, SOLUTION MANUAL FOR
Horngren's Cost Accounting, 18th edition Datar
Important Notes
The file includes the complete test bank, organized chapter by chapter.
A sample of selected pages has been provided for preview.
All available appendices and Excel files (if included in the original resources) are
provided.
We continuously update our files to ensure you receive the latest and most accurate
editions.
New editions are added regularly – stay connected for updates!
Purchase Guarantee
If you believe you have purchased the wrong file, don’t worry. Contact us anytime and we
will gladly replace it with the correct version.
Contact Email:
, CHAPTER 1
THE MANAGER AND MANAGEMENT ACCOUNTING
See the front matter of this Solutions Manual for suggestions regarding your choices of
assignment material for each chapter.
1-1 How does management accounting differ from financial accounting?
Management accounting measures, analyzes, and reports financial and nonfinancial
information that helps managers make decisions to fulfill the goals of an organization. It
focuses on internal reporting and is not restricted by generally accepted accounting
principles (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 based on generally accepted accounting principles
(GAAP).
Other differences include (1) management accounting emphasizes the future (not
the past), and (2) management accounting influences the behavior of managers and other
employees (rather than primarily reporting economic events).
1-2 “Management accounting should not fit the straitjacket of financial accounting.”
Explain and give an example.
Financial accounting is constrained by generally accepted accounting principles.
Management accounting is not restricted to these principles. 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) not recognized under GAAP, and
management accounting can use asset or liability measurement rules (such as
present values or resale prices) not permitted under GAAP.
1-3 How can a management accountant help formulate strategy?
Management accountants can help to formulate, communicate and implement 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 prices a company can charge relative to the costs of adding features that make
its products or services distinctive.
1-4 Describe the business functions in the value chain.
The business functions in the value chain are
Research and development—generating and experimenting with ideas related
to new products, services, or processes.
1-1
, Design of products and processes—detailed planning, engineering, and
testing of products and processes.
Production—procuring, transporting, storing, coordinating and assembling
resources to produce a product or deliver a service.
Marketing—promoting and selling products or services to customers or
prospective customers.
Distribution—processing orders and shipping products or delivering services
to customers.
Customer service—providing after-sales service to customers.
1-5 Explain the term supply chain and its importance to cost management.
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 one organization or in multiple organizations.
Cost management is most effective when it integrates and coordinates activities
across all companies in the supply chain as well as across each business function in an
individual company’s value chain. Attempts are made to restructure all cost areas to be
more cost-effective.
1-6 “Management accounting deals only with costs.” Do you agree? Explain.
“Management accounting deals only with costs.” This statement is misleading at best,
and wrong at worst. Management accounting measures, analyzes, and reports financial
and nonfinancial information that helps managers define the organization’s goals and
make decisions to fulfill those goals. Management accounting also analyzes 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 organization’s information recorded and analyzed by management accountants.
1-7 How can management accountants help improve quality and achieve timely
product deliveries?
Management accountants can help improve quality and achieve timely product deliveries
by recording and reporting an organization’s current quality and timeliness levels and by
analyzing and evaluating the costs and benefits—both financial and nonfinancial—of
new quality initiatives, such as TQM, relieving bottleneck constraints, or providing faster
customer service.
1-8 Describe the five-step decision-making process.
The five-step decision-making process is (1) identify the problem and uncertainties;
(2) obtain information; (3) make predictions about the future; (4) make decisions by
choosing among alternatives; and (5) implement the decision, evaluate performance, and
learn.
1-2
,1-9 Distinguish planning decisions from control decisions.
Planning decisions focus on selecting organization goals and strategies, predicting results
under various alternative ways of achieving those goals, deciding how to attain the
desired goals, and communicating the goals and how to attain them to the entire
organization.
Control decisions focus on taking actions that implement the planning decisions,
deciding how to evaluate performance, and providing feedback and learning to help
future decision making.
1-10 What three guidelines help management accountants provide the most value to
managers?
The three guidelines for management accountants are:
1. Employ a cost-benefit approach.
2. Recognize technical and behavioral considerations.
3. Apply the notion of “different costs for different purposes.”
1-11 “Knowledge of technical issues such as computer technology is a necessary but
not sufficient condition to becoming a successful management accountant.” Do you
agree? Why?
