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Horngren's Cost Accounting A Managerial Emphasis 3rd Edition By (Australia) Charles Horngren, Srikant Datar, Madhav Rajan, William Maguire, Rebecca Tan (Solution Manual)€15,20
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Horngren's Cost Accounting A Managerial Emphasis, 3e (Australia) Charles Horngren, Srikant Datar, Madhav Rajan, William Maguire, Rebecca Tan (Solution Manual)
Horngren's Cost Accounting A Managerial Emphasis, 3e (Australia) Charles Horngren, Srikant Datar, Madhav Rajan, William Maguire, Rebecca ...
Horngren's Cost
Accounting A Managerial
Emphasis, 3e (Australia)
Charles Horngren,
Srikant Datar, Madhav
Rajan, William Maguire,
Rebecca Tan
(Solutions Manual All
Chapters)
(Download link at the end of
this file)
,Chapter 1
Management accounting in context
Assignment material
Questions
1.1 Explain the way in which cost accounting, management accounting, activity
management and financial reporting are inter-related.
Solution:
Management accounting measures, analyses and reports financial and non-financial
information that helps managers make decisions to achieve an organisation’s goals.
It focuses on internal reporting and is not restricted by Australian generally accepted
accounting practice (GAAP).
Financial accounting focuses on reporting to external parties such as investors,
government agencies and banks. It measures and records business transactions and
provides financial statements that are GAAP-based.
Other differences include (1) management accounting emphasises the future (not the
past) and (2) management accounting influences the behaviour of managers and
other employees (rather than primarily reporting economic events).
1.2 ‘Management accounting should not fit the straitjacket of financial reporting.’
Explain your response to this statement and give an example.
Solution:
While financial accounting is constrained by GAAP, management accounting is not.
The result is that:
management accounting allows managers to charge interest on owners’
capital to help judge a division’s performance, even though such a charge is
not allowed under GAAP
management accounting can include assets or liabilities (such as ‘brand
names’ developed internally) that are not recognised under GAAP
management accounting can use asset or liability measurement rules (such as
present values or resale prices) that are not permitted under GAAP.
1.3 Explain the way in which a management accountant is able to help to form
strategy.
Solution:
Management accountants can help to formulate strategy by providing information
about the sources of competitive advantage—for example, the cost, productivity or
,efficiency advantage of their company relative to competitors or the premium that a
company can charge when it adds features that differentiate its products or services.
1.4 Describe the business functions in the value chain.
Solution:
The business functions in the value chain are:
Research and development—generating and experimenting with ideas
related to new products, services or processes.
Design of products, services and processes—the detailed planning and
engineering of products, services or processes.
Production—acquiring, coordinating and assembling resources to produce a
product or deliver a service.
Marketing (including sales)—promoting and selling products or services to
customers or prospective customers.
Distribution—delivering products or services to customers.
Customer service—providing after-sales support to customers.
1.5 Explain the term ‘supply chain’ and its importance to the management of
activities.
Solution:
Supply chain describes the flow of goods, services and information from the initial
sources of materials and services to the delivery of products to consumers,
regardless of whether those activities occur in the same organisation or in other
organisations.
Cost management focuses on the most effective and efficient use of resources, in
order to make benefit-cost trade-offs. Companies are most effective when they
integrate and coordinate activities across (1) all companies in the supply chain and
(2) all business functions within their own value chain.
1.6 ‘Management accounting deals only with costs.’ Do you agree? Explain your
answer.
Solution:
‘Management accounting deals only with costs.’ This statement is misleading at best
and wrong at worst. Management accounting measures, analyses and reports
financial and non-financial information that helps managers define the organisation’s
goals and make decisions to fulfil them. Management accounting also analyses
revenues from products and customers in order to assess product and customer
profitability. Therefore, while management accounting does use cost information, it is
only a part of the organisation’s information recorded and analysed by management
accountants.
1.7 Explain the way in which management accountants help to improve quality
and to ensure that products are delivered on time.
Solution:
Management accountants can help improve quality and achieve timely product
deliveries by recording and reporting an organisation’s current quality and timeliness
and by analysing and evaluating the costs and benefits—both financial and non-
financial—of new quality initiatives such as TQM, relieving bottleneck constraints or
providing faster customer service.
1.8 Describe the five-step guide to making decisions.
, Solution:
The five-step guide to making decisions is (1) identify the problem; (2) gather
relevant information; (3) identify and evaluate potential courses of action, (4) make
and implement a decision, and (5) evaluate performance and learn.
1.9 Distinguish between planning decisions and control decisions.
Solution:
Planning decisions focus on (a) selecting organisation goals, predicting results under
various alternative ways of achieving those goals, deciding how to attain the goals,
and (b) communicating the goals and how to attain them to the entire organisation.
Control decisions focus on (a) taking actions that implement the planning decisions,
and (b) deciding how to evaluate performance and providing feedback and learning
to help future decision making.
1.10 Describe the three guidelines that help management accountants provide the
most value to managers.
Solution:
The three guidelines for management accountants are:
1. Analyse benefits and costs,
2. Give full recognition to behavioural and technical considerations, and
3. Use different costs for different purposes.
1.11 ‘Knowledge of technical issues such as computer technology is a necessary
but not a sufficient condition to becoming a successful management
accountant.’ Do you agree? Explain your answer.
Solution:
Agree. A successful management accountant requires general business skills (such
as understanding the strategy of an organisation) and people skills (such as
motivating other team members) as well as technical skills (such as computer
knowledge, calculating costs of products, and supporting planning and control
decisions).
1.12 As a new management accountant, reply to this comment by a production
manager: ‘No bean counter knows enough about my responsibilities to be of
any use to me. As I see it, our accountants may be needed to keep records
for shareholders and the Australian Tax Office, but I don’t want them sticking
their noses in my day-to-day operations.’
Solution:
The new management accountant could reply in one or more of the following ways:
a. Demonstrate to the plant manager how he or she could make better decisions
if the management accountant were viewed as a resource rather than
deadweight. In a related way, the plant manager could show how his/her time
and resources could be saved by viewing the new management accountant as
a team member.
b. Demonstrate to the plant manager a good knowledge of the technical aspects
of the plant. This approach may involve doing background reading. It certainly
will involve spending much time on the plant floor speaking to plant
personnel.
c. Show the plant manager examples of the new management accountant’s past
successes in working with line managers in other plants. Examples could
include:
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