SOLUTIONS MANUAL
to accompany
MANAGERIAL
ACCOUNTING
Tools for Business Decision Making
2ND Edition
Jerry J. Weygandt PhD, CPA
Arthur Andersen Alumni Professor of Accounting
University of Wisconsin
Madison, Wisconsin
Donald E. Kieso PhD, CPA
KPMG Peat Marwick Emeritus Professor of Accountancy
Northern Illinois University
DeKalb, Illinois
Paul D. Kimmel PhD, CPA
Associate Professor of Accounting
University of Wisconsin--Milwaukee
Milwaukee, Wisconsin
John Wiley & Sons, Inc.
,COVER PHOTO © Ron Behrmann/International Stock.
To order books or for customer service call 1-800-CALL-WILEY (225-5945).
Copyright © 2002 by John Wiley & Sons, Inc.
Excerpts from this work may be reproduced by
instructors for distribution on a not-for-profit basis for
testing or instructional purposes only to students enrolled
in courses for which the textbook has been adopted. Any
other reproduction or translation of this work beyond
that permitted by Sections 107 or 108 of the 1976 United
States Copyright Act without the permission of the
copyright owner is unlawful. Requests for permission or
further information should be addressed to the
Permissions Department, John Wiley & Sons, Inc., 605
Third Avenue, New York, NY 10158-0012.
ISBN 0-471-41641-X
Printed in the United States of America
10987654321
Printed and bound by Victor Graphics, Inc.
, Contents
Preface to the Instructor
Supplementary Materials and Teaching Aids
Chapter 1 Managerial Accounting
Chapter 2 Job Order Cost Accounting
Chapter 3 Process Cost Accounting
Chapter 4 Activity-Based Costing
Chapter 5 Cost-Volume-Profit Relationships
Chapter 6 Budgetary Planning
Chapter 7 Budgetary Control and Responsibility Accounting
Chapter 8 Performance Evaluation Through Standard Costs
Chapter 9 Incremental Analysis
Chapter 10 Capital Budgeting
Chapter 11 Pricing Decisions
Chapter 12 Statement of Cash Flows
Chapter 13 Financial Statement Analysis
Appendix C Time Value of Money
Solutions to Cases for Management Decision Making
Comprehensive CD Problem: Chapters 1 to 11
iii
, Preface to the Instructor
The presentation of the subject matter of the thirteen chapters in Managerial Accounting, Second Edi-
tion is followed by questions, brief exercises, exercises, problems, a group decision case, a managerial
analysis problem, a real-world focus problem, an exploring the Web assignment, a communication activity,
a research assignment, an ethics case, and a set of five comprehensive cases in an appendix (at the back
of the book). This Solutions Manual contains suggested answers to the questions and complete solutions
to all of these assignment items.
Assignment Classification Table. A unique feature of our Solutions Manual is a table that categorizes
the end-of-chapter items (questions, brief exercises, exercises, problems, and alternative problems) by
study objectives in each chapter.
Assignment Characteristics Table. Each chapter of this Solutions Manual contains a table offering:
(1) a short description of each problem and alternative problem, (2) an indication of the level of difficulty
(simple, moderate, or complex), and (3) the estimated time in minutes.
Bloom's Taxonomy Table. Each chapter features a correlation chart showing the relationship between
Bloom’s taxonomy of learning and study objective for each end-of-chapter item, allowing for more targeted
assignments and assessment.
Questions. The questions at the end of each chapter provide a basis for classroom discussion of the
topics presented in the chapter and serve as an aid to the students in testing their understanding of the
text materials. They deal with both conceptual and procedural matters. The sequence of questions gen-
erally corresponds to the topical coverage in the text. Full and complete answers to these questions are
presented in this manual.
Brief Exercises. Each brief exercise focuses on one of the study objectives listed at the beginning of the
chapter. Because these brief exercises are straightforward and simple, they build the student’s confidence
and test basic skills.
Exercises. Generally, the exercises cover a specific topic and require less time and effort to solve than
the problems. In addition to serving as supplemental assignment material, the exercises may be used for
class discussion and for examination purposes.
Problems. Whereas the goal of the exercises is brevity of solution time and coverage of essential prin-
ciples or methodology with minimum difficulty, the problems are designed to develop a professional level
of achievement and, therefore, are generally more challenging to solve. We have arranged the problems,
as much as possible, in the same order as the discussion in the chapter. Some of the problems are rou-
tine and can be solved by following procedures that are illustrated in the text. The more difficult problems
may blend a diversity of principles into a single situation requiring a series of steps, computations, or solu-
tions and demand interpretation, analysis, and judgment.