Agree. A successful management accountant requires general business skills (such as
understanding the strategy of an organization) 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 controller, reply to this comment by a plant manager: “As I see it, our
accountants may be needed to keep records for shareholders and Uncle Sam, but I don’t
want them sticking their noses in my day-to-day operations. I do the best I know how. No
bean counter knows enough about my responsibilities to be of any use to me.”
The new controller 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 plant controller was viewed as a resource rather than a deadweight. In a
related way, the plant controller could show how the plant manager’s time and
resources could be saved by viewing the new plant controller 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 time on the plant floor speaking to plant
personnel.
(c) Show the plant manager examples of the new plant controller’s past successes
in working with line managers in other plants. Examples could include
1-3
, assistance in preparing the budget,
assistance in analyzing problem situations and evaluating financial and
nonfinancial aspects of different alternatives, and
assistance in submitting capital budget requests.
(d) Seek assistance from the corporate controller to highlight to the plant manager
the importance of many tasks undertaken by the new plant controller. This
approach is a last resort but may be necessary in some cases.
1-13 Where does the management accounting function fit into an organization’s
structure?
The controller is the chief management accounting executive. The corporate controller
reports to the chief financial officer, a staff function. Companies also have business unit
controllers who support business unit managers or regional controllers who support
regional managers in major geographic regions.
1-14 Name the four areas in which standards of ethical conduct exist for management
accountants in the United States. What organization sets these standards?
SOLUTION
The Institute of Management Accountants (IMA) sets standards of ethical conduct for
management accountants in the following four areas:
Competence
Confidentiality
Integrity
Credibility
1-15 What steps should a management accountant take if established written policies
provide insufficient guidance on how to handle an ethical conflict?
Steps to take when established written policies provide insufficient guidance are as
follows:
(a) Discuss the problem with the immediate superior (except when it appears that
the superior is involved).
(b) Clarify relevant ethical issues by confidential discussion with an IMA Ethics
Counselor or other impartial advisor.
(c) Consult your own attorney as to legal obligations and rights concerning the
ethical conflicts.
1-4
,1-16 Which of the following is not a primary function of the management accountant?
a. Communicates financial results and position to external parties.
b. Uses information to develop and implement business strategy.
c. Aids in the decision making to help an organization meet its goals.
d. Provides input into an entity’s production and marketing decisions.
SOLUTION
(a) Communicating financial results and position to external parties is not a primary
function of the management accountant. This is the function of the financial accountant.
1-17 Value chain and classification of costs, computer company. Dell Computer
incurs the following costs:
a. Utility costs for the plant assembling the Latitude computer line of products
b. Distribution costs for shipping the Latitude line of products to a retail chain
c. Payment to David Newbury Designs for design of the XPS 2-in-1 laptop
d. Salary of computer scientist working on the next generation of servers
e. Cost of Dell employees’ visit to a major customer to demonstrate Dell’s products
f. Purchase of competitors’ products for testing against potential Dell products
g. Payment to business magazine for running Dell advertisements
h. Cost of cartridges purchased from outside supplier to be used with Dell printers
Required:
Classify each of the cost items (a–h) into one of the business functions of the value chain
shown in Exhibit 1-2 (page 5).
SOLUTION
(15 min.) Value chain and classification of costs, computer company.
Cost Item Value Chain Business Function
a. Production
b. Distribution
c. Design of products and processes
d. Research and development
e. Customer service or marketing
f. Design of products and processes
(or research and development)
g. Marketing
h. Production
1-5
,1-18 Value Chain and Classification of Costs in a Consulting Firm
Quantum Solutions Consulting is a company specializing in IT consulting. As a service-
based business, it incurs various costs related to delivering its consulting services and
supporting its operations. Below are some of the costs incurred by the firm:
a. Cost of conducting market research to identify new industries to target
b. Payment for office cleaning services
c. Salaries of consultants providing strategic advice to clients
d. Cost of hosting a training session for clients
e. Purchase of software licenses used for internal business operations
f. Payment to a freelance consultant for a one-time client project
g. Travel costs for consultants visiting clients
h. Cost of sending follow-up emails and calls to prospective clients
Required:
Classify each cost (a–h) into one of the business functions of the value chain for a
consulting firm:
1. Research and Development – Developing new service offerings and identifying
new markets
2. Marketing and Sales – Attracting new clients and promoting services
3. Service Delivery/Operations – Providing consulting services to clients
4. Customer Service – Providing post-service support and training to clients
5. General Administration (Support Activity) – Maintaining office functions, human
resources, and facility upkeep
6. Technology and Infrastructure (Support Activity) – IT, software, and other
operational tools
SOLUTION
(15 min.) Value chain and classification of costs, pharmaceutical company.
