SOLUTION MANUAL
Horngren's Accounting, The Managerial Chapters, 14th Edition
By Tracie Miller-Nobles Brenda Mattison, All Chapters 1 - 9
,Table of contents
1. Introduction to Managerial Accounting
2. Job Order Costing
3. Process Costing
4. Cost-Volume-Profit Analysis
5. Master Budgets
6. Flexible Budgets and Standard Cost Systems
7. Cost Allocation and Responsibility Accounting
8. Short-Term Business Decisions
9. Capital Investment Decisions
,Chapter M:1
Introduction to Managerial Accounting
Review Questions
1. What is the primary purpose of managerial accounting?
The primary purpose of managerial accounting is to provide information to help managers plan,
direct, control, and make decisions.
2. List six differences between financial accounting and managerial accounting.
Financial accounting and managerial accounting differ on the following 6 dimensions: (1) primary
users, (2) purpose of information, (3) focus and time dimension of the information, (4) rules and re-
strictions, (5) scope of information, and (6) behavioral.
3. Explain the difference between line positions and staff positions.
Line positions are directly involved in providing goods or services to customers. Staff positions
support line positions.
4. Explain the differences between planning, directing, and controlling.
Planning means choosing goals and deciding how to achieve them. Directing involves running the day-
to-day operations of a business. Controlling is the process of monitoring operations and keeping the
company on track.
5. List the four IMA standards of ethical practice and briefly describe each.
The four IMA standards of ethical practice and a description of each follow.
I. Competence.
Maintain an appropriate level of professional leadership and expertise by enhancing
knowledge and skills.
Perform professional duties in accordance with relevant laws, regulations, and technical
standards.
Provide decision support information and recommendations that are accurate, clear, concise,
, and timely.
Recognise and help mange risk.
II. Confidentiality.
Keep information confidential except when disclosure is authorized or legally required.
Inform all relevant parties regarding appropriate use of confidential information. Monitor to
ensure compliance.
Refrain from using confidential information for unethical or illegal advantage.
III. Integrity.
Mitigate actual conflicts of interest. Regularly communicate with business associates to avoid
apparent conflicts of interest. Advise all parties of any potential conflicts.
Refrain from engaging in any conduct that would prejudice carrying out duties ethically.
Abstain from engaging in or supporting any activity that might discredit the profession.
Contribute to a positive ethical culture and place integrity of the profession above personal
interest.
5, cont.
IV. Credibility.
Communicate ainformation afairly aand aobjectively.
Provide aall arelevant ainformation athat acould areasonably abe aexpected ato ainfluence aan
aintendedauser’s aunderstanding aof athe areports, aanalyses, aor arecommendations.
Report aany adelays aor adeficiencies ain ainformation, atimeliness, aprocessing, aor ainternal
acontrolsain aconformance awith aorganization apolicy aand/or aapplicable alaw.
Communicate aany aprofessional alimitations aor aother aconstraints athat awould apreclude
aresponsi-able ajudgment aor asuccessful aperformance aof aan aactivity.
6. Describe aa aservice acompany aand agive aan aexample.
Service acompanies asell atime, askills, aand aknowledge. aExamples aof aservice acompanies ainclude
aphone aservice acompanies, abanks, acleaning aservice acompanies, aaccounting afirms, alaw afirms,
amedical aphysi-acians, aand aonline aauction aservices.
7. Describe aa amerchandising acompany aand agive aan aexample.
Merchandising acompanies aresell aproducts athey abuy afrom asuppliers. aMerchandisers akeep aan
ainventoryaof aproducts, aand amanagers aare aaccountable afor athe apurchasing, astorage, aand asale aof athe
aproducts. aEx- aamples aof amerchandising acompanies ainclude atoy astores, agrocery astores, aand aclothing
astores.
8. How ado amanufacturing acompanies adiffer afrom amerchandising acompanies?
Merchandising acompanies aresell aproducts athey apreviously abought afrom asuppliers, awhereas amanufac-
aturing acompanies ause alabor, aequipment, asupplies, aand afacilities ato aconvert araw amaterials ainto anew
afin-aished aproducts. aIn acontrast ato amerchandising acompanies, amanufacturing acompanies ahave aa
abroad arange aof aproduction aactivities athat arequire atracking acosts aon athree akinds aof ainventory.
