Chapter 1 m
An Introduction to Managerial Accountin
m m m m
g
SolutionsmtomQuestions
1-1 Managerial maccountingmismconcernedmwithmprovidingminformationmprimarilymt
ommanagersmformtheirmuseminternallyminmthemorganizationmformthempurposesmofm
strategy,mplanning,mimplementationmandmcontrol.mFinancialmaccountingmismco
ncernedmwithmprovidingminformationmprimarilymtominvestors,mcreditors,mandmo
thersmoutsidemofmthemorganization.
1-2 Essentially,mthemmanagermcarriesmout mthreemmajormactivitiesminmanmorganizati
on:mplanning,mimplementation,mandmcontrol.m Allmthreemactivitiesminvolvemdec
ision-
makingmandmusemmanagerialmaccountingminformation.m ThismismdepictedminmE
xhibit m1-1.
1-3 ThemPlanning,mImplementationmandmControlmCycleminvolvesmthemfollowingm
steps:m(1)mformulatingmplansmwhichmoftenmincludesmpreparingmbudgets,m(2
)moverseeingmday-to-
daymactivitiesmwhichmincludesmorganizing,mdirectingmandmmotivatingmpeopl
e,mresourcemallocationmandmdecisionmmaking,mandm(3)mcontrollingmwhichmin
cludesmprovidingmfeedbackmviamperformancemreports.
1-4 Inmcontrast mtomfinancialmaccounting,mmanagerialmaccounting: m(1)mfocusesmo
nmthemneedsmofmthemmanager;m(2)mplacesmmorememphasismonmthemfuture;m(3)
memphasizesmrelevancemandmtimeliness, mrather mthanmverifiability mandmprecisi
on;m(4)memphasizesmthemsegmentsmofmanmorganization; m(5)mismnot mgoverned
mbymIFRSmor mASPE; mandm(6)mismnot mmandatory.
1-5 Themleanmbusinessmmodelmfocusesmonmcontinuousmimprovement mbymelim
inatingmwasteminmthemorganization.m Companiesmthat madopt mthemleanmbus
inessmmodelmusuallymimplement monemormmoremofmthemfollowingmmanage
ment mpractices.
• Just-in-
time m(JIT):mAmproductionmandminventorymcontrolmsystemminmwhichm
materialsmarempurchasedmandmunitsmaremproducedmonlymas mneededmto
mmeet mactual mcustomer mdemand.
• Totalmqualitymmanagementm(TQM):mAnmapproachmtomcontinuous
mimprovement mthat mfocusesmonmserving mcustomersmandmusesmteamsm
ofmfront-linemworkersmtomsystematicallymidentifymandmsolvemproblems.
• Processmre-
engineering:mAnCopyright
mapproach mto mm
m©m2017 improvement
McGraw- mthat minvolvesmco
SolutionsmManual,mChapterm HillmEducation. mAllmrights mreserved. 1
1
, mpletelymredesigningmbusinessmprocessesminmordermtomeliminatem
unnecessarymsteps,mreducemerrors,mandmreducem costs.
Copyrightm©m2017 mMcGraw-
HillmEducation. mAllmrights mreserved.
2 IntroductionmtomManagerialmAccounting,mFifthmCanadian mEditi
on
, • Theorymofmconstraintsm(TOC):mAmmanagement mapproachmtha
t memphasizesmthemimportancemofmmanagingmconstraints.
1-6 Pros
• Fundsm tiedm upm inm maintainingm inventorym canm bem usedm elsewhere
• Areasmpreviouslymusedmtomstoreminventoriesmaremmademavailablemfo
rmothermmoremproductivemuses
• Themtimemrequiredmtomfillmanmordermismreduced,mresultingminmquickermr
esponsemtomcustomersmandmconsequentiallymgreatermpotential msales
• Defect mratesmaremreducedmresultingminmlessmwastemandmgreate
rmcustomermsatisfaction
• Moremeffectivemoperations
Cons
• Increasedmnumbermofmpurchasemordersmtombuymrawm materialsmand/o
rmothermcomponentsmusedminmmanufacturingmproducts
• Theremismlittlemroommformerrorsmandmdefectsminmproductsmbecausemthi
smcouldmthrowmthemproductionmfacilitymoffmschedule
• Theremismamhighmreliancemandmdependencemonmsuppliersmtommeet mdel
iverymdeadlinesmasmwellmasmsupplymproductsmthat mhavemnomdefectsma
ndmrequiremminimalminspection
1-7 Agree.mEthicalmbehaviourmismthemfoundationmofmamsuccessfulmmarket mecon
omy.mIfmwemcannot mtrust mpeoplemtomact methicallyminmtheirmbusinessmdealing
smwithmus,mwemwillmbeminclinedmtominvest mless,mscrutinizemmoremandmwastem
moneymandmtimem(scarcemresources)mtryingmtomprotect mourselves.mEthicalm
standardsmandmCodesmofmConduct maidmthemsmoothmrunningmofmthemecono
my.mInmaddition,mthemlackmofmregulatorymrequirementsm(IFRS,mASPE)mrega
rdingmmanagerialmaccountingmmakesmethicalmbehaviourmevenmmoremcritica
l.
