Managerial Accounting Tools for Business Decision Making
SOLUTION MANUAL
Managerial Accounting Tools for Business Decision Making
9th Edition by Jerry J. Weygandt, Paul D. Kimmel
Chapters 1 - 14, Complete
,TABLE OF CONTENTS
Chapter 1: Managerial Accounting
Chapter 2: Job Order Costing
Chapter 2A: Job Order Costing: Non-Debit and Credit Approach
Chapter 3: Process Costing
Chapter 3A: Process Costing: Non-Debit and Credit Approach
Chapter 4: Activity-Based Costing
Chapter 5: Cost-Volume-Profit
Chapter 6: Cost-Volume-Profit Analysis: Additional Issues
Chapter 7: Incremental Analysis
Chapter 8: Pricing
Chapter 9: Budgetary Planning
Chapter 10: Budgetary Control and Responsibility Accounting
Chapter 11: Standard Costs and Balanced Scorecard
Chapter 12: Planning for Capital Investments
Chapter 13: Statement of Cash Flows
Chapter 14: Financial Analysis
, Managerial Accounting Tools for Business Decision Making
CHAPTER 1
Managerial Accounting
Learning Objectives
1. Identify the features of managerial accounting and the functions of management.
2. Describe the classes of manufacturing costs and the differences between product and
periodcosts.
3. Demonstrate how to compute cost of goods manufactured and prepare financial statements for
amanufacturer.
4. Discuss trends in managerial accounting.
ANSWERS TO QUESTIONS
1. (a) Not true. Managerial accounting is a field of accounting that provides economic and financial
information for managers and other internal users.
(b) Joe is incorrect. Managerial accounting applies to all types of businesses—service,
merchandising, and manufacturing.
LO1 BT: C Difficulty: Easy TOT: 3 min. AACSB: None AICPA FC: Measurement, Analysis and Interpretation IMA: Cost Management
2. (a) Financial accounting is concerned primarily with external users such as stockholders,
creditors, and regulators. In contrast, managerial accounting is concerned primarily with
internal users such as officers and managers.
(b) Financial statements are the end product of financial accounting. These statements are
prepared quarterly and annually. In managerial accounting, internal reports may be
prepared as frequently as needed.
(c) The purpose of financial accounting is to provide general-purpose information for external
users. The purpose of managerial accounting is to provide special-purpose information for
specific internal decisions.
LO1 BT: C Difficulty: Easy TOT: 5 min. AACSB: None AICPA FC: Measurement, Analysis and Interpretation IMA: Cost Management
3. Differences in the content of the reports are as follows:
Financial Managerial
• Pertains to business as a whole and is • Pertains to subunits of the business and
highly aggregated. may be very detailed.
• Limited to accrual accounting and cost data. • Extends beyond accrual accounting
• Generally accepted accounting principles. system to any relevant data.
, • Standard is relevance to decisions.
In financial accounting, financial statements are verified annually through an independent
audit by certified public accountants. There are no independent audits of internal reports
prepared by managerial accountants.
LO1 BT: C Difficulty: Easy TOT: 5 min. AACSB: None AICPA FC: Measurement, Analysis and Interpretation IMA: Cost Management
4. Linda should know that the management of an organization performs three broad functions:
(1) Planning requires management to look ahead and to establish objectives.
(2) Directing involves coordinating the diverse activities and human resources of a company to
produce a smooth-running operation.
(3) Controlling is the process of keeping the company’s activities on track.
LO1 BT: C Difficulty: Easy TOT: 3 min. AACSB: None AICPA FC: Measurement, Analysis and Interpretation IMA: Cost Management
5. Not true. Decision-making is not a separate management function. Rather, decision-making
involves the exercise of good judgment in performing the three management functions
explained in the answer to question four above.
LO1 BT: C Difficulty: Easy TOT: 2 min. AACSB: None AICPA FC: Measurement, Analysis and Interpretation IMA: Cost Management
6. Employees with line positions are directly involved in the company’s primary revenue generating
operating activities. Examples would include factory managers and supervisors, and the vice
president of operations. In contrast, employees with staff positions are not directly involved in
revenue-generating operating activities, but rather serve in a support capacity to line employees.
Examples include employees in finance, legal, and human resources.