Cost Item Value Chain Business Function
a. Marketing
b. General Administration
c. Service Delivery/Operations
d. Customer Service
e. Technology and Infrastructure
f. General Administration
g. Service Delivery/Operations
h. Customer Service
1-19 Value chain and classification of costs, fast-food restaurant.
McDonald's, a fast-food restaurant, incurs the following costs:
a. Cost of oil for the deep fryer
b. Wages of the counter help who give customers the food they order
c. Cost of chicken and potatoes
d. Cost of tomato ketchup packets given away with customer orders
1-6
,e. Cost of the posters indicating the special “Kid’s Meal for $6.00”
f. Costs of corporate sponsorship of the World Series
g. Salaries of the food specialists in the corporate test kitchen who create new menu items
h. Cost of “to-go” bags requested by customers who could not finish their meals in the
restaurant
Required:
Classify each of the cost items (a–h) as one of the business functions of the value chain
shown in Exhibit 1-2 (page 5).
SOLUTION
(15 min.) Value chain and classification of costs, fast-food restaurant.
Cost Item Value Chain Business Function
a. Production
b. Distribution
c. Production
d. Production
e. Marketing
f. Marketing
g. Design of products and processes (or research and development)
h. Customer service
1-20 Key success factors. BYK Consulting has issued a report recommending changes
for its newest high-tech manufacturing client, Precision Instruments. Precision currently
manufactures a single product, a surgical robot that is sold and distributed internationally.
The report contains the following suggestions for enhancing business performance:
a. Develop a more advanced cutting tool to stay ahead of competitors.
b. Adopt a TQM philosophy to reduce waste and defects to near zero.
c. Reduce lead times (time from customer order of product to customer receipt of
product) by 20% in order to increase customer retention.
d. Redesign the robot to use 25% less energy, as part of Precision’s corporate social
responsibility objectives.
e. Benchmark the company’s gross margin percentages against its major competitors.
Link each of these changes to the key success factors that are important to managers.
SOLUTION
(10 min.) Key success factors.
Change in Operations/
Management Accounting Key Success Factor
a. Innovation
1-7
, b. Cost and efficiency and quality
c. Time and cost and efficiency
d. Innovation, sustainability, and cost and
e. efficiency
Cost and efficiency
1-21 Key success factors. Rogers Transport Company provides trucking services for
major retailers. Managers at the company believe that the following factors are critical to
their success:
a. Increase spending on employee development to streamline processes.
b. Foster cooperative relationships with truck repair providers to allow for less downtime
from truck breakdowns.
c. Invest in electric and hybrid vehicles to reduce carbon emissions.
d. Train material-handling employees to reduce errors when loading trucks.
e. Benchmark the company’s gross margin percentages against its major competitors.
Match each of the above factors to the key success factors that are important to managers.
SOLUTION
(10 min.) Key success factors.
Change in Operations/
Management Accounting Key Success Factor
a. Time and cost and efficiency
b. Time and cost and efficiency
c. Innovation and sustainability
d. Cost and efficiency, time, and quality
e. Cost and efficiency
1-22 Planning and control decisions. Gregor Company makes and sells brooms and
mops. It takes the following actions, not necessarily in the order given. For each action
(a–e), state whether it is a planning decision or a control decision.
a. Gregor asks its advertising team to develop fresh advertisements to market its newest
product.
b. Gregor calculates customer satisfaction scores after introducing its newest product.
c. Gregor compares costs it actually incurred with costs it expected to incur for the
production of the new product.
d. Gregor’s design team proposes a new product to compete directly with the Swiffer.
e. Gregor estimates the costs it will incur to distribute 30,000 units of the new product in
the first quarter of next fiscal year.
