ACCESS Test Bank for Fundamental Managerial Accounting Concepts 10th Editi
m m m m m m m m m
on Edmonds m
Chapterm01m-mManagementmAccountingmandmCorporatemGovernance
Teaching Notes for Chapter 1
m m m m
Managerialmaccountingmrequiresmteachingmmethodsmdifferentmfrommthosemusedminmfinancia
lmaccounting.mInmthemintroductorymfinancialmaccountingmcourse,minstructorsmteachmstudents
maboutmaccountingmstandards.mAmprimarym goalminmteachingmmanagerialmaccountingmismtomd
evelopmstudents’mconditionalmassessmentmskillsm(critical-
thinkingmskills).mFormexample,minmamlatermchapter,mstudentsmaremfrequentlymconfusedmbymth
emfactmthat,minmdifferentmsituations,mamgivenmcostmcanmbemclassifiedmasmfixedmormvariable,mdir
ectmormindirect,mrelevantmormnotmrelevant.mThemsalarymcostmofmstoremmanagersmmaymbemfixed
mwithmrespectmtomthemnumbermofmcustomersmthatmentermtheirmstores.mHowever,mmanagers’ms
alarymcostmismvariablemrelativemtomthemnumbermofmstoresmamcompanymoperates.mAmmanager’
smsalarymcostmismdirectlymtraceablemtomamparticularmstorembutmnotmtraceablemtomamsalemoccurri
ngminmthemstore.mStudentsmmustmlearnmtomassessmthemconditionsmthatmdeterminemcostmclassif
ication.mChapterm1moffersmthemfirstmopportunitymtomdevelopmthemstudents’mconditionalmasse
ssmentmskills.mHere,mstudentsmlearnmthatmdepreciationmcanmbemclassifiedmasmanmassetmormanm
expense,mdependingmonmcertainmconditions.mIfmamdepreciablemassetmismusedmtomproduceminve
ntory,mthemdepreciationmcostmwillmfirstmbemclassifiedmasmanmassetm(inventory)mandmlatermasman
mexpensem(costmofmgoodsmsold).mIfmthemdepreciablemassetmismusedmtomsupportmsellingmandmad
ministrativemactivities,mdepreciationmwillmbemreportedmdirectlymonmthemincomemstatementma
smdepreciationmexpense.
Studentsmtypicallymentermmanagerialmaccountingmwithmrigidmideasmaboutmexpensemreco
gnition.mInmfinancialmaccountingmtheymlearnedmthatmdepreciationmandmemployeemcompensa
tionmcostsmaremexpensedmdirectlymonmthemincomemstatement.mThemideamthatmdepreciationmre
latedmtommanufacturingmequipmentmandmwagesmofmproductionmworkersmwillmpassmthroughm
anminventorymaccountmbeforembeingmexpensedmasmcostmofmgoodsmsoldmismcontrarymtomtheirmex
istingmknowledgembase.mExpandingmthatmknowledgembasemrequiresmamsignificantmcommitm
entmofmteachingmtime.mYourmstudentsmaremdevelopingmtheirmanalyticalmskills.mTheymaremlear
ningmhowmtomassessmthemconditionsmthatminfluencemcostmclassification.m Thismtypemofmlearni
ngmrequiresmmoremtimemthanmmerelymmemorizingmdefinitions.mIfmyoumsometimesmfeelmthatm
progressmismtoomslow,mremembermthatmyoumarembuildingmamfoundationmuponmwhichmsubseq
uentmlearningmwillmrest.mTheremismnommoremimportantmteachingmtaskmthanmhelpingmstudents
mformmamsoundmconceptualmframework.mWemrecommendmusingmapproximatelymthreemhours
mofmclassmtimemformChapterm1.
1-1
©mMcGrawmHillmLLC.mAllmrightsmreserved.mN ynursytest.store hempriormwrittenmconsentmofmMcGrawmHillmL
omrm
e LC.
,ACCESS Test Bank for Fundamental Managerial Accounting Concepts 10th Editi
m m m m m m m m m
on Edmonds m
Chapterm01m-mManagementmAccountingmandmCorporatemGovernance
Detailed Outline of a Lesson Plan for Chapter 1
m m m m m m m m
AmcomprehensivemlessonmplanmformthemfirstmdaymofmclassmbeginsminmthemIntroductionmtomthismmanual.mPl
easemreadmitmbeforemimplementingmstepsmII–VIIImofmthemfollowingmlessonmplan.
