Solution Manual for
Horngren's Managerial Chapters Accounting, 7th Edition by Tracie
Chapter 1-11
Chapter 1 b
Introduction to Managerial Accounting
b b b
Review Questions
b
1. Thebprimarybpurposebofbmanagerialbaccountingbisbtobprovidebinformationbtobhelpbmanagersbplan,bdire
ct,bcontrol,bandbmakebdecisions.
2. Financialbaccountingbandbmanagerialbaccountingbdifferbonbthebfollowingb6bdimensions:b(1)bprimarybusers,b
(2)bpurposebofbinformation,b(3)bfocusbandbtimebdimensionbofbthebinformation,b(4)brulesbandbrestrictions,b(
5)bscopebofbinformation,bandb(6)bbehavioral.
3. Linebpositionsbarebdirectlybinvolvedbinbprovidingbgoodsborbservicesbtobcustomers.bStaffbpositionsbsupp
ortblinebpositions.
4. Planningbmeansbchoosingbgoalsbandbdecidingbhowbtobachievebthem.bDirectingbinvolvesbrunningbthebday-
to-
dayboperationsbofbabbusiness.bControllingbisbthebprocessbofbmonitoringboperationsbandbkeepingbthebcompa
nybonbtrack.
5. ThebfourbIMAbstandardsbofbethicalbpracticebandbabdescriptionbofbeachbfollow.
I. Competence.
Maintainbanbappropriateblevelbofbprofessionalbleadershipbandbexpertisebbybenhancingbkno
wledgebandbskills.
Performbprofessionalbdutiesbinbaccordancebwithbrelevantblaws,bregulations,bandbtechnicalbstan
dards.
Providebdecisionbsupportbinformationbandbrecommendationsbthatbarebaccurate,bclear,bconcise,band
btimely.
Recognisebandbhelpbmangebrisk.
II. Confidentiality.
Keepbinformationbconfidentialbexceptbwhenbdisclosurebisbauthorizedborblegallybrequired.
Informballbrelevantbpartiesbregardingbappropriatebusebofbconfidentialbinformation.b Monitorbtobens
urebcompliance.
Refrainbfrombusingbconfidentialbinformationbforbunethicalborbillegalbadvantage.
III. Integrity.
Mitigatebactualbconflictsbofbinterest.bRegularlybcommunicatebwithbbusinessbassociatesbtobavoidbappar
entbconflictsbofbinterest.bbAdviseballbpartiesbofbanybpotentialbconflicts.
Refrainbfrombengagingbinbanybconductbthatbwouldbprejudicebcarryingboutbdutiesbethically.
Abstainbfrombengagingbinborbsupportingbanybactivitybthatbmightbdiscreditbthebprofession.
©b2021bPearsonbEducation,bInc. 1-1
, Contributebtobabpositivebethicalbculturebandbplacebintegritybofbthebprofessionbabovebpersonalbinte
rest.
5,bcont.
IV. Credibility.
Communicatebinformationbfairlybandbobjectively.
Provideballbrelevantbinformationbthatbcouldbreasonablybbebexpectedbtobinfluencebanbintendedbuser
’sbunderstandingbofbthebreports,banalyses,borbrecommendations.
Reportbanybdelaysborbdeficienciesbinbinformation,btimeliness,bprocessing,borbinternalbcontrolsbinbco
nformancebwithborganizationbpolicyband/orbapplicableblaw.
Communicatebanybprofessionalblimitationsborbotherbconstraintsbthatbwouldbprecludebresponsi-
blebjudgmentborbsuccessfulbperformancebofbanbactivity.
b
6. Servicebcompaniesbsellbtime,bskills,bandbknowledge.b Examplesbofbservicebcompaniesbincludebphonebservic
ebcompanies,bbanks,bcleaningbservicebcompanies,baccountingbfirms,blawbfirms,bmedicalbphysicians,bandbo
nlinebauctionbservices.
7. Merchandisingbcompaniesbresellbproductsbtheybbuybfrombsuppliers.bMerchandisersbkeepbanbinventorybofbpr
oducts,bandbmanagersbarebaccountablebforbthebpurchasing,bstorage,bandbsalebofbthebproducts.bExamplesbofb
merchandisingbcompaniesbincludebtoybstores,bgrocerybstores,bandbclothingbstores.
8. Merchandisingbcompaniesbresellbproductsbtheybpreviouslybboughtbfrombsuppliers,bwhereasbmanufacturing
bcompaniesbuseblabor,bequipment,bsupplies,bandbfacilitiesbtobconvertbrawbmaterialsbintob
newbfinishedbprodu
cts.bInbcontrastbtobmerchandisingbcompanies,bmanufacturingbcompaniesbhavebabbroadbrangebofbproductio
nbactivitiesbthatbrequirebtrackingbcostsbonbthreebkindsbofbinventory.
9. ThebthreebinventorybaccountsbusedbbybmanufacturingbcompaniesbarebRawbMaterialsbInventory,bWork-bin-
ProcessbInventory,bandbFinishedbGoodsbInventory.
RawbMaterialsbInventorybincludesbmaterialsbusedbtobmanufacturebabproduct.bWork-in-
ProcessbInventorybincludesbgoodsbthatbhavebbeenbstartedbinbthebmanufacturingbprocessbbutbarebnotbye
tbcomplete.b FinishedbGoodsbInventorybincludesbcompletedbgoodsbthatbhavebnotbyetbbeenbsold.
