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Solution Manual for Management Accounting 8th Edition by Langfield-Smith

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Solution Manual for Management Accounting 8th Edition by Langfield-Smith

CHAPTER 1

Management Accounting: Information for Creating Value and Managing Resources

ANSWERS TO REVIEW QUESTIONS

 

1.1    There are many possible answers to the question.

Qantas, the national airline of Australia, has faced a number of changes in its business environment over the last 20 years, including deregulation of the domestic aviation industry. This resulted in increased competition as new companies attempted to enter the industry. The most notable of these was Compass, which madetwo failed attempts to succeed in the market and gain market share by savagely cutting prices. Qantas’major competitor, Ansett Australia, collapsed in 2001, resulting in Qantas having almost a monopoly for a short period. A powerful UK airline, Virgin, has also entered the market, with a history of taking legal action against market leaders who attempt to intimidate them using predatory pricing. Further, Impulse Airlines, a local airline, started operations, only to be eventually taken over by Qantas. On top of all this, the international terrorism crisis of 11 September 2001 saw a substantial contraction of international air travel for a period of many months, leading to the collapse of several United States airlines many times the size of Qantas.

Other changes to the business environment have included:

  • unrest and war in the Middle East and speculation in oil,resulting in volatility and serious increases in fuel prices
  • bombings in Bali in 2002 and 2005
  • the outbreak of severe acute respiratory syndrome (SARS) in 2003
  • natural disasters, such as the Asian tsunami in 2004
  • the heavy subsidisation of competing national carriers, especially by Middle Eastern countries
  • the entry of Tiger Airways into Australia
  • extra capacity gained by Virgin Blue
  • the shifting of significant parts of engineering maintenance operations offshore
  • publicity surrounding a series of safety and engineering concerns, and an audit by the Civil Aviation Safety Authority(CASA) in 2008, finding that maintenance by Qantas was not up to its own standards, and
  • financial uncertainty arising from the 2008 credit crisis and share market collapse.

In more recent times, two different volcanoes have caused the cancellation of flights forseveral days, and the explosion of an engine in a new range of aircraft, the A380, in November 2010 caused the grounding of that fleet until January 2011 while the reason was explored and overcome (see the ‘Real life’ in ‘Comparing two alternative investment projects’ in Chapter 21).

1.2    The explosion in e-commerce will affect management accounting in significant ways.One effect will be a drastic reduction in paperwork.Millions of transactions between businesses will be conducted electronically with no hard-copy documentation.Along with this method of communicating for business transactions comes the very significant issue of information security.Businesses need to find ways to protect confidential information in their own computers, while at the same time sharing the information necessary to complete transactions.Another effect of e-commerce is the dramatically increased speed with which business transactions can be conducted.In addition to these business-to-business transactional issues, there will be dramatic changes in the way management accounting procedures are carried out, one example being e-budgeting,the enterprise-wide electronic completion of a company’s budgeting process.

1.3    Management accounting information prepared on a regular basis includes product costs, profitability reports, and also individual resource costs such as materials purchased and used, labour costs and the costs incurred in providing and managing facilities. On an ad hoc basis, management accounting reports may be prepared to estimate future cash flows relating to the impact of purchasing and operating a new piece of equipment and the expected outcome from changing the product mix.

1.4    Management accounting is defined as ‘processes and techniques that are focused on the effective and efficient use of organisational resources to support managers in their task of enhancing both customer value and shareholder value’. Value creation is a central focus for contemporary managers. Customer value refers to the value that a customer places on particular features of a good or service (and which is what leads to them purchase the product). Shareholder value is the value that shareholders, or owners, place on a business,usually expressed in the form of increased profitability, increased share prices or increased dividends.

1.5    The important differences between management accounting and financial accounting are listed below.

(a)   Management accounting information is provided to managers and employees within the organisation, whereas financial accounting information is provided to interested parties outside the organisation.

(b)   Management accounting reports are unregulated, whereas financial accounting reports are legally required and must conform to Australian accounting standards and corporations law.

(c)   The primary source of data for management accounting information is the organisation’s basic accounting system, plus data from many other sources. These sources will yield data such as rates of defective products manufactured, physical quantities of material and labour used in production, occupancy rates in hotels and hospitals and average take-off delays in airlines. The primary source of data for financial accounting information is almost exclusively the organisation’s basic accounting system, which accumulates financial information.

(d)   Management accounting reports often focus on sub-units within the organisation, such as departments, divisions, geographical regions or product lines. These reports are based on a combination of historical data, estimates and projections of future costs. The data may be subjective and there is a strong emphasis on reporting information that is relevant and timely. Financial accounting reports tend to focus on the enterprise in its entirety. These reports are based almost exclusively on verifiable transaction data. The focus is often on reliability rather than relevance and the reports are not timely.

