Chapter 1
Managerial Accounting and
the Business Environment
Solution to Discussion Case
Benefits to employees of having a code of conduct:
Creates clarity as to how all employees are expected to behave. This
should help employees avoid behaviours that the company prohibits.
Provides protection for employees when dealing with superiors given
the guidelines related to protection from discrimination and harass-
ment.
Establishes guidelines for workplace safety, which should help protect
the health of employees.
Provides information on the consequences of code violations, which
will help understand employees understand the outcomes of prohibit-
ed behaviours, if detected.
Provides guidance as to what employees should do if they witness a
violation of the code and protects those employees who do report an
incident.
Disadvantages to CIBC of having a code of conduct:
May create the impression among employees that they are not trust-
ed by senior management to act appropriately.
The obligation to report violations could create a culture of suspicion
and mistrust among employees.
Enforcing the code may be costly and time consuming in large organ-
izations such as CIBC. For example, investigations of possible viola-
tions could take weeks.
© McGraw-Hill Education Ltd. 2018. All rights reserved.
Solutions Manual, Chapter 1 1
, Solutions to Questions
1-1 In contrast to financial accounting, ma- al customer, by geographic area (e.g., province
nagerial accounting: (1) focuses on the needs of or country), and by product line (e.g. asset
managers rather than outsiders; (2) emphasizes management, personal loans, mortgages, etc.).
decisions affecting the future rather than the Procter & Gamble could segment its per-
financial consequences of past actions; (3) em- formance by product category (e.g., beauty and
phasizes relevance rather than objectivity and grooming, household care, and health and well-
verifiability; (4) emphasizes timeliness rather being), product line (e.g., Crest, Tide, and Boun-
than precision; (5) emphasizes the segments of ty), and stock keeping units (e.g., Crest Cavity
an organization rather than summary data con- Protection toothpaste, Crest Extra Whitening
cerning the entire organization; (6) is not go- toothpaste, and Crest Sensitivity toothpaste).
verned by GAAP; and (7) is not mandatory.
1-2 Managers carry out four major activities
in an organization: planning, directing and moti- 1-7 Deere & Company is an example of a
vating, controlling and decision-making. Plan- company that competes in terms of product
ning involves establishing a basic strategy, se- leadership. The company’s slogan “nothing runs
lecting a course of action, and specifying how like a Deere” emphasizes its product leadership
the action will be implemented. Directing and customer value proposition.
motivating involves mobilizing people to carry Amazon.ca competes in terms of opera-
out plans and run routine operations. Controlling tional excellence. The company focuses on de-
involves ensuring that the plan is actually carried livering products faster, more conveniently, and
out and is appropriately modified as circum- at a lower price than competitors.
stances change. Decision-making involves se- TD Asset Management competes in
lecting a course of action from among two or terms of customer intimacy. It focuses on build-
more alternatives. ing personal relationships with clients so that it
can tailor investment strategies to individual
1-3 A budget is a quantitative plan for the needs.
acquisition and use of financial and other re-
sources over a specified future time period. 1-8 Planning, controlling, and decision mak-
ing must be performed within the context of a
1-4 Customer value propositions fall into company’s strategy. For example, if a company
three broad categories—customer intimacy, op- that competes as a product leader plans to grow
erational excellence, and product leadership. A too quickly, it may diminish quality and threaten
company with a customer intimacy strategy at- the company’s customer value proposition. A
tempts to better understand and respond to its company that competes in terms of operational
customers’ individual needs than its competitors. excellence would select control measures that
A company that adopts an operational excel- focus on time-based performance, convenience,
lence strategy attempts to deliver products fas- and cost. A company that competes in terms of
ter, more conveniently, and at a lower price than customer intimacy may decide against outsourc-
its competitors. A company that has a product ing employee training to cut costs because it
leadership strategy attempts to offer higher might diminish the quality of customer service.
quality products than its competitors.
1-9 The six business functions that make
1-5 The Planning and Control Cycle involves the value chain are: (1) research and develop-
formulating plans, implementing plans, measur- ment; (2) product design; (3) manufacturing;
ing performance, and evaluating differences be- (4) marketing; (5) distribution; and (6) customer
tween planned and actual performance. service.
1-6 The Royal Bank of Canada could seg- 1-10 Examples of things socially responsible
ment its companywide performance by individu- organizations should provide for their employees
© McGraw-Hill Education Ltd. 2018. All rights reserved.
