SOLUTION MANUAL d
Horngren's Accounting, The Managerial Chapters, 14th Edition
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By Tracie Miller-Nobles Brenda Mattison, All Chapters 1 - 9
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,Table of contents
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1. Introduction to Managerial Accounting
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2. Job Order Costing
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3. Process Costing d
4. Cost-Volume-Profit Analysis d
5. Master Budgets d
6. Flexible Budgets and Standard Cost Systems
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7. Cost Allocation and Responsibility Accounting
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8. Short-Term Business Decisions d d
9. Capital Investment Decisions
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,Chapter M:1 d
Introduction to Managerial Accounting d d d
Review Questions d
1. What is the primary purpose of managerial accounting?
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The primary purpose of managerial accounting is to provide information to help managers plan,
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direct, control, and make decisions.
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2. List six differences between financial accounting and managerial accounting.
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Financial accounting and managerial accounting differ on the following 6 dimensions: (1) primary
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users, (2) purpose of information, (3) focus and time dimension of the information, (4) rules and re-
d d d d d d d d d d d d d d d d d
strictions, (5) scope of information, and (6) behavioral.
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3. Explain the difference between line positions and staff positions.
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Line positions are directly involved in providing goods or services to customers. Staff positions
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support line positions.
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4. Explain the differences between planning, directing, and controlling.
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Planning means choosing goals and deciding how to achieve them. Directing involves running the day-
d d d d d d d d d d d d d d
to-day operations of a business. Controlling is the process of monitoring operations and keepingthe
d d d d d d d d d d d d d d
company on track.
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5. List the four IMA standards of ethical practice and briefly describe each.
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The four IMA standards of ethical practice and a description of each follow.
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I. Competence.
Maintain an appropriate level of professional leadership and expertise by enhancing d d d d d d d d d d
knowledge and skills. d d d
Perform professional duties in accordance with relevant laws, regulations, and technical
d d d d d d d d d d
standards. d
Provide decision support information and recommendations that are accurate, clear, concise,
d d d d d d d d d d
, and timely. d
Recognise and help mange risk. d d d d
II. Confidentiality.
Keep information confidential except when disclosure is authorized or legally required.
d d d d d d d d d d
Inform all relevant parties regarding appropriate use of confidential information. Monitor to
d d d d d d d d d d d
ensure compliance.
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Refrain from using confidential information for unethical or illegal advantage.
d d d d d d d d d
III. Integrity.
Mitigate actual conflicts of interest. Regularly communicate with business associates to avoid
d d d d d d d d d d d
apparent conflicts of interest. Advise all parties of any potential conflicts.
d d d d dd d d d d d d
Refrain from engaging in any conduct that would prejudice carrying out duties ethically.
d d d d d d d d d d d d
Abstain from engaging in or supporting any activity that might discredit the profession.
d d d d d d d d d d d d
Contribute to a positive ethical culture and place integrity of the profession above personal
d d d d d d d d d d d d d
interest. d
5, cont.
d
IV. Credibility.
Communicate information fairly and objectively. d d d d
Provide all relevant information that could reasonably be expected to influence an intended
d d d d d d d d d d d d
user’s understanding of the reports, analyses, or recommendations.
d d d d d d d d
Report any delays or deficiencies in information, timeliness, processing, or internal controlsin
d d d d d d d d d d d d
conformance with organization policy and/or applicable law.
d d d d d d d
Communicate any professional limitations or other constraints that would preclude responsi- d d d d d d d d d d
ble judgment or successful performance of an activity.
d d d d d d d d
6. Describe a service company and give an example.
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Service companies sell time, skills, and knowledge. Examples of service companies include phone
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service companies, banks, cleaning service companies, accounting firms, law firms, medical physi-
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cians, and online auction services.
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7. Describe a merchandising company and give an example.
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Merchandising companies resell products they buy from suppliers. Merchandisers keep an inventory
d d d d d d d d d d d
of products, and managers are accountable for the purchasing, storage, and sale of the products. Ex-
d d d d d d d d d d d d d d d d
amples of merchandising companies include toy stores, grocery stores, and clothing stores.
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8. How do manufacturing companies differ from merchandising companies?