1-8
Horngren's Cost Accounting, 18th edition Datar
Important Notes
The file includes the complete test bank, organized chapter by chapter.
A sample of selected pages has been provided for preview.
All available appendices and Excel files (if included in the original resources) are
provided.
We continuously update our files to ensure you receive the latest and most accurate
editions.
New editions are added regularly – stay connected for updates!
Purchase Guarantee
If you believe you have purchased the wrong file, don’t worry. Contact us anytime and we
will gladly replace it with the correct version.
Contact Email:
, CHAPTER 1
THE MANAGER AND MANAGEMENT ACCOUNTING
See the front matter of this Solutions Manual for suggestions regarding your choices of
assignment material for each chapter.
1-1 How does management accounting differ from financial accounting?
Management accounting measures, analyzes, and reports financial and nonfinancial
information that helps managers make decisions to fulfill the goals of an organization. It
focuses on internal reporting and is not restricted by generally accepted accounting
principles (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 based on generally accepted accounting principles
(GAAP).
Other differences include (1) management accounting emphasizes the future (not
the past), and (2) management accounting influences the behavior of managers and other
employees (rather than primarily reporting economic events).
1-2 “Management accounting should not fit the straitjacket of financial accounting.”
Explain and give an example.
Financial accounting is constrained by generally accepted accounting principles.
Management accounting is not restricted to these principles. 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) not recognized under GAAP, and
management accounting can use asset or liability measurement rules (such as
present values or resale prices) not permitted under GAAP.
1-3 How can a management accountant help formulate strategy?
Management accountants can help to formulate, communicate and implement 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 prices a company can charge relative to the costs of adding features that make
its products or services distinctive.
1-4 Describe the business functions in the value chain.
The business functions in the value chain are
Research and development—generating and experimenting with ideas related
to new products, services, or processes.
1-1
, Design of products and processes—detailed planning, engineering, and
testing of products and processes.
Production—procuring, transporting, storing, coordinating and assembling
resources to produce a product or deliver a service.
Marketing—promoting and selling products or services to customers or
prospective customers.
Distribution—processing orders and shipping products or delivering services
to customers.
Customer service—providing after-sales service to customers.
1-5 Explain the term supply chain and its importance to cost management.
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 one organization or in multiple organizations.
Cost management is most effective when it integrates and coordinates activities
across all companies in the supply chain as well as across each business function in an
individual company’s value chain. Attempts are made to restructure all cost areas to be
more cost-effective.
1-6 “Management accounting deals only with costs.” Do you agree? Explain.
“Management accounting deals only with costs.” This statement is misleading at best,
and wrong at worst. Management accounting measures, analyzes, and reports financial
and nonfinancial information that helps managers define the organization’s goals and
make decisions to fulfill those goals. Management accounting also analyzes 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 organization’s information recorded and analyzed by management accountants.
1-7 How can management accountants help improve quality and achieve timely
product deliveries?
Management accountants can help improve quality and achieve timely product deliveries
by recording and reporting an organization’s current quality and timeliness levels and by
analyzing and evaluating the costs and benefits—both financial and nonfinancial—of
new quality initiatives, such as TQM, relieving bottleneck constraints, or providing faster
customer service.
1-8 Describe the five-step decision-making process.
The five-step decision-making process is (1) identify the problem and uncertainties;
(2) obtain information; (3) make predictions about the future; (4) make decisions by
choosing among alternatives; and (5) implement the decision, evaluate performance, and
learn.
1-2
,1-9 Distinguish planning decisions from control decisions.
Planning decisions focus on selecting organization goals and strategies, predicting results
under various alternative ways of achieving those goals, deciding how to attain the
desired goals, and communicating the goals and how to attain them to the entire
organization.
Control decisions focus on taking actions that implement the planning decisions,
deciding how to evaluate performance, and providing feedback and learning to help
future decision making.
1-10 What three guidelines help management accountants provide the most value to
managers?
The three guidelines for management accountants are:
1. Employ a cost-benefit approach.
2. Recognize technical and behavioral considerations.
3. Apply the notion of “different costs for different purposes.”
1-11 “Knowledge of technical issues such as computer technology is a necessary but
not sufficient condition to becoming a successful management accountant.” Do you
agree? Why?