2 Managerial Accounting, 11th Canadian Edition
Managerial Accounting and
the Business Environment
Solution to Discussion Case
Benefits to employees of having a code of conduct:
Creates clarity as to how all employees are expected to behave. This
should help employees avoid behaviours that the company prohibits.
Provides protection for employees when dealing with superiors given
the guidelines related to protection from discrimination and harass-
ment.
Establishes guidelines for workplace safety, which should help protect
the health of employees.
Provides information on the consequences of code violations, which
will help understand employees understand the outcomes of prohibit-
ed behaviours, if detected.
Provides guidance as to what employees should do if they witness a
violation of the code and protects those employees who do report an
incident.
Disadvantages to CIBC of having a code of conduct:
May create the impression among employees that they are not trust-
ed by senior management to act appropriately.
The obligation to report violations could create a culture of suspicion
and mistrust among employees.
Enforcing the code may be costly and time consuming in large organ-
izations such as CIBC. For example, investigations of possible viola-
tions could take weeks.
© McGraw-Hill Education Ltd. 2018. All rights reserved.
Solutions Manual, Chapter 1 1
, Solutions to Questions
1-1 In contrast to financial accounting, ma- al customer, by geographic area (e.g., province
nagerial accounting: (1) focuses on the needs of or country), and by product line (e.g. asset
managers rather than outsiders; (2) emphasizes management, personal loans, mortgages, etc.).
decisions affecting the future rather than the Procter & Gamble could segment its per-
financial consequences of past actions; (3) em- formance by product category (e.g., beauty and
phasizes relevance rather than objectivity and grooming, household care, and health and well-
verifiability; (4) emphasizes timeliness rather being), product line (e.g., Crest, Tide, and Boun-
than precision; (5) emphasizes the segments of ty), and stock keeping units (e.g., Crest Cavity
an organization rather than summary data con- Protection toothpaste, Crest Extra Whitening
cerning the entire organization; (6) is not go- toothpaste, and Crest Sensitivity toothpaste).
verned by GAAP; and (7) is not mandatory.
1-2 Managers carry out four major activities
in an organization: planning, directing and moti- 1-7 Deere & Company is an example of a
vating, controlling and decision-making. Plan- company that competes in terms of product
ning involves establishing a basic strategy, se- leadership. The company’s slogan “nothing runs
lecting a course of action, and specifying how like a Deere” emphasizes its product leadership
the action will be implemented. Directing and customer value proposition.
motivating involves mobilizing people to carry Amazon.ca competes in terms of opera-
out plans and run routine operations. Controlling tional excellence. The company focuses on de-
involves ensuring that the plan is actually carried livering products faster, more conveniently, and
out and is appropriately modified as circum- at a lower price than competitors.
stances change. Decision-making involves se- TD Asset Management competes in
lecting a course of action from among two or terms of customer intimacy. It focuses on build-
more alternatives. ing personal relationships with clients so that it
can tailor investment strategies to individual
1-3 A budget is a quantitative plan for the needs.
acquisition and use of financial and other re-
sources over a specified future time period. 1-8 Planning, controlling, and decision mak-
ing must be performed within the context of a
1-4 Customer value propositions fall into company’s strategy. For example, if a company
three broad categories—customer intimacy, op- that competes as a product leader plans to grow
erational excellence, and product leadership. A too quickly, it may diminish quality and threaten
company with a customer intimacy strategy at- the company’s customer value proposition. A
tempts to better understand and respond to its company that competes in terms of operational
customers’ individual needs than its competitors. excellence would select control measures that
A company that adopts an operational excel- focus on time-based performance, convenience,
lence strategy attempts to deliver products fas- and cost. A company that competes in terms of
ter, more conveniently, and at a lower price than customer intimacy may decide against outsourc-
its competitors. A company that has a product ing employee training to cut costs because it
leadership strategy attempts to offer higher might diminish the quality of customer service.
quality products than its competitors.
1-9 The six business functions that make
1-5 The Planning and Control Cycle involves the value chain are: (1) research and develop-
formulating plans, implementing plans, measur- ment; (2) product design; (3) manufacturing;
ing performance, and evaluating differences be- (4) marketing; (5) distribution; and (6) customer
tween planned and actual performance. service.
1-6 The Royal Bank of Canada could seg- 1-10 Examples of things socially responsible
ment its companywide performance by individu- organizations should provide for their employees
© McGraw-Hill Education Ltd. 2018. All rights reserved.
2 Managerial Accounting, 11th Canadian Edition