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Merchandising companies resell products they previously bought from suppliers, whereas manufac-
d d d d d d d d d d
turing companies use labor, equipment, supplies, and facilities to convert raw materials into new fin-
d d d d d d d d d d d d d d d
Horngren's Accounting, The Managerial Chapters, 14th Edition
d d d d d d
By Tracie Miller-Nobles Brenda Mattison, All Chapters 1 - 9
d d d d d d d d d
,Table of contents
d d
1. Introduction to Managerial Accounting
d d d
2. Job Order Costing
d d
3. Process Costing d
4. Cost-Volume-Profit Analysis d
5. Master Budgets d
6. Flexible Budgets and Standard Cost Systems
d d d d d
7. Cost Allocation and Responsibility Accounting
d d d d
8. Short-Term Business Decisions d d
9. Capital Investment Decisions
d d
,Chapter M:1 d
Introduction to Managerial Accounting d d d
Review Questions d
1. What is the primary purpose of managerial accounting?
d d d d d d d
The primary purpose of managerial accounting is to provide information to help managers plan,
d d d d d d d d d d d d d
direct, control, and make decisions.
d d d d d
2. List six differences between financial accounting and managerial accounting.
d d d d d d d d
Financial accounting and managerial accounting differ on the following 6 dimensions: (1) primary
d d d d d d d d d d d d
users, (2) purpose of information, (3) focus and time dimension of the information, (4) rules and re-
d d d d d d d d d d d d d d d d d
strictions, (5) scope of information, and (6) behavioral.
d d d d d d d d
3. Explain the difference between line positions and staff positions.
d d d d d d d d
Line positions are directly involved in providing goods or services to customers. Staff positions
d d d d d d d d d d d d d
support line positions.
d d d
4. Explain the differences between planning, directing, and controlling.
d d d d d d d
Planning means choosing goals and deciding how to achieve them. Directing involves running the day-
d d d d d d d d d d d d d d
to-day operations of a business. Controlling is the process of monitoring operations and keepingthe
d d d d d d d d d d d d d d
company on track.
d d d
5. List the four IMA standards of ethical practice and briefly describe each.
d d d d d d d d d d d
The four IMA standards of ethical practice and a description of each follow.
d d d d d d d d d d d d
I. Competence.
Maintain an appropriate level of professional leadership and expertise by enhancing d d d d d d d d d d
knowledge and skills. d d d
Perform professional duties in accordance with relevant laws, regulations, and technical
d d d d d d d d d d
standards. d
Provide decision support information and recommendations that are accurate, clear, concise,
d d d d d d d d d d
, and timely. d
Recognise and help mange risk. d d d d
II. Confidentiality.
Keep information confidential except when disclosure is authorized or legally required.
d d d d d d d d d d
Inform all relevant parties regarding appropriate use of confidential information. Monitor to
d d d d d d d d d d d
ensure compliance.
d d
Refrain from using confidential information for unethical or illegal advantage.
d d d d d d d d d
III. Integrity.
Mitigate actual conflicts of interest. Regularly communicate with business associates to avoid
d d d d d d d d d d d
apparent conflicts of interest. Advise all parties of any potential conflicts.
d d d d dd d d d d d d
Refrain from engaging in any conduct that would prejudice carrying out duties ethically.
d d d d d d d d d d d d
Abstain from engaging in or supporting any activity that might discredit the profession.
d d d d d d d d d d d d
Contribute to a positive ethical culture and place integrity of the profession above personal
d d d d d d d d d d d d d
interest. d
5, cont.
d
IV. Credibility.
Communicate information fairly and objectively. d d d d
Provide all relevant information that could reasonably be expected to influence an intended
d d d d d d d d d d d d
user’s understanding of the reports, analyses, or recommendations.
d d d d d d d d
Report any delays or deficiencies in information, timeliness, processing, or internal controlsin
d d d d d d d d d d d d
conformance with organization policy and/or applicable law.
d d d d d d d
Communicate any professional limitations or other constraints that would preclude responsi- d d d d d d d d d d
ble judgment or successful performance of an activity.
d d d d d d d d
6. Describe a service company and give an example.
d d d d d d d
Service companies sell time, skills, and knowledge. Examples of service companies include phone
d d d d d d d d d d d d
service companies, banks, cleaning service companies, accounting firms, law firms, medical physi-
d d d d d d d d d d d d
cians, and online auction services.
d d d d d
7. Describe a merchandising company and give an example.
d d d d d d d
Merchandising companies resell products they buy from suppliers. Merchandisers keep an inventory
d d d d d d d d d d d
of products, and managers are accountable for the purchasing, storage, and sale of the products. Ex-
d d d d d d d d d d d d d d d d
amples of merchandising companies include toy stores, grocery stores, and clothing stores.
d d d d d d d d d d d d
8. How do manufacturing companies differ from merchandising companies?
d d d d d d d
Merchandising companies resell products they previously bought from suppliers, whereas manufac-
d d d d d d d d d d
turing companies use labor, equipment, supplies, and facilities to convert raw materials into new fin-
d d d d d d d d d d d d d d d