Agree. A successful management accountant requires general business skills (such as
understanding the strategy of an organization) 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 controller, reply to this comment by a plant manager: “As I see it, our
accountants may be needed to keep records for shareholders and Uncle Sam, but I don’t
want them sticking their noses in my day-to-day operations. I do the best I know how. No
bean counter knows enough about my responsibilities to be of any use to me.”
The new controller 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 plant controller was viewed as a resource rather than a deadweight. In a
related way, the plant controller could show how the plant manager’s time and
resources could be saved by viewing the new plant controller 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 time on the plant floor speaking to plant
personnel.
(c) Show the plant manager examples of the new plant controller’s past successes
in working with line managers in other plants. Examples could include
1-3
, assistance in preparing the budget,
assistance in analyzing problem situations and evaluating financial and
nonfinancial aspects of different alternatives, and
assistance in submitting capital budget requests.
(d) Seek assistance from the corporate controller to highlight to the plant manager
the importance of many tasks undertaken by the new plant controller. This
approach is a last resort but may be necessary in some cases.
1-13 Where does the management accounting function fit into an organization’s
structure?
The controller is the chief management accounting executive. The corporate controller
reports to the chief financial officer, a staff function. Companies also have business unit
controllers who support business unit managers or regional controllers who support
regional managers in major geographic regions.
1-14 Name the four areas in which standards of ethical conduct exist for management
accountants in the United States. What organization sets these standards?
SOLUTION
The Institute of Management Accountants (IMA) sets standards of ethical conduct for
management accountants in the following four areas:
Competence
Confidentiality
Integrity
Credibility
1-15 What steps should a management accountant take if established written policies
provide insufficient guidance on how to handle an ethical conflict?
Steps to take when established written policies provide insufficient guidance are as
follows:
(a) Discuss the problem with the immediate superior (except when it appears that
the superior is involved).
(b) Clarify relevant ethical issues by confidential discussion with an IMA Ethics
Counselor or other impartial advisor.
(c) Consult your own attorney as to legal obligations and rights concerning the
ethical conflicts.
1-4
,1-16 Which of the following is not a primary function of the management accountant?
a. Communicates financial results and position to external parties.
b. Uses information to develop and implement business strategy.
c. Aids in the decision making to help an organization meet its goals.
d. Provides input into an entity’s production and marketing decisions.
SOLUTION
(a) Communicating financial results and position to external parties is not a primary
function of the management accountant. This is the function of the financial accountant.
1-17 Value chain and classification of costs, computer company. Dell Computer
incurs the following costs:
a. Utility costs for the plant assembling the Latitude computer line of products
b. Distribution costs for shipping the Latitude line of products to a retail chain
c. Payment to David Newbury Designs for design of the XPS 2-in-1 laptop
d. Salary of computer scientist working on the next generation of servers
e. Cost of Dell employees’ visit to a major customer to demonstrate Dell’s products
f. Purchase of competitors’ products for testing against potential Dell products
g. Payment to business magazine for running Dell advertisements
h. Cost of cartridges purchased from outside supplier to be used with Dell printers
Required:
Classify each of the cost items (a–h) into one of the business functions of the value chain
shown in Exhibit 1-2 (page 5).
SOLUTION
(15 min.) Value chain and classification of costs, computer company.
Cost Item Value Chain Business Function
a. Production
b. Distribution
c. Design of products and processes
d. Research and development
e. Customer service or marketing
f. Design of products and processes
(or research and development)
g. Marketing
h. Production
1-5
,1-18 Value Chain and Classification of Costs in a Consulting Firm
Quantum Solutions Consulting is a company specializing in IT consulting. As a service-
based business, it incurs various costs related to delivering its consulting services and
supporting its operations. Below are some of the costs incurred by the firm:
a. Cost of conducting market research to identify new industries to target
b. Payment for office cleaning services
c. Salaries of consultants providing strategic advice to clients
d. Cost of hosting a training session for clients
e. Purchase of software licenses used for internal business operations
f. Payment to a freelance consultant for a one-time client project
g. Travel costs for consultants visiting clients
h. Cost of sending follow-up emails and calls to prospective clients
Required:
Classify each cost (a–h) into one of the business functions of the value chain for a
consulting firm:
1. Research and Development – Developing new service offerings and identifying
new markets
2. Marketing and Sales – Attracting new clients and promoting services
3. Service Delivery/Operations – Providing consulting services to clients
4. Customer Service – Providing post-service support and training to clients
5. General Administration (Support Activity) – Maintaining office functions, human
resources, and facility upkeep
6. Technology and Infrastructure (Support Activity) – IT, software, and other
operational tools
SOLUTION
(15 min.) Value chain and classification of costs, pharmaceutical company.