LO1 BT: C Difficulty: Easy TOT: 3 min. AACSB: None AICPA FC: Measurement, Analysis and Interpretation IMA: Cost Management
Questions Chapter 1 (Continued)
7. The difference in balance sheets pertains to the presentation of inventories in the current asset
section. In a merchandising company, only inventory is shown. In a manufacturing company,
three inventory accounts are shown: finished goods, work in process, and raw materials.
LO3 BT: C Difficulty: Easy TOT: 2 min. AACSB: None AICPA FC: Measurement, Analysis and Interpretation IMA: Cost management
8. Manufacturing costs are classified as either direct materials, direct labor, or manufacturing
overhead.
LO2 BT: C Difficulty: Easy TOT: 1 min. AACSB: None AICPA FC: Measurement, Analysis and Interpretation IMA: Cost management
9. No, Mel is not correct. The distinction between direct and indirect materials is based on two criteria:
(1) physical association and (2) the convenience of making the physical association. Materials
which cannot be easily associated with the finished product are considered indirect materials.
LO2 BT: C Difficulty: Easy TOT: 2 min. AACSB: None AICPA FC: Measurement, Analysis and Interpretation IMA: Cost management
10. Product costs, or inventoriable costs, are costs that are a necessary and integral part of
producing the finished product, they are classified as manufacturing costs. Period costs are costs
that are identified with a specific time period rather than with a salable product. These costs
relate to nonmanufacturing activities and therefore are not inventoriable costs, they are
expensedas incurred.
LO2 BT: K Difficulty: Easy TOT: 2 min. AACSB: None AICPA FC: Measurement, Analysis and Interpretation IMA: Cost management
11. A merchandising company that uses the periodic inventory system reports beginning inventory,
cost of goods purchased, and ending inventory in the cost of goods section of the income
statement. A manufacturing company reports beginning finished goods inventory, cost of goods
manufactured, and ending finished goods inventory in its determination of cost of goods sold.
LO3 BT: C Difficulty: Easy TOT: 5 min. AACSB: None AICPA FC: Measurement, Analysis and Interpretation IMA: Cost management
12. (a) X = total cost of work in process.
SOLUTION MANUAL
Managerial Accounting Tools for Business Decision Making
9th Edition by Jerry J. Weygandt, Paul D. Kimmel
Chapters 1 - 14, Complete
,TABLE OF CONTENTS
Chapter 1: Managerial Accounting
Chapter 2: Job Order Costing
Chapter 2A: Job Order Costing: Non-Debit and Credit Approach
Chapter 3: Process Costing
Chapter 3A: Process Costing: Non-Debit and Credit Approach
Chapter 4: Activity-Based Costing
Chapter 5: Cost-Volume-Profit
Chapter 6: Cost-Volume-Profit Analysis: Additional Issues
Chapter 7: Incremental Analysis
Chapter 8: Pricing
Chapter 9: Budgetary Planning
Chapter 10: Budgetary Control and Responsibility Accounting
Chapter 11: Standard Costs and Balanced Scorecard
Chapter 12: Planning for Capital Investments
Chapter 13: Statement of Cash Flows
Chapter 14: Financial Analysis
, Managerial Accounting Tools for Business Decision Making
CHAPTER 1
Managerial Accounting
Learning Objectives
1. Identify the features of managerial accounting and the functions of management.
2. Describe the classes of manufacturing costs and the differences between product and
periodcosts.
3. Demonstrate how to compute cost of goods manufactured and prepare financial statements for
amanufacturer.
4. Discuss trends in managerial accounting.
ANSWERS TO QUESTIONS
1. (a) Not true. Managerial accounting is a field of accounting that provides economic and financial
information for managers and other internal users.
(b) Joe is incorrect. Managerial accounting applies to all types of businesses—service,
merchandising, and manufacturing.
LO1 BT: C Difficulty: Easy TOT: 3 min. AACSB: None AICPA FC: Measurement, Analysis and Interpretation IMA: Cost Management
2. (a) Financial accounting is concerned primarily with external users such as stockholders,
creditors, and regulators. In contrast, managerial accounting is concerned primarily with
internal users such as officers and managers.
(b) Financial statements are the end product of financial accounting. These statements are
prepared quarterly and annually. In managerial accounting, internal reports may be
prepared as frequently as needed.