Horngren's Accounting, The Managerial Chapters, 14th Edition
By Tracie Miller-Nobles Brenda Mattison, All Chapters 1 - 9
,Table of contents
1. Introduction to Managerial Accounting
2. Job Order Costing
3. Process Costing
4. Cost-Volume-Profit Analysis
5. Master Budgets
6. Flexible Budgets and Standard Cost Systems
7. Cost Allocation and Responsibility Accounting
8. Short-Term Business Decisions
9. Capital Investment Decisions
,Chapter M:1
Introduction to Managerial Accounting
Review Questions
1. What is the primary purpose of managerial accounting?
The primary purpose of managerial accounting is to provide information to help managers plan,
direct, control, and make decisions.
2. List six differences between financial accounting and managerial accounting.
Financial accounting and managerial accounting differ on the following 6 dimensions: (1) primary
users, (2) purpose of information, (3) focus and time dimension of the information, (4) rules and re-
strictions, (5) scope of information, and (6) behavioral.
3. Explain the difference between line positions and staff positions.
Line positions are directly involved in providing goods or services to customers. Staff positions
support line positions.
4. Explain the differences between planning, directing, and controlling.
Planning means choosing goals and deciding how to achieve them. Directing involves running the day-
to-day operations of a business. Controlling is the process of monitoring operations and keeping the
company on track.
5. List the four IMA standards of ethical practice and briefly describe each.
The four IMA standards of ethical practice and a description of each follow.
I. Competence.
Maintain an appropriate level of professional leadership and expertise by enhancing
knowledge and skills.
Perform professional duties in accordance with relevant laws, regulations, and technical
standards.
Provide decision support information and recommendations that are accurate, clear, concise,
, and timely.
Recognise and help mange risk.
II. Confidentiality.
Keep information confidential except when disclosure is authorized or legally required.
Inform all relevant parties regarding appropriate use of confidential information. Monitor to
ensure compliance.
Refrain from using confidential information for unethical or illegal advantage.
III. Integrity.
Mitigate actual conflicts of interest. Regularly communicate with business associates to avoid
apparent conflicts of interest. Advise all parties of any potential conflicts.
Refrain from engaging in any conduct that would prejudice carrying out duties ethically.
Abstain from engaging in or supporting any activity that might discredit the profession.
Contribute to a positive ethical culture and place integrity of the profession above personal
interest.
5, cont.
IV. Credibility.
Communicate ainformation afairly aand aobjectively.
Provide aall arelevant ainformation athat acould areasonably abe aexpected ato ainfluence aan
aintendedauser’s aunderstanding aof athe areports, aanalyses, aor arecommendations.
Report aany adelays aor adeficiencies ain ainformation, atimeliness, aprocessing, aor ainternal
acontrolsain aconformance awith aorganization apolicy aand/or aapplicable alaw.
Communicate aany aprofessional alimitations aor aother aconstraints athat awould apreclude
aresponsi-able ajudgment aor asuccessful aperformance aof aan aactivity.
6. Describe aa aservice acompany aand agive aan aexample.
Service acompanies asell atime, askills, aand aknowledge. aExamples aof aservice acompanies ainclude
aphone aservice acompanies, abanks, acleaning aservice acompanies, aaccounting afirms, alaw afirms,
amedical aphysi-acians, aand aonline aauction aservices.
7. Describe aa amerchandising acompany aand agive aan aexample.
Merchandising acompanies aresell aproducts athey abuy afrom asuppliers. aMerchandisers akeep aan
ainventoryaof aproducts, aand amanagers aare aaccountable afor athe apurchasing, astorage, aand asale aof athe
aproducts. aEx- aamples aof amerchandising acompanies ainclude atoy astores, agrocery astores, aand aclothing
astores.
8. How ado amanufacturing acompanies adiffer afrom amerchandising acompanies?
Merchandising acompanies aresell aproducts athey apreviously abought afrom asuppliers, awhereas amanufac-
aturing acompanies ause alabor, aequipment, asupplies, aand afacilities ato aconvert araw amaterials ainto anew
afin-aished aproducts. aIn acontrast ato amerchandising acompanies, amanufacturing acompanies ahave aa
abroad arange aof aproduction aactivities athat arequire atracking acosts aon athree akinds aof ainventory.
