SOLUTIONS MANUAL
Cornerstones of Managerial Accounting
Maryanne M. Mowen, Don R. Hansen, David McConomy, and Bradley Witt
ST
──────────────────────────────────────────────────
4th Canadian Edition
UV
IA
?_
AP
PR
OV
ED
? ?
, TABLE OF CONTENTS
Cornerstones of Managerial Accounting (4th Canadian Edition) - Solutions Manual
Maryanne Mowen, Don Hansen, David McConomy, Bradley Witt
ST
Chapter 1 Introduction to Managerial Accounting
UV
Chapter 2 Basic Managerial Accounting Concepts
R
Chapter 3 Cost Behaviour
U
Chapter 4 Cost–Volume–Profit Analysis: A Managerial Planning Tool
IA
Integrative Case 1
SE
Chapter 5 Job-Order Costing
?_
IS
Chapter 6 Process Costing
Chapter 7 Activity-Based Costing and Management
O
AP
Chapter 8 Absorption and Variable Costing, and Inventory Management
N
Chapter 9 Budgeting, Production, Cash, and Master Budget
N
Chapter 10 Standard Costing: A Managerial Control Tool
PR
Integrative Case 2
O
Chapter 11 Flexible Budgets and Overhead Analysis
C
Chapter 12 Performance Evaluation and Decentralization
OV
ED
Chapter 13 Short-Run Decision Making: Relevant Costing
Chapter 14 Capital Investment Decisions
M
ED
??
, CHAPTER 1
INTRODUCTION TO MANAGERIAL ACCOUNTING
DISCUSSION QUESTIONS
ST
1. Managerial accounting is the provision of past 50 years have changed the world
accounting information for internal users in a significantly. Managerial accountants have
firm. had to broaden their focus beyond simple
financial reporting to include the gathering of
UV
2. The three broad objectives of managerial
information on all types of costs and of the
accounting are planning, controlling, and
value of the product or service to customers.
decision making.
These broader costs are used in planning
3. The users of managerial accounting and decision making.
information are generally managers and
9. Customer value is the difference between
other employees of a firm. Managerial
what a customer pays for a product or service
IA
accounting information is typically not
and what the customer receives in return.
provided to outsiders but may be in selected
The focus on customer value forces
cases. For example, a bank may require management accounting to look at many
budgeting information for the next few years
types of costs, not simply manufacturing cost.
before agreeing to grant a loan.
?_
These may include the price of the good or
4. A managerial accounting information system service, maintenance costs, search costs,
typically provides both financial and learning costs, and disposal costs.
nonfinancial information. For example,
10. Today’s managerial accountant must
financial information on cost of production is
AP
understand many functions of the business,
tracked. Other information, such as the
number of warranty returns, may also be from manufacturing to marketing to
tracked by the management information distribution to customer service, in order to
system. provide appropriate information for managing
the value chain. Increased international trade
5. Controlling is sometimes called performance means that the managerial accountant must
PR
evaluation. It involves comparing the actual be familiar not only with business practices
outcome with the expected outcome to see and laws in their own country but also in the
what differences, if any, exist. countries with which their company trades.
6. Planning occurs first. It requires setting 11. Enterprise risk management (ERM) refers to
objectives and identifying the means of
the formal process of identifying the factors
OV
achieving those objectives. Then, the results
or threats, both internal and external to the
of the plan are compared with the plan, which
is called controlling. Clearly, it is also organization, that might prevent the
feedback, in that any impediments or organization from achieving its strategic
unexpected occurrences are noted. This objectives. The managerial accountant plays
feedback is then used to develop the plan for an increasingly important role in ERM by
the next period. providing financial and nonfinancial
ED
measures of these threats and
7. Managerial accounting is internally focused, communicating them to high-level executives
does not follow mandatory rules, keeps track (e.g., chief risk officer, chief financial officer,
of both financial and nonfinancial information, board of directors) in the organization who
emphasizes the future, and relies on a broad manage these factors.
range of disciplines. Financial accounting is
??