I. Distinguishmbetweenmmanagerialmandmfinancialmaccounting.mThembestmwaymtom
differentiatembetweenmmanagerialmandmfinancialmaccountingmismtomhighlightmdiffere
ncesmwheremtheymoccurminmthemsubjectmmattermthroughoutmthemcourse.mFormexampl
e,mwhenmusingmestimatedmdataminmamdecision-
makingmcontext,mpointmoutmthatmmanagerialmaccountingmismfuture-
orientedmrathermthanmhistoricallymbased.mAmlongmmonologuemaboutmthemdifferences
mbetweenmfinancialmandmmanagerialmaccountingmwillmonlymboremyourmstudents.mInma
mbriefmintroductionmtomthismtopic,myoummightmdiscussmtheminformationmneedsmforminte
rnalmusersm(managers)mtomplan,mdirect,mandmcontrol.mTheminformationmneededmbyma
mmanagermdependsmonmhis/hermpositionminmthemorganizationmandmthemparticularmdec
isionmfacingmthemmanager.mIfmyoumwantmtomspendmmoremtimemonmthemtopic,mExercis
em1-1Amfrommthemend-of-
chaptermmaterialsminmthemtextmmightmbemanmappropriatemin-
classmactivitymatmthismpoint.
II. UsemDemonstrationmProblemm1-1masmamproblem-
basedmlearningmexercise.m(Seemthemintroductionmtomthismmanualmformdetailsmaboutm
problem-basedmlearning.)
III. Aftermgivingmthemstudentsmamfewmminutesmtomdigestmthemproblemmandmformul
atemsolutions,mengagemthemminmsomemformmofmcollaborativemlearningmexperien
ce.
IV. Introducem them conceptm ofm productm costingm bym providingm them solutionm to
requirementmamofmDemonstrationmProblemm1-1.
V. ContinuingmDemonstrationmProblemm1-
1,mdeterminemthemcostmpermunitmandmthemsalesmpricemusingmamcost-
plusmpricingmstrategy.
VI. Showmhowmproductmcostsmaremexpensedmthroughmcostmofmgoodsmsold.
VII. Introducemthemcostmcategorymofmselling,mgeneral,mandmadministrativemcostsm(S
G&Amcosts).
VIII. UsemProblemm1-19Amasmanmin-classmreinforcementmexercise.
IX. CopymandmdistributemDemonstrationmProblemm1-2.mDemonstrationmProblemm1-
2mexpandsmthemclassificationmconceptsmintroducedminmDemonstrationmProblemm1-
1mtomincludemaccountingmformthemdepreciationmofmmanufacturingmequipment.mExpla
inmthatmdepreciationmonmmanufacturingmfacilitiesmandmequipmentmismamproductmcost.m
Pointmoutmthatmthementrymtomrecordmdepreciationmonmmanufacturingmequipmentmrepr
esentsmanmassetmexchangemtransaction.mThembookmvaluemofmmanufacturingmequipm
1-2
©mMcGrawmHillmLLC.mAllmrightsmreserved.mN ynursytest.store hempriormwrittenmconsentmofmMcGrawmHillmL
omrm
e LC.
,ACCESS Test Bank for Fundamental Managerial Accounting Concepts 10th Editi
m m m m m m m m m
on Edmonds m
Chapterm01m-mManagementmAccountingmandmCorporatemGovernance
entmdecreases,mandmthembalanceminmthemInventorymaccountmincreases.mStudentsmarem
somaccustomedmtomthemideamthatmdepreciationmismanmexpense,mtheymaremnotmlikelymtom
graspmthemproductmcostmconceptmuntilmtheymworkmamproblem.mAftermyourmexplanatio
n,massign
1-3
©mMcGrawmHillmLLC.mAllmrightsmreserved.mN ynursytest.store hempriormwrittenmconsentmofmMcGrawmHillmL
omrm
e LC.
, ACCESS Test Bank for Fundamental Managerial Accounting Concepts 10th Editi
m m m m m m m m m
on Edmonds m
Chapterm01m-mManagementmAccountingmandmCorporatemGovernance
DemonstrationmProblemm1-
2mtomstudentsmandmhavemthemmattemptmtomworkmthemproblem.mStudentsmshouldmbema
blemtomworkmthemproblemmwithmminimalmhelp.mWalkmaroundmthemroom;mifmyoumfind
mthatmstudentsmaremhavingmtrouble,mhelpmasmneeded.
IfmyoumdesiremfurthermreinforcementmofmproductmversusmSG&Amcostmclassifications
,mseemProblemm1-20Amorm1-
20B.mStudentsmmaymneedmhelpmgettingmstartedmwithmthesemproblems.