Copyrightm©m2017 mMcGraw-
SolutionsmManual,mChapterm HillmEducation. mAllmrights mreserved. 3
1
,
An Introduction to Managerial Accountin
m m m m
g
SolutionsmtomQuestions
1-1 Managerial maccountingmismconcernedmwithmprovidingminformationmprimarilymt
ommanagersmformtheirmuseminternallyminmthemorganizationmformthempurposesmofm
strategy,mplanning,mimplementationmandmcontrol.mFinancialmaccountingmismco
ncernedmwithmprovidingminformationmprimarilymtominvestors,mcreditors,mandmo
thersmoutsidemofmthemorganization.
1-2 Essentially,mthemmanagermcarriesmout mthreemmajormactivitiesminmanmorganizati
on:mplanning,mimplementation,mandmcontrol.m Allmthreemactivitiesminvolvemdec
ision-
makingmandmusemmanagerialmaccountingminformation.m ThismismdepictedminmE
xhibit m1-1.
1-3 ThemPlanning,mImplementationmandmControlmCycleminvolvesmthemfollowingm
steps:m(1)mformulatingmplansmwhichmoftenmincludesmpreparingmbudgets,m(2
)moverseeingmday-to-
daymactivitiesmwhichmincludesmorganizing,mdirectingmandmmotivatingmpeopl
e,mresourcemallocationmandmdecisionmmaking,mandm(3)mcontrollingmwhichmin
cludesmprovidingmfeedbackmviamperformancemreports.
1-4 Inmcontrast mtomfinancialmaccounting,mmanagerialmaccounting: m(1)mfocusesmo
nmthemneedsmofmthemmanager;m(2)mplacesmmorememphasismonmthemfuture;m(3)
memphasizesmrelevancemandmtimeliness, mrather mthanmverifiability mandmprecisi
on;m(4)memphasizesmthemsegmentsmofmanmorganization; m(5)mismnot mgoverned
mbymIFRSmor mASPE; mandm(6)mismnot mmandatory.
1-5 Themleanmbusinessmmodelmfocusesmonmcontinuousmimprovement mbymelim
inatingmwasteminmthemorganization.m Companiesmthat madopt mthemleanmbus
inessmmodelmusuallymimplement monemormmoremofmthemfollowingmmanage
ment mpractices.
• Just-in-
time m(JIT):mAmproductionmandminventorymcontrolmsystemminmwhichm
materialsmarempurchasedmandmunitsmaremproducedmonlymas mneededmto
mmeet mactual mcustomer mdemand.
• Totalmqualitymmanagementm(TQM):mAnmapproachmtomcontinuous
mimprovement mthat mfocusesmonmserving mcustomersmandmusesmteamsm
ofmfront-linemworkersmtomsystematicallymidentifymandmsolvemproblems.
• Processmre-
engineering:mAnCopyright
mapproach mto mm
m©m2017 improvement
McGraw- mthat minvolvesmco
SolutionsmManual,mChapterm HillmEducation. mAllmrights mreserved. 1
1
, mpletelymredesigningmbusinessmprocessesminmordermtomeliminatem
unnecessarymsteps,mreducemerrors,mandmreducem costs.
Copyrightm©m2017 mMcGraw-
HillmEducation. mAllmrights mreserved.
2 IntroductionmtomManagerialmAccounting,mFifthmCanadian mEditi
on
, • Theorymofmconstraintsm(TOC):mAmmanagement mapproachmtha
t memphasizesmthemimportancemofmmanagingmconstraints.
1-6 Pros
• Fundsm tiedm upm inm maintainingm inventorym canm bem usedm elsewhere
• Areasmpreviouslymusedmtomstoreminventoriesmaremmademavailablemfo
rmothermmoremproductivemuses
• Themtimemrequiredmtomfillmanmordermismreduced,mresultingminmquickermr
esponsemtomcustomersmandmconsequentiallymgreatermpotential msales
• Defect mratesmaremreducedmresultingminmlessmwastemandmgreate
rmcustomermsatisfaction
• Moremeffectivemoperations
Cons
• Increasedmnumbermofmpurchasemordersmtombuymrawm materialsmand/o
rmothermcomponentsmusedminmmanufacturingmproducts
• Theremismlittlemroommformerrorsmandmdefectsminmproductsmbecausemthi
smcouldmthrowmthemproductionmfacilitymoffmschedule
• Theremismamhighmreliancemandmdependencemonmsuppliersmtommeet mdel
iverymdeadlinesmasmwellmasmsupplymproductsmthat mhavemnomdefectsma
ndmrequiremminimalminspection
1-7 Agree.mEthicalmbehaviourmismthemfoundationmofmamsuccessfulmmarket mecon
omy.mIfmwemcannot mtrust mpeoplemtomact methicallyminmtheirmbusinessmdealing
smwithmus,mwemwillmbeminclinedmtominvest mless,mscrutinizemmoremandmwastem
moneymandmtimem(scarcemresources)mtryingmtomprotect mourselves.mEthicalm
standardsmandmCodesmofmConduct maidmthemsmoothmrunningmofmthemecono
my.mInmaddition,mthemlackmofmregulatorymrequirementsm(IFRS,mASPE)mrega
rdingmmanagerialmaccountingmmakesmethicalmbehaviourmevenmmoremcritica
l.
Copyrightm©m2017 mMcGraw-
SolutionsmManual,mChapterm HillmEducation. mAllmrights mreserved. 3
1
,
