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

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Horngren'sAccounting,13thEditionManagerial
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byTracieMiller-Nobles,BrendaMattison,AllChapter1-9
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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 Costingv




4. Cost-Volume-Profit Analysis v




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 v v




9. Capital Investment Decisions
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,Chapter1 v




IntroductiontoManagerialAccounting v v v




Review Questions v v




1. The primary purpose of managerial accounting is to provide information to help managers plan,
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direct, control, and make decisions.
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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
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restrictions, (5) scope of information, and (6) behavioral.
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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 day- to-
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day operations of a business. Controlling is the process of monitoring operations and keepingthe
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company on track.
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5. The four IMA standards of ethical practice and a description of each follow.
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I. Competence.
Maintain an appropriate level of professional leadership and expertise by enhancing v v v v v v v v v v




knowledgeand skills.
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Perform professional duties in accordance with relevant laws, regulations, and technical
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standards. v




Provide decision support information and recommendations that are accurate, clear, concise,
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and timely. v v




Recognise and help mange risk. v v v v




II. Confidentiality.
Keep information confidential except when disclosure is authorized or legally required. Inform
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all relevant parties regarding appropriate use of confidential information. Monitor to ensure
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compliance. v




Refrain from using confidential information for unethical or illegal advantage.
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III. Integrity.
Mitigate actual conflicts of interest. Regularlycommunicate with business associates to avoid
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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.
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, Abstain from engaging in or supporting anyactivity that might discredit the profession.
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Contribute to a positive ethical culture and place integrity of the profession above personal
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vinterest.
5, cont.
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IV. Credibility.
Communicate information fairly and objectively. v v v v




Provide all relevant information that could reasonably be expected to influence an intended
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user’s understanding of the reports, analyses, or recommendations.
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Report any delays or deficiencies in information, timeliness, processing, or internal controlsin
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conformance with organization policy and/or applicable law.
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Communicate any professional limitations or other constraints that would preclude responsi- ble v v v v v v v v v v v




judgment or successful performance of an activity.
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6. Service companies sell time, skills, and knowledge. Examples of service companies include phone service
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companies, banks, cleaning service companies, accounting firms, law firms, medical physicians, and online
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auction services.
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7. Merchandising companies resell products they buy from suppliers. Merchandisers keep an inventoryof
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products, and managers are accountable for the purchasing, storage, and sale of the products. Examples
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of merchandising companies include toy stores, grocery stores, and clothing stores.
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8. Merchandising companies resell products they previously bought from suppliers, whereas v v v v v v v v v




manufacturing companies use labor, equipment, supplies, and facilities to convert raw materials into
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new finished products. In contrast to merchandising companies, manufacturing companies have a
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broad range of production activities that require tracking costs on three kinds of inventory.
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9. The three inventory accounts used by manufacturing companies are Raw Materials Inventory, Work-in-
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Process Inventory, and Finished Goods Inventory.
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Raw Materials Inventory includes materials used to manufacture a product. Work-in-ProcessInventory
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vincludes goods that have been started in the manufacturing process but are not yet complete. Finished
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vGoods Inventory includes completed goods that have not yet been sold.
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10. A direct cost is a cost that can be easily and cost-effectively traced to a cost object (which is anything for
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which managers want a separate measurement of cost). An indirect cost is a cost thatcannot be easily or
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cost-effectively traced to a cost object.
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11. The three manufacturing costs for a manufacturing company are direct materials, direct labor, and
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manufacturing overhead. Direct materials are materials that become a physical part of a finished
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product and whose costs are easily traceable to the finished product. Direct labor is the labor cost of
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the employees who convert materials into finished products. Manufacturing overhead includes all
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manufacturing costs except direct materials and direct labor, such as indirect materials, indirect labor,
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factory depreciation, factory rent, and factory property taxes.
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