X. Discussmthemimportancemofmproductmandmperiodmcostingminmfinancialmstatemen
ts.mStudentsmareminterestedminmhowmproductmcostingmaffectsmreal-
worldmdecisionmmaking.mAftermshowingmthemmhowmthemclassificationmofmcostsmasmp
roductmversusmselling,mgeneral,mandmadministrativemcanmaffectmthemamountsmreport
edminmamcompany’smbalancemsheetmandmincomemstatement,mwemdiscussmhowmthemam
ountsmreportedminmthemfinancialmstatementsmcanmaffectmbusinessmdecisions.mSpecifi
cally,mwemdiscussmthemimplicationsmformacquiringmcapitalmormdebt,mthempotentialmeff
ectmonmexecutivemcompensation,mandmthemimpactmonmincomemtaxes.mTomaddressmth
esemissues,mwemsuggestmyoumusemProblemm1-
21Amasmamdemonstrationmproblem.mThen,myoummaymwishmtomusemProblemm1-
21Bmasmamhomeworkmproblem.
XI. Discussmmanagerialmversusmfinancialmtreatmentmofmupstream,mmidstream,man
dmdownstreammcostsminmmanufacturingmcompanies.mThismcanmeliminatemthemnee
dmformseparatemreportsmforminternalmandmexternalmfinancialmreporting.mManagersmma
ymfailmtomusemupstreammormdownstreammcostsmwhenmcalculatingmsalesmpricemormprod
uctmprofitability.mUsemDemonstrationmProblemm1-3mtomintroducemthismconcept.
XII. Themchaptermprovidesmambriefmintroductionmtomtotalmqualitymmanagementm(T
QM),mactivity-
basedmmanagementm(ABM),mandmvaluemchainmanalysis.mEachmofmthesemtopicsmism
coveredminmmoremdepthminmlatermchaptersmofmthemtext.mIfmyoumaremrunningmshortmofmti
me,myoummaymminimizemthemtimemyoumallocatemtomthesemsubjects.mIfmyoumwishmtomc
overmthesemtopics,mwemsuggestmthatmyoumusemamproblemmfrommthemAmSetmofmthemend
-of-chaptermmaterials,mlikemProblemm1-
29Amonmvaluemchainmanalysis,minmthemtextmasmamdemonstrationmproblem.mThenmyou
mmaymwishmtomusemProblemm1-29B masmamhomeworkmproblem.
1-4
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omrm
e LC.
m m m m m m m m m
on Edmonds m
Chapterm01m-mManagementmAccountingmandmCorporatemGovernance
Teaching Notes for Chapter 1
m m m m
Managerialmaccountingmrequiresmteachingmmethodsmdifferentmfrommthosemusedminmfinancia
lmaccounting.mInmthemintroductorymfinancialmaccountingmcourse,minstructorsmteachmstudents
maboutmaccountingmstandards.mAmprimarym goalminmteachingmmanagerialmaccountingmismtomd
evelopmstudents’mconditionalmassessmentmskillsm(critical-
thinkingmskills).mFormexample,minmamlatermchapter,mstudentsmaremfrequentlymconfusedmbymth
emfactmthat,minmdifferentmsituations,mamgivenmcostmcanmbemclassifiedmasmfixedmormvariable,mdir
ectmormindirect,mrelevantmormnotmrelevant.mThemsalarymcostmofmstoremmanagersmmaymbemfixed
mwithmrespectmtomthemnumbermofmcustomersmthatmentermtheirmstores.mHowever,mmanagers’ms
alarymcostmismvariablemrelativemtomthemnumbermofmstoresmamcompanymoperates.mAmmanager’
smsalarymcostmismdirectlymtraceablemtomamparticularmstorembutmnotmtraceablemtomamsalemoccurri
ngminmthemstore.mStudentsmmustmlearnmtomassessmthemconditionsmthatmdeterminemcostmclassif
ication.mChapterm1moffersmthemfirstmopportunitymtomdevelopmthemstudents’mconditionalmasse
ssmentmskills.mHere,mstudentsmlearnmthatmdepreciationmcanmbemclassifiedmasmanmassetmormanm
expense,mdependingmonmcertainmconditions.mIfmamdepreciablemassetmismusedmtomproduceminve
ntory,mthemdepreciationmcostmwillmfirstmbemclassifiedmasmanmassetm(inventory)mandmlatermasman
mexpensem(costmofmgoodsmsold).mIfmthemdepreciablemassetmismusedmtomsupportmsellingmandmad
ministrativemactivities,mdepreciationmwillmbemreportedmdirectlymonmthemincomemstatementma
smdepreciationmexpense.