1.6    The cost accounting system is one part of an organisation’s overall accounting system, the purpose of which is to estimate the cost of goods and services, as well as the cost of organisational units such as departments. Cost information accumulated by the cost accounting system is used for both management accounting and financial accounting purposes. Management accounting uses include setting prices, controlling operations and making product-related decisions. Financial accounting uses include valuation of inventory and cost of goods sold for the manufacturer’s balance sheet and income statement respectively.

Management accounting is broader than just the preparation and reporting of financial

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DescriptionEdition: 8th Edition Format: Downloadable ZIP Fille Resource Type: Solution manual Duration: Unlimited downloads Delivery: Instant DownloadEdition: 5th Edition Format: Downloadable ZIP Fille Resource Type: Solution manual Duration: Unlimited downloads Delivery: Instant DownloadEdition: 10th Edition Format: Downloadable ZIP Fille Resource Type: Solution manual Duration: Unlimited downloads Delivery: Instant DownloadEdition: 6th Edition Format: Downloadable ZIP Fille Resource Type: Solution manual Duration: Unlimited downloads Delivery: Instant DownloadEdition: 11th Edition Format: Downloadable ZIP Fille Resource Type: Solution manual Duration: Unlimited downloads Delivery: Instant DownloadEdition: 3rd Edition Format: Downloadable ZIP Fille Resource Type: Solution manual Duration: Unlimited downloads Delivery: Instant Download
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Solution Manual for Management Accounting 8th Edition by Langfield-Smith

CHAPTER 1

Management Accounting: Information for Creating Value and Managing Resources ANSWERS TO REVIEW QUESTIONS   1.1    There are many possible answers to the question. Qantas, the national airline of Australia, has faced a number of changes in its business environment over the last 20 years, including deregulation of the domestic aviation industry. This resulted in increased competition as new companies attempted to enter the industry. The most notable of these was Compass, which madetwo failed attempts to succeed in the market and gain market share by savagely cutting prices. Qantas’major competitor, Ansett Australia, collapsed in 2001, resulting in Qantas having almost a monopoly for a short period. A powerful UK airline, Virgin, has also entered the market, with a history of taking legal action against market leaders who attempt to intimidate them using predatory pricing. Further, Impulse Airlines, a local airline, started operations, only to be eventually taken over by Qantas. On top of all this, the international terrorism crisis of 11 September 2001 saw a substantial contraction of international air travel for a period of many months, leading to the collapse of several United States airlines many times the size of Qantas. Other changes to the business environment have included:
  • unrest and war in the Middle East and speculation in oil,resulting in volatility and serious increases in fuel prices
  • bombings in Bali in 2002 and 2005
  • the outbreak of severe acute respiratory syndrome (SARS) in 2003
  • natural disasters, such as the Asian tsunami in 2004
  • the heavy subsidisation of competing national carriers, especially by Middle Eastern countries
  • the entry of Tiger Airways into Australia
  • extra capacity gained by Virgin Blue
  • the shifting of significant parts of engineering maintenance operations offshore
  • publicity surrounding a series of safety and engineering concerns, and an audit by the Civil Aviation Safety Authority(CASA) in 2008, finding that maintenance by Qantas was not up to its own standards, and
  • financial uncertainty arising from the 2008 credit crisis and share market collapse.
In more recent times, two different volcanoes have caused the cancellation of flights forseveral days, and the explosion of an engine in a new range of aircraft, the A380, in November 2010 caused the grounding of that fleet until January 2011 while the reason was explored and overcome (see the ‘Real life’ in ‘Comparing two alternative investment projects’ in Chapter 21). 1.2    The explosion in e-commerce will affect management accounting in significant ways.One effect will be a drastic reduction in paperwork.Millions of transactions between businesses will be conducted electronically with no hard-copy documentation.Along with this method of communicating for business transactions comes the very significant issue of information security.Businesses need to find ways to protect confidential information in their own computers, while at the same time sharing the information necessary to complete transactions.Another effect of e-commerce is the dramatically increased speed with which business transactions can be conducted.In addition to these business-to-business transactional issues, there will be dramatic changes in the way management accounting procedures are carried out, one example being e-budgeting,the enterprise-wide electronic completion of a company’s budgeting process. 1.3    Management accounting information prepared on a regular basis includes product costs, profitability reports, and also individual resource costs such as materials purchased and used, labour costs and the costs incurred in providing and managing facilities. On an ad hoc basis, management accounting reports may be prepared to estimate future cash flows relating to the impact of purchasing and operating a new piece of equipment and the expected outcome from changing the product mix. 1.4    Management accounting is defined as ‘processes and techniques that are focused on the effective and efficient use of organisational resources to support managers in their task of enhancing both customer value and shareholder value’. Value creation is a central focus for contemporary managers. Customer value refers to the value that a customer places on particular features of a good or service (and which is what leads to them purchase the product). Shareholder value is the value that shareholders, or owners, place on a business,usually expressed in the form of increased profitability, increased share prices or increased dividends. 1.5    The important differences between management accounting and financial accounting are listed below. (a)   Management accounting information is provided to managers and employees within the organisation, whereas financial accounting information is provided to interested parties outside the organisation. (b)   Management accounting reports are unregulated, whereas financial accounting reports are legally required and must conform to Australian accounting standards and corporations law. (c)   The primary source of data for management accounting information is the organisation’s basic accounting system, plus data from many other sources. These sources will yield data such as rates of defective products manufactured, physical quantities of material and labour used in production, occupancy rates in hotels and hospitals and average take-off delays in airlines. The primary source of data for financial accounting information is almost exclusively the organisation’s basic accounting system, which accumulates financial information. (d)   Management accounting reports often focus on sub-units within the organisation, such as departments, divisions, geographical regions or product lines. These reports are based on a combination of historical data, estimates and projections of future costs. The data may be subjective and there is a strong emphasis on reporting information that is relevant and timely. Financial accounting reports tend to focus on the enterprise in its entirety. These reports are based almost exclusively on verifiable transaction data. The focus is often on reliability rather than relevance and the reports are not timely. 1.6    The cost accounting system is one part of an organisation’s overall accounting system, the purpose of which is to estimate the cost of goods and services, as well as the cost of organisational units such as departments. Cost information accumulated by the cost accounting system is used for both management accounting and financial accounting purposes. Management accounting uses include setting prices, controlling operations and making product-related decisions. Financial accounting uses include valuation of inventory and cost of goods sold for the manufacturer’s balance sheet and income statement respectively. Management accounting is broader than just the preparation and reporting of financial

