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Official effects cost accounting Horngren 9780273753872 management accounting Page 908 Chapter 1 / m 21
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By: karansamlal • 7 year ago
By: tanja123 • 9 year ago
The assignments are consistent with my book but unfortunately the numbers do not match. I myself held the 14th edition of this book. Therefore, I suspect that the effects of the 13th editite. Very sorry that stands in the description wrong ISBN
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CHAPTER 1THE ACCOUNTANT’S ROLE IN THE ORGANIZATION
See the front matter of this Solutions Manual for suggestions regarding your choices of
assignment material for each chapter.
1-1 Management accounting measures, analyzes and reports financial and nonfinancial
information that helps managers make decisions to fulfill the goals of an organization. It focuses
on internal reporting and is not restricted by generally accepted accounting principles (GAAP).
Financial accounting focuses on reporting to external parties such as investors,
government agencies, and banks. It measures and records business transactions and provides
financial statements that are based on generally accepted accounting principles (GAAP).
Other differences include (1) management accounting emphasizes the future (not the
past), and (2) management accounting influences the behavior of managers and other employees
(rather than primarily reporting economic events).
1-2 Financial accounting is constrained by generally accepted accounting principles.
Management accounting is not restricted to these principles. The result is that
management accounting allows managers to charge interest on owners’ capital to help
judge a division’s performance, even though such a charge is not allowed under GAAP,
management accounting can include assets or liabilities (such as “brand names”
developed internally) not recognized under GAAP, and
management accounting can use asset or liability measurement rules (such as present
values or resale prices) not permitted under GAAP.
1-3 Strategic cost management describes cost management that
specifically focuses on strategic issues. Management accountants help
formulate strategy by helping managers answer questions such as:
Who are our most important customers, and how do we deliver value
to them? For example, after Amazon.com’s success in selling books
online, Barnes and Noble developed the capabilities to sell online by
building its information and technology infrastructure.
What substitute products exist in the marketplace, and how do they
differ from our product in terms of price and quality? For example,
Hewlett-Packard designs new printers after comparing the quality,
price, and functionality of its printers to other printers in the
marketplace.
What is our most critical capability? Is it technology, production, or
marketing? How can we leverage it for new strategic initiatives? For
example, Kellogg Company uses the reputation of its brand to
introduce new cereals.
Will adequate cash be available to fund the strategy, or will
additional funds need to be raised? For example, Proctor & Gamble
issued new debt and equity to fund its strategic acquisition of
Gillette.
3-1
,1-4 The business functions in the value chain are
Research and development—generating and experimenting with ideas related to new
products, services, or processes.
Design of products, services, and processes—the detailed planning and engineering
of products, services, or processes.
Production—acquiring, coordinating, and assembling resources to produce a product
or deliver a service.
Marketing—promoting and selling products or services to customers or prospective
customers.
Distribution—delivering products or services to customers.
Customer service—providing after-sale support to customers.
1-5 Supply chain describes the flow of goods, services, and information from the initial
sources of materials and services to the delivery of products to consumers, regardless of whether
those activities occur in the same organization or in other organizations.
Cost management is most effective when it integrates and coordinates activities across all
companies in the supply chain as well as across each business function in an individual
company’s value chain. Attempts are made to restructure all cost areas to be more cost-effective.
1-6 “Management accounting deals only with costs.” This statement is misleading at best,
and wrong at worst. Management accounting measures, analyzes, and reports financial and non-
financial information that helps managers define the organization’s goals, and make decisions to
fulfill them. Management accounting also analyzes revenues from products and customers in
order to assess product and customer profitability. Therefore, while management accounting does
use cost information, it is only a part of the organization’s information recorded and analyzed by
management accountants.
1-7 Management accountants can help improve quality and achieve timely product deliveries
by recording and reporting an organization’s current quality and timeliness levels and by analyzing
and evaluating the costs and benefits—both financial and non-financial—of new quality initiatives
such as TQM, relieving bottleneck constraints or providing faster customer service.
1-8 The five-step decision-making process is (1) identify the problem and uncertainties (2)
obtain information (3) make predictions about the future (4) make decisions by choosing among
alternatives and (5) implement the decision, evaluate performance and learn.
1-9 Planning decisions focus on (a) selecting organization goals, predicting results under
various alternative ways of achieving those goals, deciding how to attain the desired goals, and
(b) communicating the goals and how to attain them to the entire organization.
Control decisions focus on (a) taking actions that implement the planning decisions, and (b)
deciding how to evaluate performance and providing feedback and learning to help future decision making.
1-10 The three guidelines for management accountants are
1. Employ a cost-benefit approach.
2. Recognize behavioral and technical considerations.
3. Apply the notion of “different costs for different purposes”.
1-11 Agree. A successful management accountant requires general business skills (such as
understanding the strategy of an organization) and people skills (such as motivating other team
3-2
, members) as well as technical skills (such as computer knowledge, calculating costs of products,
and supporting planning and control decisions).
1-12 The new controller could reply in one or more of the following ways:
(a) Demonstrate to the plant manager how he or she could make better decisions if the
plant controller was viewed as a resource rather than a deadweight. In a related way,
the plant controller could show how the plant manager’s time and resources could be
saved by viewing the new plant controller as a team member.
(b) Demonstrate to the plant manager a good knowledge of the technical aspects of the
plant. This approach may involve doing background reading. It certainly will involve
spending much time on the plant floor speaking to plant personnel.
(c) Show the plant manager examples of the new plant controller’s past successes in
working with line managers in other plants. Examples could include
assistance in preparing the budget,
assistance in analyzing problem situations and evaluating financial and
nonfinancial aspects of different alternatives, and
assistance in submitting capital budget requests.
(d) Seek assistance from the corporate controller to highlight to the plant manager the
importance of many tasks undertaken by the new plant controller. This approach is a
last resort but may be necessary in some cases.
1-13 IMA stands for the Institute of Management Accountants. It is the largest association of
management accountants in the United States. The CMA (Certified Management Accountant) is
the professional designation for management accountants and financial executives. It
demonstrates that the holder has met the admission criteria and demonstrated the competency of
management accounting knowledge required by the IMA.
1-14 The Institute of Management Accountants (IMA) sets standards of ethical conduct for
management accountants in the following areas:
Competence
Confidentiality
Integrity
Credibility
1-15 Steps to take when established written policies provide insufficient guidance are
(a) Discuss the problem with the immediate superior (except when it appears that the
superior is involved).
(b) Clarify relevant ethical issues by confidential discussion with an IMA Ethics
Counselor or other impartial advisor.
(c) Consult your own attorney as to legal obligations and rights concerning the ethical
conflicts.
3-3
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