Additionally, a far greater number of problems has been provided than the instructor can reasonably
use in a single offering of the course. An alternative set of problems similar in nature and coverage to the
first set of problems is provided so that assignments similar in coverage and difficulty can be varied from
semester to semester.
iv
to accompany
MANAGERIAL
ACCOUNTING
Tools for Business Decision Making
2ND Edition
Jerry J. Weygandt PhD, CPA
Arthur Andersen Alumni Professor of Accounting
University of Wisconsin
Madison, Wisconsin
Donald E. Kieso PhD, CPA
KPMG Peat Marwick Emeritus Professor of Accountancy
Northern Illinois University
DeKalb, Illinois
Paul D. Kimmel PhD, CPA
Associate Professor of Accounting
University of Wisconsin--Milwaukee
Milwaukee, Wisconsin
John Wiley & Sons, Inc.
,COVER PHOTO © Ron Behrmann/International Stock.
To order books or for customer service call 1-800-CALL-WILEY (225-5945).
Copyright © 2002 by John Wiley & Sons, Inc.
Excerpts from this work may be reproduced by
instructors for distribution on a not-for-profit basis for
testing or instructional purposes only to students enrolled
in courses for which the textbook has been adopted. Any
other reproduction or translation of this work beyond
that permitted by Sections 107 or 108 of the 1976 United
States Copyright Act without the permission of the
copyright owner is unlawful. Requests for permission or
further information should be addressed to the
Permissions Department, John Wiley & Sons, Inc., 605
Third Avenue, New York, NY 10158-0012.
ISBN 0-471-41641-X
Printed in the United States of America
10987654321
Printed and bound by Victor Graphics, Inc.
, Contents
Preface to the Instructor
Supplementary Materials and Teaching Aids
Chapter 1 Managerial Accounting
Chapter 2 Job Order Cost Accounting
Chapter 3 Process Cost Accounting
Chapter 4 Activity-Based Costing
Chapter 5 Cost-Volume-Profit Relationships
Chapter 6 Budgetary Planning
Chapter 7 Budgetary Control and Responsibility Accounting
Chapter 8 Performance Evaluation Through Standard Costs
Chapter 9 Incremental Analysis
Chapter 10 Capital Budgeting
Chapter 11 Pricing Decisions
Chapter 12 Statement of Cash Flows
Chapter 13 Financial Statement Analysis
Appendix C Time Value of Money
Solutions to Cases for Management Decision Making
Comprehensive CD Problem: Chapters 1 to 11
iii
, Preface to the Instructor
The presentation of the subject matter of the thirteen chapters in Managerial Accounting, Second Edi-
tion is followed by questions, brief exercises, exercises, problems, a group decision case, a managerial
analysis problem, a real-world focus problem, an exploring the Web assignment, a communication activity,
a research assignment, an ethics case, and a set of five comprehensive cases in an appendix (at the back
of the book). This Solutions Manual contains suggested answers to the questions and complete solutions
to all of these assignment items.
Assignment Classification Table. A unique feature of our Solutions Manual is a table that categorizes
the end-of-chapter items (questions, brief exercises, exercises, problems, and alternative problems) by
study objectives in each chapter.
Assignment Characteristics Table. Each chapter of this Solutions Manual contains a table offering:
(1) a short description of each problem and alternative problem, (2) an indication of the level of difficulty
(simple, moderate, or complex), and (3) the estimated time in minutes.
Bloom's Taxonomy Table. Each chapter features a correlation chart showing the relationship between
Bloom’s taxonomy of learning and study objective for each end-of-chapter item, allowing for more targeted
assignments and assessment.
Questions. The questions at the end of each chapter provide a basis for classroom discussion of the
topics presented in the chapter and serve as an aid to the students in testing their understanding of the
text materials. They deal with both conceptual and procedural matters. The sequence of questions gen-
erally corresponds to the topical coverage in the text. Full and complete answers to these questions are
presented in this manual.
Brief Exercises. Each brief exercise focuses on one of the study objectives listed at the beginning of the
chapter. Because these brief exercises are straightforward and simple, they build the student’s confidence
and test basic skills.
Exercises. Generally, the exercises cover a specific topic and require less time and effort to solve than
the problems. In addition to serving as supplemental assignment material, the exercises may be used for
class discussion and for examination purposes.
Problems. Whereas the goal of the exercises is brevity of solution time and coverage of essential prin-
ciples or methodology with minimum difficulty, the problems are designed to develop a professional level
of achievement and, therefore, are generally more challenging to solve. We have arranged the problems,
as much as possible, in the same order as the discussion in the chapter. Some of the problems are rou-
tine and can be solved by following procedures that are illustrated in the text. The more difficult problems
may blend a diversity of principles into a single situation requiring a series of steps, computations, or solu-
tions and demand interpretation, analysis, and judgment.
Additionally, a far greater number of problems has been provided than the instructor can reasonably
use in a single offering of the course. An alternative set of problems similar in nature and coverage to the
first set of problems is provided so that assignments similar in coverage and difficulty can be varied from
semester to semester.
iv