Solution Manual for Managerial Accounting for Managers 5th Edition by Noreen

Chapter 1 Managerial Accounting and Cost Concepts Questions   1-1       The three major types of product costs in a manufacturing company are direct materials, direct labor, and manufacturing overhead. 1-2
  1. Direct materials are an integral part of a finished product and their costs can be conveniently traced to it.
  2. Indirect materials are generally small items of material such as glue and nails. They may be an integral part of a finished product but their costs can be traced to the product only at great cost or inconvenience.
  3. Direct labor consists of labor costs that can be easily traced to particular products. Direct labor is also called “touch labor.”
  4. Indirect labor consists of the labor costs of janitors, supervisors, materials handlers, and other factory workers that cannot be conveniently traced to particular products. These labor costs are incurred to support production, but the workers involved do not directly work on the product.
  5. Manufacturing overhead includes all manufacturing costs except direct materials and direct labor. Consequently, manufacturing overhead includes indirect materials and indirect labor as well as other manufacturing costs.
1-3       A product cost is any cost involved in purchasing or manufacturing goods. In the case of manufactured goods, these costs consist of direct materials, direct labor, and manufacturing overhead. A period cost is a cost that is taken directly to the income statement as an expense in the period in which it is incurred.   1-4
  1. Variable cost: The variable cost per unit is constant, but total variable cost changes in direct proportion to changes in volume.
  2. Fixed cost: The total fixed cost is constant within the relevant range. The average fixed cost per unit varies inversely with changes in volume.
  3. Mixed cost: A mixed cost contains both variable and fixed cost elements.
1-5
  1. Unit fixed costs decrease as the activity level increases.
  2. Unit variable costs remain constant as the activity level increases.
  3. Total fixed costs remain constant as the activity level increases.
  4. Total variable costs increase as the activity level increases.
1-6
  1. Cost behavior: Cost behavior refers to the way in which costs change in response to changes in a measure of activity such as sales volume, production volume, or orders processed.
  2. Relevant range: The relevant range is the range of activity within which assumptions about variable and fixed cost behavior are valid.
1-7       An activity base is a measure of whatever causes the incurrence of a variable cost. Examples of activity bases include units produced, units sold, letters typed, beds in a hospital, meals served in a cafe, service calls made, etc. 1-8       The linear assumption is reasonably valid providing that the cost formula is used only within the relevant range. 1-9       A discretionary fixed cost has a fairly short planning horizon—usually a year. Such costs arise from annual decisions by management to spend on certain fixed cost items, such as advertising, research, and management development. A committed fixed cost has a long planning horizon—generally many years. Such costs relate to a company’s investment in facilities, equipment, and basic organization. Once such costs have been incurred, they are “locked in” for many years. 1-10     Yes. As the anticipated level of activity changes, the level of fixed costs needed to support operations may also change. Most fixed costs are adjusted upward and downward in large steps, rather than being absolutely fixed at one level for all ranges of activity. 1-11     The traditional approach organizes costs by function, such as production, selling, and administration. Within a functional area, fixed and variable costs are intermingled. The contribution approach income statement organizes costs by behavior, first deducting variable expenses to obtain contribution margin, and then deducting fixed expenses to obtain net operating income. 1-12     The contribution margin is total sales revenue less total variable expenses. 1-13     A differential cost is a cost that differs between alternatives in a decision. An opportunity cost is the potential benefit that is given up when one alternative is selected over another. A sunk cost is a cost that has already been incurred and cannot be altered by any decision taken now or in the future. 1-14     No, differential costs can be either variable or fixed. For example, the alternatives might consist of purchasing one machine rather than another to make a product. The difference between the fixed costs of purchasing the two machines is a differential cost.