(c) The purpose of financial accounting is to provide general-purpose information for external
users. The purpose of managerial accounting is to provide special-purpose information for
specific internal decisions.
LO1 BT: C Difficulty: Easy TOT: 5 min. AACSB: None AICPA FC: Measurement, Analysis and Interpretation IMA: Cost Management
3. Differences in the content of the reports are as follows:
Financial Managerial
• Pertains to business as a whole and is • Pertains to subunits of the business and
highly aggregated. may be very detailed.
• Limited to accrual accounting and cost data. • Extends beyond accrual accounting
• Generally accepted accounting principles. system to any relevant data.
, • Standard is relevance to decisions.
In financial accounting, financial statements are verified annually through an independent
audit by certified public accountants. There are no independent audits of internal reports
prepared by managerial accountants.
LO1 BT: C Difficulty: Easy TOT: 5 min. AACSB: None AICPA FC: Measurement, Analysis and Interpretation IMA: Cost Management
4. Linda should know that the management of an organization performs three broad functions:
(1) Planning requires management to look ahead and to establish objectives.
(2) Directing involves coordinating the diverse activities and human resources of a company to
produce a smooth-running operation.
(3) Controlling is the process of keeping the company’s activities on track.
LO1 BT: C Difficulty: Easy TOT: 3 min. AACSB: None AICPA FC: Measurement, Analysis and Interpretation IMA: Cost Management
5. Not true. Decision-making is not a separate management function. Rather, decision-making
involves the exercise of good judgment in performing the three management functions
explained in the answer to question four above.
LO1 BT: C Difficulty: Easy TOT: 2 min. AACSB: None AICPA FC: Measurement, Analysis and Interpretation IMA: Cost Management
6. Employees with line positions are directly involved in the company’s primary revenue generating
operating activities. Examples would include factory managers and supervisors, and the vice
president of operations. In contrast, employees with staff positions are not directly involved in
revenue-generating operating activities, but rather serve in a support capacity to line employees.
Examples include employees in finance, legal, and human resources.
LO1 BT: C Difficulty: Easy TOT: 3 min. AACSB: None AICPA FC: Measurement, Analysis and Interpretation IMA: Cost Management
Questions Chapter 1 (Continued)
7. The difference in balance sheets pertains to the presentation of inventories in the current asset
section. In a merchandising company, only inventory is shown. In a manufacturing company,
three inventory accounts are shown: finished goods, work in process, and raw materials.
LO3 BT: C Difficulty: Easy TOT: 2 min. AACSB: None AICPA FC: Measurement, Analysis and Interpretation IMA: Cost management
8. Manufacturing costs are classified as either direct materials, direct labor, or manufacturing
overhead.
LO2 BT: C Difficulty: Easy TOT: 1 min. AACSB: None AICPA FC: Measurement, Analysis and Interpretation IMA: Cost management
9. No, Mel is not correct. The distinction between direct and indirect materials is based on two criteria:
(1) physical association and (2) the convenience of making the physical association. Materials
which cannot be easily associated with the finished product are considered indirect materials.
LO2 BT: C Difficulty: Easy TOT: 2 min. AACSB: None AICPA FC: Measurement, Analysis and Interpretation IMA: Cost management
10. Product costs, or inventoriable costs, are costs that are a necessary and integral part of
producing the finished product, they are classified as manufacturing costs. Period costs are costs
that are identified with a specific time period rather than with a salable product. These costs
relate to nonmanufacturing activities and therefore are not inventoriable costs, they are
expensedas incurred.
LO2 BT: K Difficulty: Easy TOT: 2 min. AACSB: None AICPA FC: Measurement, Analysis and Interpretation IMA: Cost management
11. A merchandising company that uses the periodic inventory system reports beginning inventory,
cost of goods purchased, and ending inventory in the cost of goods section of the income
statement. A manufacturing company reports beginning finished goods inventory, cost of goods
manufactured, and ending finished goods inventory in its determination of cost of goods sold.
LO3 BT: C Difficulty: Easy TOT: 5 min. AACSB: None AICPA FC: Measurement, Analysis and Interpretation IMA: Cost management
12. (a) X = total cost of work in process.
