Solution Manual t
Managerial Accounting t
by ffiarrison Noreen
Uploaded by t
Mudassar Hassan t
University of Sargodha
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,Chapter 1 t
Managerial Accounting and the Business t t t t
Environment
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Solutions to Questions t t
1-1 Managerial accounting is concerned with t t t t from making one product to making another al-
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providing information to managers for use within
t t t t t t t lows the company to respond more quickly to cus-
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the organization. Financial accounting is con-
t t t t t t tomers. Finally, smaller batches make it easier to
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cerned with providing information to stockholders,
t t t t t t spot manufacturing problems before they result ina
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creditors, and others outside of the organization.
t t t t t t t large number of defective units.
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1-2 Essentially, managers carry out three ma- t t t t t 1-7 The main benefits of a successful JIT sys- t t t t t t t
tjor activities in an organization: planning, directing
t t t t t t tem are reductions in: (1) funds tied up in inven-
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and motivating, and controlling. All three activities
t t t t t t t tories; (2) space requirements; (3) throughput
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involve decision making.
t t t time; and (4) defects.
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1-3 The Planning and Control Cycle involves t t t t t 1-8 TQM generally approaches improvement t t t
formulating plans, implementing plans, measuring
t t t t t in a series of small steps that are planned and im-
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performance, and evaluating differences between
t t t t t plemented by teams of front-line workers. Process
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planned and actual performance.
t t t t Reengineering involves completely redesigning
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business processes from the ground up—often
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1-4 A line position is directly related to the t t t t t t t with the use of outside consultants.
t t t t t t
achievement of the basic objectives of the organi-
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zation. A staff position is not directly related to the
t t t t t t t t t t 1-9 If Process Reengineering is successful,t t t t
achievement of those objectives; rather, it is sup-
t t t t t t t t fewer workers are needed. If management re-
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portive, providing services and assistance to other
t t t t t t t sponds by laying off workers, morale will almost
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parts of the organization.
t t t t certain suffer.
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1-5 In contrast to financial accounting, mana- t t t t t 1-10 Some benefits from improvement efforts t t t t
gerial accounting: (1) focuses on the needs of the
t t t t t t t t t come from cost reductions, but the primary bene-
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manager; (2) places more emphasis on the future;
t t t t t t t t fit is often an increase in capacity. At non-con-
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(3) emphasizes relevance and flexibility, rather
t t t t t straints, increases in capacity just add to the al-
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than precision; (4) emphasizes the segments of an
t t t t t t t t ready-existing excess capacity. Therefore, im-
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organization; (5) is not governed by GAAP; and
t t t t t t t t provement efforts should ordinarily focus on the
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(6) is not mandatory. t t constraint.
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1-6 A number of benefits accrue from reduced t t t t t t 1-11 If people generally did not act ethically in
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setup time. First, reduced setup time allows a
t t t t t t t t tbusiness, no one would trust anyone else and t t t t t t t
company to produce in smaller batches, which in
t t t t t t t t tpeople would be reluctant to enter into business
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turn reduces the level of inventories. Second, re-
t t t t t t t t ttransactions. The result would be less funds raised t t t t t t t
duced setup time allows a company to spend more
t t t t t t t t t in capital markets, fewer goods and services avail-
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time producing goods and less time getting ready
t t t t t t t t able for sale, lower quality, and higher prices.
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to produce. Third, the ability to rapidly change
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© The McGraw-Hill Companies, Inc., 2006.
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Solutions Manual, Chapter 1 t t t 1
,Uploaded by t Mudassar Hassan
t
Exercise 1-1 (10 minutes)
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1. Line
2. Directing and motivating
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3. Budgets
4. Planning
5. Staff
6. Decentralization
7. Precision; Nonmonetary data
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8. Managerial accounting; Financial accounting
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9. Feedback
10. Controller
11. Performance report t
12. Chief Financial Officer
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© The McGraw-Hill Companies, Inc., 2006. All rights reserved.
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2 Managerial Accounting, 11th Edition
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, Exercise 1-2 (10 minutes)
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1. Total quality management; Process reengineering
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2. Just-In-Time
3. Nonconstraint
4. Benchmarking
5. Setup
6. Constraint
7. Non-value-added activities t
8. Business process t
© The McGraw-Hill Companies, Inc., 2006. All rights reserved.
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Solutions Manual, Chapter 1
t t t 3