Solution Manual for Accounting Information Systems 10th Edition by Hall

Table of Contents Part I: OVERVIEW OF ACCOUNTING INFORMATION SYSTEMS. 1. The Information System: An Accountant’s Perspective. 2. Introduction to Transaction Processing. 3. Ethics, Fraud, and Internal Control. Part II: TRANSACTION CYCLES AND BUSINESS PROCESSES. 4. The Revenue Cycle. 5. The Expenditure Cycle Part I: Purchases and Cash Disbursements Procedures. 6. The Expenditure Cycle Part II: Payroll Processing and Fixed Asset Procedures. 7. The Conversion Cycle. 8. Financial Reporting and Management Reporting Systems. Part III: ADVANCED TECHNOLOGIES IN ACCOUNTING INFORMATION. 9. Database Management Systems. 10. The REA Approach to Business Process Modeling. 11. Enterprise Resource Planning Systems. 12. Electronic Commerce Systems. Part IV: SYSTEMS DEVELOPMENT ACTIVITIES. 13. Systems Development and Program Change Activities. Part V: COMPUTER CONTROLS AND AUDITING. 14. IT Controls Part I: Sarbanes-Oxley and IT Governance. 15. IT Controls Part II: Security and Access. 16. IT Controls Part III: Systems Development, Program Changes, Application Controls. Glossary. Subject Index.  

Solution Manual for Fundamentals of Financial Accounting 6th Edition by Phillips

Appendix C Present and Future Value Concepts ANSWERS TO QUESTIONS
  1. The time value of money is the idea that a dollar received today is worth more than a dollar to be received at any later date because it can be invested today to earn interest over time.
  2. Future value—The future value of a number of dollars is the amount that it will increase to in the future at i interest rate for n periods. The future value is the principal plus accumulated interest compounded each period.
Present value—The present value of a number of dollars, to be received at some specified date in the future, is that amount discounted to the present at i interest rate for n periods. It is the inverse of future value. In compound discounting, the interest is subtracted rather than added as in compounding.
  1. $10,000 x 2.59374 = $25,937 (rounded to the nearest dollar).
  2. $8,000 x .38554 = $3,084 (rounded to the nearest dollar).
  3. An annuity is a term that refers to equal periodic cash payments or receipts of an equal amount each period for two or more periods. In contrast to a future value of $1, or a present value of $1 (which involves a single contribution or amount), an annuity involves a series of equal contributions for a series of equal periods. An annuity may refer to a future value or a present value.
 