Studentsmtypicallymentermmanagerialmaccountingmwithmrigidmideasmaboutmexpensemreco
gnition.mInmfinancialmaccountingmtheymlearnedmthatmdepreciationmandmemployeemcompensa
tionmcostsmaremexpensedmdirectlymonmthemincomemstatement.mThemideamthatmdepreciationmre
latedmtommanufacturingmequipmentmandmwagesmofmproductionmworkersmwillmpassmthroughm
anminventorymaccountmbeforembeingmexpensedmasmcostmofmgoodsmsoldmismcontrarymtomtheirmex
istingmknowledgembase.mExpandingmthatmknowledgembasemrequiresmamsignificantmcommitm
entmofmteachingmtime.mYourmstudentsmaremdevelopingmtheirmanalyticalmskills.mTheymaremlear
ningmhowmtomassessmthemconditionsmthatminfluencemcostmclassification.m Thismtypemofmlearni
ngmrequiresmmoremtimemthanmmerelymmemorizingmdefinitions.mIfmyoumsometimesmfeelmthatm
progressmismtoomslow,mremembermthatmyoumarembuildingmamfoundationmuponmwhichmsubseq
uentmlearningmwillmrest.mTheremismnommoremimportantmteachingmtaskmthanmhelpingmstudents
mformmamsoundmconceptualmframework.mWemrecommendmusingmapproximatelymthreemhours
mofmclassmtimemformChapterm1.
1-1
©mMcGrawmHillmLLC.mAllmrightsmreserved.mN ynursytest.store hempriormwrittenmconsentmofmMcGrawmHillmL
omrm
e LC.
,ACCESS Test Bank for Fundamental Managerial Accounting Concepts 10th Editi
m m m m m m m m m
on Edmonds m
Chapterm01m-mManagementmAccountingmandmCorporatemGovernance
Detailed Outline of a Lesson Plan for Chapter 1
m m m m m m m m
AmcomprehensivemlessonmplanmformthemfirstmdaymofmclassmbeginsminmthemIntroductionmtomthismmanual.mPl
easemreadmitmbeforemimplementingmstepsmII–VIIImofmthemfollowingmlessonmplan.
I. Distinguishmbetweenmmanagerialmandmfinancialmaccounting.mThembestmwaymtom
differentiatembetweenmmanagerialmandmfinancialmaccountingmismtomhighlightmdiffere
ncesmwheremtheymoccurminmthemsubjectmmattermthroughoutmthemcourse.mFormexampl
e,mwhenmusingmestimatedmdataminmamdecision-
makingmcontext,mpointmoutmthatmmanagerialmaccountingmismfuture-
orientedmrathermthanmhistoricallymbased.mAmlongmmonologuemaboutmthemdifferences
mbetweenmfinancialmandmmanagerialmaccountingmwillmonlymboremyourmstudents.mInma
mbriefmintroductionmtomthismtopic,myoummightmdiscussmtheminformationmneedsmforminte
rnalmusersm(managers)mtomplan,mdirect,mandmcontrol.mTheminformationmneededmbyma
mmanagermdependsmonmhis/hermpositionminmthemorganizationmandmthemparticularmdec
isionmfacingmthemmanager.mIfmyoumwantmtomspendmmoremtimemonmthemtopic,mExercis
em1-1Amfrommthemend-of-
chaptermmaterialsminmthemtextmmightmbemanmappropriatemin-
classmactivitymatmthismpoint.
II. UsemDemonstrationmProblemm1-1masmamproblem-
basedmlearningmexercise.m(Seemthemintroductionmtomthismmanualmformdetailsmaboutm
problem-basedmlearning.)
III. Aftermgivingmthemstudentsmamfewmminutesmtomdigestmthemproblemmandmformul
atemsolutions,mengagemthemminmsomemformmofmcollaborativemlearningmexperien
ce.
IV. Introducem them conceptm ofm productm costingm bym providingm them solutionm to
requirementmamofmDemonstrationmProblemm1-1.
V. ContinuingmDemonstrationmProblemm1-
1,mdeterminemthemcostmpermunitmandmthemsalesmpricemusingmamcost-
plusmpricingmstrategy.
VI. Showmhowmproductmcostsmaremexpensedmthroughmcostmofmgoodsmsold.
VII. Introducemthemcostmcategorymofmselling,mgeneral,mandmadministrativemcostsm(S
G&Amcosts).