externally focused, follows externally 12. The value chain is the set of activities
imposed rules (such as GAAP), has an required to design, develop, produce, market,
historical orientation, and provides and deliver products and services to
information about the company as a whole. customers. It is important because it helps
8. Huge improvements in technology, the company to understand its role in serving
transportation, and communication over the
, customers and to develop strategic wrongly decided to increase current period
competence. net income by inappropriately decreasing
current period expenses (by recording more
13. Line positions are those that have direct
of the expenditures as an asset that would be
responsibility for the basic objectives of an
expensed in small amounts each period
organization. These typically include
rather than all at once in the current period).
producing and selling a product. Staff
Oftentimes, the high-level executives that
ST
positions are supportive in nature (e.g.,
perpetrate such financial fraud are rewarded
human resources, maintenance) and have
by incentives that overweight current-period
only indirect responsibility for an
net income performance relative to long-term
organization’s basic objectives.
net income performance. Another major
14. Yes, the controller should be a member of theme common to many of the accounting
UV
senior management. This is because the and banking frauds is a lack of sufficient
controller, as the chief accountant for the transparency, or clarification, in the types and
firm, has a wealth of information needed by timing of the information that is reported to
senior management in determining the parties outside of the organization. Some
strategic direction of the firm. business experts also would argue that a
third common theme underlying many of
IA
15. Ethical behaviour involves choosing actions these scandals was the lack of sufficient
that are right, proper, and just. It is possible oversight (i.e., watchdog mentality) by the
to teach aspects of ethical behaviour in a
perpetrating organization’s auditors, board of
managerial accounting classroom. Students directors, or both.
?_
need to see examples of right and wrong in
business. These examples help them to 17. The Chartered Professional Accountant
recognize ethical dilemmas they will face (CPA) is the Canadian professional
later on the job. accounting designation. The three previous
forms of designation discussed are Certified
16. One major theme or executive pressure
AP
Management Accountant, Chartered
common to many of the accounting scandals Accountant, and Certified General
is a focus on the short-term future, rather than
Accountant.
the long-term. For example, WorldCom
PR
OV
ED
??
Cornerstones of Managerial Accounting
Maryanne M. Mowen, Don R. Hansen, David McConomy, and Bradley Witt
ST
──────────────────────────────────────────────────
4th Canadian Edition
UV
IA
?_
AP
PR
OV
ED
? ?
, TABLE OF CONTENTS
Cornerstones of Managerial Accounting (4th Canadian Edition) - Solutions Manual
Maryanne Mowen, Don Hansen, David McConomy, Bradley Witt
ST
Chapter 1 Introduction to Managerial Accounting
UV
Chapter 2 Basic Managerial Accounting Concepts
R
Chapter 3 Cost Behaviour
U
Chapter 4 Cost–Volume–Profit Analysis: A Managerial Planning Tool
IA
Integrative Case 1
SE
Chapter 5 Job-Order Costing
?_
IS
Chapter 6 Process Costing
Chapter 7 Activity-Based Costing and Management
O
AP
Chapter 8 Absorption and Variable Costing, and Inventory Management
N
Chapter 9 Budgeting, Production, Cash, and Master Budget
N
Chapter 10 Standard Costing: A Managerial Control Tool
PR
Integrative Case 2
O
Chapter 11 Flexible Budgets and Overhead Analysis
C
Chapter 12 Performance Evaluation and Decentralization
OV
ED
Chapter 13 Short-Run Decision Making: Relevant Costing
Chapter 14 Capital Investment Decisions
M
ED
??
, CHAPTER 1
INTRODUCTION TO MANAGERIAL ACCOUNTING
DISCUSSION QUESTIONS
ST
1. Managerial accounting is the provision of past 50 years have changed the world
accounting information for internal users in a significantly. Managerial accountants have
firm. had to broaden their focus beyond simple
financial reporting to include the gathering of
UV
2. The three broad objectives of managerial
information on all types of costs and of the
accounting are planning, controlling, and
value of the product or service to customers.
decision making.