  6.   Table Values
Concept i = 5% n =4 i = 10%; n =7 i = 14%; n = 10
FV of $1 1.21551 1.94872  3.70722
PV of $1 0.82270 0.51316   0.26974
FV of annuity of $1 4.31013 9.48717 19.33730
PV of annuity of $1 3.54595 4.86842   5.21612
  1. $1,000 x 14.48656 = $14,487. (rounded to the nearest dollar)
  Authors' Recommended Solution Time (Time in minutes)    
  Mini-exercises   Exercises   Problems
No. Time No. Time No. Time
1 2 1 10 CP1 20
2 2 2 15 CP2 20
3 6 3 15 CP3 20
4 6 4 15 CP4 15
5 6 7 8 9 10 11 12   3 3 3 3 3 3 3 3 5 6 7   5 10 8 PA1 PA2 PA3 PA4 PB1 PB2 PB3 PB4   20 20 20 15 20 20 20 15
          ANSWERS TO MINI-EXERCISES MC–1            
$500,000 ´ 0.46319 (Table C.2, n=10, i=8%) = $231,595
MC–2            
 $15,000 ´   6.14457 (Table C.4, n=10, i=10%) = $92,169
MC–3
     $100,000 (no PV) = $100,000
   $100,000 ´ 0.92593 (Table C.2, n=1, i=8%) = 92,593
   $ 30,000 ´ 9.81815 (Table C.4, n=20, i=8%) =   294,545
Total = $487,138
MC–4
$25,000 ´ 15.93742 (Table C.3, n=10, i=10%) = $398,436
$15,000 ´ 57.27500 (Table C.3, n=20, i=10%) = $859,125
It is much better to save $15,000 for 20 years.

Solution Manual for Managerial Accounting 11th CANADIAN Edition by Garrison

Chapter 1 Managerial Accounting and the Business Environment Learning Objectives  
  • Describe the functions performed by managers.
  • Identify the major differences and similarities between financial and managerial accounting.
  • Explain the basic concepts of lean production and enterprise risk management.
  • Explain the nature and importance of ethics for accountants and the role of corporate social responsibility.
  • Explain how intrinsic motivation, extrinsic incentives, and cognitive biases affect employee behaviour.
  Chapter Overview   This chapter serves four main purposes:  
  • It explains the nature of managerial accounting in providing internal accounting information to support the work of management—planning, directing and motivating, and controlling.
  • It describes the nature of organizations and the role of management accountants in an organization.
  • It explains how companies are responding to a changing business environment by improving business process with the following four approaches:
    • Lean Production
    • Enterprise Risk Management
  • It discusses the importance of upholding ethical standards.
    Service-Related Examples   Company                                                                                                       Type of Business                           Text Reference Certified Professional Accountants     Accounting                                    Introduction Canadian Pacific                               Railway                                   In Business CIBC                                                 Bank                                             Ethics/Discussion Case     Assignment Topic Grid Chapter 1  
Problem Topic LO1: Functions of managers LO2: Financial vs. managerial accounting   LO3: Lean production and enterprise risk   management   LO4: Nature and importance of ethics for   accountants LO5: Intrinsic motivation, extrinsic incentives, and cognitive biases Service industry Writing component CPA adapted
E1-1 Functions Performed by Managers ü ?
E1-2 Financial and Managerial Accounting ü ?
E1-3 Enterprise Risk Management ü ?
P1-4 Cognitive Biases ü ?
P1-5 Planning and Control Activities ü J ?
P1-6 Ethics in Business ü ?
P1-7 Corporate Social Responsibility ü ?
P1-8 Intrinsic Motivation and Extrinsic Incentives ü ?
P1-9 Value Chain Analysis ü
 

Solution Manual for Intermediate Accounting 3rd Edition by Wahlen

Description Solution Manual for Intermediate Accounting As a student, completing homework assignments can be challenging. Sometimes you forget the material that you previously learned in class. Other times, the subject matter is very complex and leaves you feeling confused. On the other hand, maybe you have a very busy schedule and frequently miss the deadline to hand in your homework.nnDo any (or all) of these scenarios sound familiar?nnYou are not alone. We understand life as a student is difficult. We believe homework should be a tool that helps you achieve excellent results in the classroom, so you can graduate with the highest GPA and go on to get the job of your dreams. It is for this very reason that we place at your disposal the Solution Manual for Intermediate Accounting 3rd Edition by Wahlen.nAre you ready to say goodbye to homework-induced frustration? nnSolution Manual Benefits:n • Instantly download the solution manual after purchasenn • View the free sample first, so you know exactly what you are gettingnn • Digital format provides access anywhere you have a computer or smartphonenn • Turn in your homework on time, every time (even if it’s due in a few hours!)nn • Figure out problems on your own and spend less time in extra help sessionsnn • Review your answers immediately after completing your homeworknn • Check your reasoning and understanding of each problem as you gonnThe solution manual contain solutions and answers to the exercises, review questions, problems and case studies directly from your textbook. Whenever you dont know how to solve a problem, it can be helpful to look up the answer in the solutions manual, and then work backwards to figure it out.n nIt gets even BETTER:nnThe solutions manual is in digital downloadable format and can be accessed instantly after purchase! All it takes is the click of a button and you will be on your way to understanding your homework and completing it faster than ever before. Buy the solutions manual and become a homework master today! You will soon wonder how you ever survived without it.
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