SOLUTION
MANUAL FOR
FUNDAMENTAL
S OF COST
ACCOUNTING
7TH EDITION
WILLIAM
LANEN A+
© McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw Hill LLC.
,SOLUTION MANUAL FOR FUNDAMENTALS OF COST
ACCOUNTING 7TH EDITION WILLIAM LANEN
1
Cost Accounting: Information for DecisionMaking
SOLUTIONS TO REVIEW QUESTIONS
1-1.
Among the goals of an organization, a central one is to create and increase value. Costaccounting
systems are designed to provide information to decision makers in the organization with the
information they need to accomplish this goal. Therefore, the designers of the cost accounting
system need to understand how value is created in the organization to design systems for their
organization.
1-2.
Financial accounting is designed to provide information about the firm to external users.External
users include investors, creditors, government authorities, regulators, customers, competitors,
suppliers, labor unions, and so on. Cost accounting systems are designed to provide information to
internal users (managers).
This difference is important, because it affects the design of the systems. Financial accounting
systems are based on standards or rules. This allows the user to compare the results of different
firms. Managerial accounting systems do not require rules. Eachfirm is free to develop managerial
accounting systems that best serve the needs of thedecision makers (managers).
1-3.
B Providing cost information for financial reporting A
Identifying the best store in a chain
Solutions Manual, Chapter 4 1
2 Fundamentals of Cost Accounting, 7e
© McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw Hill LLC.
,C Determining which plant to use for production
1-4.
The value chain is the set of activities that transforms raw resources into the goods andservices
end users purchase and consume. The supply chain includes the set of firms and individuals that
sells goods and services to the firm. The distribution chain is the setof firms and individuals that
buys and distributes goods and services from the firm.
1-5.
The customers of cost accounting are managers, from plant managers to the CEO.
1-6.
Value-added activities are activities that customers perceive as adding utility to the goods or
services they purchase. Nonvalue-added activities do not add value to the goods or services. By
classifying costs this way, the cost accounting system can help the manager identify areas
(processes) that can be improved, lowering costs and adding value to the organization.
1-7.
Answers will vary, but should include some of the following:
Title Major Responsibilities and Major Duties
Chief financial officer (CFO) .... Manages entire finance and accounting function
Treasurer................................. Manages liquid assets
Conducts business with banks and other
financial institutions
Oversees public issues of stock and debt
Controller................................. Plans and designs information and incentive
systems
Internal auditor ........................ Ensures compliance with laws, regulations, and
company policies and procedures
Provides consulting and auditing services withinthe
firm
Cost accountant ...................... Records, measures, estimates, and analyzes costs
Works with financial and operational manager to
© McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw Hill LLC.
,
MANUAL FOR
FUNDAMENTAL
S OF COST
ACCOUNTING
7TH EDITION
WILLIAM
LANEN A+
© McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw Hill LLC.
,SOLUTION MANUAL FOR FUNDAMENTALS OF COST
ACCOUNTING 7TH EDITION WILLIAM LANEN
1
Cost Accounting: Information for DecisionMaking
SOLUTIONS TO REVIEW QUESTIONS
1-1.
Among the goals of an organization, a central one is to create and increase value. Costaccounting
systems are designed to provide information to decision makers in the organization with the
information they need to accomplish this goal. Therefore, the designers of the cost accounting
system need to understand how value is created in the organization to design systems for their
organization.
1-2.
Financial accounting is designed to provide information about the firm to external users.External
users include investors, creditors, government authorities, regulators, customers, competitors,
suppliers, labor unions, and so on. Cost accounting systems are designed to provide information to
internal users (managers).
This difference is important, because it affects the design of the systems. Financial accounting
systems are based on standards or rules. This allows the user to compare the results of different
firms. Managerial accounting systems do not require rules. Eachfirm is free to develop managerial
accounting systems that best serve the needs of thedecision makers (managers).
1-3.
B Providing cost information for financial reporting A
Identifying the best store in a chain
Solutions Manual, Chapter 4 1
2 Fundamentals of Cost Accounting, 7e
© McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw Hill LLC.
,C Determining which plant to use for production
1-4.
The value chain is the set of activities that transforms raw resources into the goods andservices
end users purchase and consume. The supply chain includes the set of firms and individuals that
sells goods and services to the firm. The distribution chain is the setof firms and individuals that
buys and distributes goods and services from the firm.
1-5.
The customers of cost accounting are managers, from plant managers to the CEO.
1-6.
Value-added activities are activities that customers perceive as adding utility to the goods or
services they purchase. Nonvalue-added activities do not add value to the goods or services. By
classifying costs this way, the cost accounting system can help the manager identify areas
(processes) that can be improved, lowering costs and adding value to the organization.
1-7.
Answers will vary, but should include some of the following:
Title Major Responsibilities and Major Duties
Chief financial officer (CFO) .... Manages entire finance and accounting function
Treasurer................................. Manages liquid assets
Conducts business with banks and other
financial institutions
Oversees public issues of stock and debt
Controller................................. Plans and designs information and incentive
systems
Internal auditor ........................ Ensures compliance with laws, regulations, and
company policies and procedures
Provides consulting and auditing services withinthe
firm
Cost accountant ...................... Records, measures, estimates, and analyzes costs
Works with financial and operational manager to
© McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw Hill LLC.
,