VIII. UsemProblemm1-19Amasmanmin-classmreinforcementmexercise.
IX. CopymandmdistributemDemonstrationmProblemm1-2.mDemonstrationmProblemm1-
2mexpandsmthemclassificationmconceptsmintroducedminmDemonstrationmProblemm1-
1mtomincludemaccountingmformthemdepreciationmofmmanufacturingmequipment.mExpla
inmthatmdepreciationmonmmanufacturingmfacilitiesmandmequipmentmismamproductmcost.m
Pointmoutmthatmthementrymtomrecordmdepreciationmonmmanufacturingmequipmentmrepr
esentsmanmassetmexchangemtransaction.mThembookmvaluemofmmanufacturingmequipm
1-2
©mMcGrawmHillmLLC.mAllmrightsmreserved.mN ynursytest.store hempriormwrittenmconsentmofmMcGrawmHillmL
omrm
e LC.
,ACCESS Test Bank for Fundamental Managerial Accounting Concepts 10th Editi
m m m m m m m m m
on Edmonds m
Chapterm01m-mManagementmAccountingmandmCorporatemGovernance
entmdecreases,mandmthembalanceminmthemInventorymaccountmincreases.mStudentsmarem
somaccustomedmtomthemideamthatmdepreciationmismanmexpense,mtheymaremnotmlikelymtom
graspmthemproductmcostmconceptmuntilmtheymworkmamproblem.mAftermyourmexplanatio
n,massign
1-3
©mMcGrawmHillmLLC.mAllmrightsmreserved.mN ynursytest.store hempriormwrittenmconsentmofmMcGrawmHillmL
omrm
e LC.
, ACCESS Test Bank for Fundamental Managerial Accounting Concepts 10th Editi
m m m m m m m m m
on Edmonds m
Chapterm01m-mManagementmAccountingmandmCorporatemGovernance
DemonstrationmProblemm1-
2mtomstudentsmandmhavemthemmattemptmtomworkmthemproblem.mStudentsmshouldmbema
blemtomworkmthemproblemmwithmminimalmhelp.mWalkmaroundmthemroom;mifmyoumfind
mthatmstudentsmaremhavingmtrouble,mhelpmasmneeded.
IfmyoumdesiremfurthermreinforcementmofmproductmversusmSG&Amcostmclassifications
,mseemProblemm1-20Amorm1-
20B.mStudentsmmaymneedmhelpmgettingmstartedmwithmthesemproblems.
X. Discussmthemimportancemofmproductmandmperiodmcostingminmfinancialmstatemen
ts.mStudentsmareminterestedminmhowmproductmcostingmaffectsmreal-
worldmdecisionmmaking.mAftermshowingmthemmhowmthemclassificationmofmcostsmasmp
roductmversusmselling,mgeneral,mandmadministrativemcanmaffectmthemamountsmreport
edminmamcompany’smbalancemsheetmandmincomemstatement,mwemdiscussmhowmthemam
ountsmreportedminmthemfinancialmstatementsmcanmaffectmbusinessmdecisions.mSpecifi
cally,mwemdiscussmthemimplicationsmformacquiringmcapitalmormdebt,mthempotentialmeff
ectmonmexecutivemcompensation,mandmthemimpactmonmincomemtaxes.mTomaddressmth
esemissues,mwemsuggestmyoumusemProblemm1-
21Amasmamdemonstrationmproblem.mThen,myoummaymwishmtomusemProblemm1-
21Bmasmamhomeworkmproblem.
XI. Discussmmanagerialmversusmfinancialmtreatmentmofmupstream,mmidstream,man
dmdownstreammcostsminmmanufacturingmcompanies.mThismcanmeliminatemthemnee
dmformseparatemreportsmforminternalmandmexternalmfinancialmreporting.mManagersmma
ymfailmtomusemupstreammormdownstreammcostsmwhenmcalculatingmsalesmpricemormprod
uctmprofitability.mUsemDemonstrationmProblemm1-3mtomintroducemthismconcept.
XII. Themchaptermprovidesmambriefmintroductionmtomtotalmqualitymmanagementm(T
QM),mactivity-
basedmmanagementm(ABM),mandmvaluemchainmanalysis.mEachmofmthesemtopicsmism
coveredminmmoremdepthminmlatermchaptersmofmthemtext.mIfmyoumaremrunningmshortmofmti
me,myoummaymminimizemthemtimemyoumallocatemtomthesemsubjects.mIfmyoumwishmtomc
overmthesemtopics,mwemsuggestmthatmyoumusemamproblemmfrommthemAmSetmofmthemend
-of-chaptermmaterials,mlikemProblemm1-
29Amonmvaluemchainmanalysis,minmthemtextmasmamdemonstrationmproblem.mThenmyou
mmaymwishmtomusemProblemm1-29B masmamhomeworkmproblem.
1-4
©mMcGrawmHillmLLC.mAllmrightsmreserved.mN ynursytest.store hempriormwrittenmconsentmofmMcGrawmHillmL
omrm
e LC.