10. Abdirectbcostbisbabcostbthatbcanbbebeasilybandbcost-
effectivelybtracedbtobabcostbobjectb(whichbisbanythingbforbwhichbmanagersbwantbabseparatebmeasurementb
ofbcost).bAnbindirectbcostbisbabcostbthatbcannotbbebeasilyborbcost-effectivelybtracedbtobabcostbobject.
11. Thebthreebmanufacturingbcostsbforbabmanufacturingbcompanybarebdirectbmaterials,bdirectblabor,bandbmanuf
acturingboverhead.bDirectbmaterialsbarebmaterialsbthatbbecomebabphysicalbpartbofbabfinishedbproductbandbw
hosebcostsbarebeasilybtraceablebtobthebfinishedbproduct.b Directblaborbisbtheblaborbcostbofbthebemployeesbwh
obconvertbmaterialsbintobfinishedbproducts.b Manufacturingboverheadbincludesball
©b2021bPearsonbEducation,bInc. 1-2
, manufacturingbcostsbexceptbdirectbmaterialsbandbdirectblabor,bsuchbasbindirectbmaterials,bindirectblabor
,bfactorybdepreciation,bfactorybrent,bandbfactorybpropertybtaxes.
12. Examplesbofbmanufacturingboverheadbincludebcostsbofbindirectbmaterials,bindirectblabor,brepairbandbmai
ntenancebinbfactory,bfactorybutilities,bfactorybrent,bfactorybinsurance,bfactorybpropertybtaxes,bmanufactur
ingbplantbmanagers’bsalaries,bandbdepreciationbonbmanufacturingbbuildingsbandbequipment.
13. Primebcostsbarebdirectbmaterialsbplusbdirectblabor.bConversionbcostsbarebdirectblaborbplusbmanufacturin
gboverhead.bNotebthatbdirectblaborbisbclassifiedbasbbothbabprimebcostbandbabconversionbcost.
14. Productbcostsbarebthebcostbofbpurchasingborbmakingbabproduct.b Thesebcostsbarebrecordedbasbanbassetbandb
notbexpensedbuntilbthebproductbisbsold.bProductbcostsbincludebdirectbmaterials,bdirectblabor,bandbmanufac
turingboverhead.
15. Periodbcostsbarebnon-
manufacturingbcostsbthatbarebexpensedbinbthebsamebaccountingbperiodbinbwhichbtheybarebincurred,bwherea
sbproductbcostsbarebrecordedbasbanbassetbandbnotbexpensedbuntilbthebaccountingbperiodbinbwhichbthebprod
uctbisbsold.
16. CostbofbGoodsbManufacturedbisbcalculatedbasbBeginningbWork-in-
ProcessbInventoryb+bTotalbManufacturingbCostsbIncurredbduringbthebYearb–bEndingbWork-in-
ProcessbInventory.bTotalbManufacturingbCostsbIncurredbduringbthebYearb=bDirectbMaterialsbUse
db+bDirectbLaborb+bManufacturingbOverhead.
17. Forbabmanufacturingbcompany,bthebactivitybinbthebFinishedbGoodsbInventorybaccountbprovidesbthebinf
ormationbforbdeterminingbCostbofbGoodsbSold.bAbmanufacturingbcompanybcalculatesbCostbofbGoodsb
SoldbasbBeginningbFinishedbGoodsbInventoryb+bCostbofbGoodsbManufacturedb–
bEndingbFinishedbGoodbInventory.bInbaddition,babmanufacturingbcompanybmustbtrackbcostsbfrombRaw
bMaterialsbInventorybandbWork-in-
ProcessbInventorybinborderbtobcomputebCostbofbGoodsbManufacturedbusedbinbthebpreviousbequation.
Forbabmerchandisingbcompany,bthebactivitybinbthebMerchandisebInventorybaccountbprovidesbthebinformati
onbforbdeterminingbCostbofbGoodsbSold.bAbmerchandisingbcompanybcalculatesbCostbofbGoodsbSoldbasbBe
ginningbMerchandisebInventoryb+bPurchasesbandbFreightbInb–bEndingbMerchandisebInventory.
18. AbmanufacturingbcompanybcalculatesbunitbproductbcostbasbCostbofbGoodsbManufacturedb/bTotalbnu
mberbofbunitsbproduced.
19. AbservicebcompanybcalculatesbunitbcostbperbservicebasbTotalboperatingbcostsb/bTotalbnumberbofbserv
icesbprovided.
©b2021bPearsonbEducation,bInc. 1-3
, 20. AbmerchandisingbcompanybcalculatesbunitbcostbperbitembasbTotalbcostbofbgoodsbsoldb/bTotalbnumberbofbite
msbsold.
Short Exercises
b
S-M:1-1
a. FA
b. MA
c. MA
d. FA
e. FA
S-M:1-2
a. Confidentiality
b. Integrity
c. Competenceb(skippingbthebsession);b Integrityb(company-paidbconference)
d. Competence
e. Credibility;b Integrity
S-M:1-3
a. 2
b. 4
c. 1
d. 5
e. 4
f. 5
g. 3
S-M:1-4
Gluebforbframes $ 250
Plantbdepreciation 7,500
Plantbforeman’sbsalary 3,500
Plantbjanitor’sbwages 1,300
Oilbforbmanufacturingbequipment b 150bb
Totalbmanufacturingboverhead b $b12,700bb
©b2021bPearsonbEducation,bInc. 1-4
