suppliers. Merchandisers keep an
g g g g g g g g g g


inventoryof
g products, and managers are accountable for the purchasing, storage, and sale of g g g g g g g g g g g


the products. Examples of merchandising companies include toy stores, grocery stores, and
g g g g g g g g g g g


clothing stores.
g g




8. Merchandising companies resell products they previously bought from suppliers, whereas
g g g g g g g g g


manufacturing companies use labor, equipment, supplies, and facilities to convert raw
g g g g g g g g g g g


materials into new finished products. In contrast to merchandising companies, manufacturing
g g g g g g g g g g


companies have a broad range of production activities that require tracking costs on three
g g g g g g g g g g g g g g


kinds of inventory.
g g g




9. The three inventory accounts used by manufacturing companies are Raw Materials Inventory,
g g g g g g g g g g g


Work-in- Process Inventory, and Finished Goods Inventory.
g g g g g g




Raw Materials Inventory includes materials used to manufacture a product. Work-in-
g g g g g g g g g g


ProcessInventory includes goods that have been started in the manufacturing process but are
g g g g g g g g g g g g g


not yet complete. Finished Goods Inventory includes completed goods that have not yet
g g g g g g g g g g g g g


been sold.
g g




10. A direct cost is a cost that can be easily and cost-effectively traced to a cost object (which is
g g g g g g g g g g g g g g g g g g


anything for which managers want a separate measurement of cost). An indirect cost is a
g g g g g g g g g g g g g g


cost thatcannot be easily or cost-effectively traced to a cost object.
g g g g g g g g g g




11. The three manufacturing costs for a manufacturing company are direct materials, direct labor,
g g g g g g g g g g g g


and manufacturing overhead. Direct materials are materials that become a physical part of a
g g g g g g g g g g g g g


finished product and whose costs are easily traceable to the finished product. Direct labor
g g g g g g g g g g g g


is the labor cost of the employees who convert materials into finished products. Manufacturing
g g g g g g g g g g g g g


overhead includes all manufacturing costs except direct materials and direct labor, such as
g g g g g g g g g g g g


indirect materials, indirect labor, factory depreciation, factory rent, and factory property
g g g g g g g g g g


taxes.
g