These broader costs are used in planning
3. The users of managerial accounting and decision making.
information are generally managers and
9. Customer value is the difference between
other employees of a firm. Managerial
what a customer pays for a product or service
IA
accounting information is typically not
and what the customer receives in return.
provided to outsiders but may be in selected
The focus on customer value forces
cases. For example, a bank may require management accounting to look at many
budgeting information for the next few years
types of costs, not simply manufacturing cost.
before agreeing to grant a loan.
?_
These may include the price of the good or
4. A managerial accounting information system service, maintenance costs, search costs,
typically provides both financial and learning costs, and disposal costs.
nonfinancial information. For example,
10. Today’s managerial accountant must
financial information on cost of production is
AP
understand many functions of the business,
tracked. Other information, such as the
number of warranty returns, may also be from manufacturing to marketing to
tracked by the management information distribution to customer service, in order to
system. provide appropriate information for managing
the value chain. Increased international trade
5. Controlling is sometimes called performance means that the managerial accountant must
PR
evaluation. It involves comparing the actual be familiar not only with business practices
outcome with the expected outcome to see and laws in their own country but also in the
what differences, if any, exist. countries with which their company trades.
6. Planning occurs first. It requires setting 11. Enterprise risk management (ERM) refers to
objectives and identifying the means of
the formal process of identifying the factors
OV
achieving those objectives. Then, the results
or threats, both internal and external to the
of the plan are compared with the plan, which
is called controlling. Clearly, it is also organization, that might prevent the
feedback, in that any impediments or organization from achieving its strategic
unexpected occurrences are noted. This objectives. The managerial accountant plays
feedback is then used to develop the plan for an increasingly important role in ERM by
the next period. providing financial and nonfinancial
ED
measures of these threats and
7. Managerial accounting is internally focused, communicating them to high-level executives
does not follow mandatory rules, keeps track (e.g., chief risk officer, chief financial officer,
of both financial and nonfinancial information, board of directors) in the organization who
emphasizes the future, and relies on a broad manage these factors.
range of disciplines. Financial accounting is
??
externally focused, follows externally 12. The value chain is the set of activities
imposed rules (such as GAAP), has an required to design, develop, produce, market,
historical orientation, and provides and deliver products and services to
information about the company as a whole. customers. It is important because it helps
8. Huge improvements in technology, the company to understand its role in serving
transportation, and communication over the
, customers and to develop strategic wrongly decided to increase current period
competence. net income by inappropriately decreasing
current period expenses (by recording more
13. Line positions are those that have direct
of the expenditures as an asset that would be
responsibility for the basic objectives of an
expensed in small amounts each period
organization. These typically include
rather than all at once in the current period).
producing and selling a product. Staff
Oftentimes, the high-level executives that
ST
positions are supportive in nature (e.g.,
perpetrate such financial fraud are rewarded
human resources, maintenance) and have
by incentives that overweight current-period
only indirect responsibility for an
net income performance relative to long-term
organization’s basic objectives.
net income performance. Another major
14. Yes, the controller should be a member of theme common to many of the accounting
UV
senior management. This is because the and banking frauds is a lack of sufficient
controller, as the chief accountant for the transparency, or clarification, in the types and
firm, has a wealth of information needed by timing of the information that is reported to
senior management in determining the parties outside of the organization. Some
strategic direction of the firm. business experts also would argue that a
third common theme underlying many of
IA
15. Ethical behaviour involves choosing actions these scandals was the lack of sufficient
that are right, proper, and just. It is possible oversight (i.e., watchdog mentality) by the
to teach aspects of ethical behaviour in a
perpetrating organization’s auditors, board of
managerial accounting classroom. Students directors, or both.
?_
need to see examples of right and wrong in
business. These examples help them to 17. The Chartered Professional Accountant
recognize ethical dilemmas they will face (CPA) is the Canadian professional
later on the job. accounting designation. The three previous
forms of designation discussed are Certified
16. One major theme or executive pressure
AP
Management Accountant, Chartered
common to many of the accounting scandals Accountant, and Certified General
is a focus on the short-term future, rather than
Accountant.
the long-term. For example, WorldCom
PR
OV
ED
??