Cost Item Value Chain Business Function
a. Marketing
b. General Administration
c. Service Delivery/Operations
d. Customer Service
e. Technology and Infrastructure
f. General Administration
g. Service Delivery/Operations
h. Customer Service
1-19 Value chain and classification of costs, fast-food restaurant.
McDonald's, a fast-food restaurant, incurs the following costs:
a. Cost of oil for the deep fryer
b. Wages of the counter help who give customers the food they order
c. Cost of chicken and potatoes
d. Cost of tomato ketchup packets given away with customer orders
1-6
,e. Cost of the posters indicating the special “Kid’s Meal for $6.00”
f. Costs of corporate sponsorship of the World Series
g. Salaries of the food specialists in the corporate test kitchen who create new menu items
h. Cost of “to-go” bags requested by customers who could not finish their meals in the
restaurant
Required:
Classify each of the cost items (a–h) as one of the business functions of the value chain
shown in Exhibit 1-2 (page 5).
SOLUTION
(15 min.) Value chain and classification of costs, fast-food restaurant.
Cost Item Value Chain Business Function
a. Production
b. Distribution
c. Production
d. Production
e. Marketing
f. Marketing
g. Design of products and processes (or research and development)
h. Customer service
1-20 Key success factors. BYK Consulting has issued a report recommending changes
for its newest high-tech manufacturing client, Precision Instruments. Precision currently
manufactures a single product, a surgical robot that is sold and distributed internationally.
The report contains the following suggestions for enhancing business performance:
a. Develop a more advanced cutting tool to stay ahead of competitors.
b. Adopt a TQM philosophy to reduce waste and defects to near zero.
c. Reduce lead times (time from customer order of product to customer receipt of
product) by 20% in order to increase customer retention.
d. Redesign the robot to use 25% less energy, as part of Precision’s corporate social
responsibility objectives.
e. Benchmark the company’s gross margin percentages against its major competitors.
Link each of these changes to the key success factors that are important to managers.
SOLUTION
(10 min.) Key success factors.
Change in Operations/
Management Accounting Key Success Factor
a. Innovation
1-7
, b. Cost and efficiency and quality
c. Time and cost and efficiency
d. Innovation, sustainability, and cost and
e. efficiency
Cost and efficiency
1-21 Key success factors. Rogers Transport Company provides trucking services for
major retailers. Managers at the company believe that the following factors are critical to
their success:
a. Increase spending on employee development to streamline processes.
b. Foster cooperative relationships with truck repair providers to allow for less downtime
from truck breakdowns.
c. Invest in electric and hybrid vehicles to reduce carbon emissions.
d. Train material-handling employees to reduce errors when loading trucks.
e. Benchmark the company’s gross margin percentages against its major competitors.
Match each of the above factors to the key success factors that are important to managers.
SOLUTION
(10 min.) Key success factors.
Change in Operations/
Management Accounting Key Success Factor
a. Time and cost and efficiency
b. Time and cost and efficiency
c. Innovation and sustainability
d. Cost and efficiency, time, and quality
e. Cost and efficiency
1-22 Planning and control decisions. Gregor Company makes and sells brooms and
mops. It takes the following actions, not necessarily in the order given. For each action
(a–e), state whether it is a planning decision or a control decision.
a. Gregor asks its advertising team to develop fresh advertisements to market its newest
product.
b. Gregor calculates customer satisfaction scores after introducing its newest product.
c. Gregor compares costs it actually incurred with costs it expected to incur for the
production of the new product.
d. Gregor’s design team proposes a new product to compete directly with the Swiffer.
e. Gregor estimates the costs it will incur to distribute 30,000 units of the new product in
the first quarter of next fiscal year.
1-8
