Scribd
Upload
273 views

Chapter 1 Exercises

Uploaded by

JaiThra T James
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF or read online on Scribd
273 views

Chapter 1 Exercises

Uploaded by

JaiThra T James
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF or read online on Scribd
You are on page 1/ 12
24 "MANAGERIAL ACCOUNTING, THE BUSINESS ORGANIZATION, AND PROFESSIONAL ETHICS MyAccountingLab Accounting Vocabular: ‘Vocabulary is an essential and often troublesome phase ofthe leaning process. A fizzy understanding of terms hampers the learning of concepts and the ability to solve accounting problems. Before proceeding tothe assignment material, be sure you understand the words and terms in this section, Their meaning is explained within the chapeee accounting system tention directing tbehaviorl implications budget business process reengineering business-to-business (B2B) business-to-consumer(B2C) ‘certified management accountant (CMA) cetified public accountant (CPA) ‘chartered accountant (CA) chief financial officer (CFO) code of conduct computer-aided design (CAD) ‘computer-aided manufacturing (cam) computer-integrated ‘manufacturing (CIM) systems control controller (comptroller) cost-benefit balance decision making clectronic commerce (e-commerce) ‘enterprise resource planning (ERP) system ethics eXtensible Business Reporting Language (XBRL) financial accounting Foreign Corrupt Practices Act generally acepied accounting principles (GAAP) IMA Statement of Ethical Professional Practice Insitute of Management ‘Accountants (IMA) intemal auditors internal conteols {ustin-time GT) phitosophy Jean manufacturing Tine managers ‘management accounting management audit, ‘management by exception performance reports planaing roblem solving product life eyele Sarbanes-Oxley Act scorekeeping service organizations Six Sigma staff managers total quality management (TQM) reasuree value chain Fundamental Assignment Material ‘The assignment material for this chapters divided into two groups: fundamental ancl additional. The fundamental assignment material consists of two ses of parallel problems that convey the essential ‘concepts and techniques of the chapter, The addtional assignment material covers the chapter in ‘more detail and includes questions, critical thinking exercises, exercises, problems, cases, a prob. lem based on Nike's 10-K, an Excel application exercise, a collaborative leaming exerise, and an Internet exercise, Al Scorekeeping, Attention Directing, and Problem Solving For each of the following activites, identify the primary funetion that the accountant is performing — Seorekeepng,sttention directing or problem solving—and explain why it bes fis tha! category, |. Preparing aschedule of depreciation for forklift tucks in the receiving department of a General Electric factory in Scotland 2, Analyzing, fora Sony production superintendent, the impact on costs of purchasing some new sssembly equipment Preparing a scrap report for he finishing department of Toyota pars factory Interpreting why the Colville Timber Resource Company dit not adhere to its production schedile Explaining the stamping department's performance report Preparing a monthly statement of European sales for the Ford Motor Company's vice pres ent of marketing 7, Preparing, for the manager of production contol of a Mittal Steel plan, a cost comparison of ‘0 computerized manufacturing contol systems MANAGERIAL ACCOUNTING, THE BUSINESS ORGANIZATION, AND PROFESSIONAL ETHICS 8, Interpreting variances on the performance report forthe University of Michigan’s purchasing ‘department. 9. Analyzing, foran Airbus manufacturing manager, the desicability of having some parts for the ‘A380 airplane made in Korea 10, Preparing the budget forthe dermatology department of Providence Hospital ‘A2 Management by Exception ‘Beta Aipha Pi the accounting honorary fraterity, held a homecoming party. The fratemity expected attendance of 80 persons and prepare the following budget "Room renal $170 Foc Enertainment Decorations Toad After Beta Alpha Psi pai all the bills fr the party. the total cost came to $1,885, or $275 over budget Details are $170 for room renal; $875 for food: $870 for entertainment; and $270 for decorations [Ninety-six persons attended the party. 1. Prepare a performance report forthe party that shows how actual costs differed from the budget That is, include in your fepor the budgeted amounts, actual amounts, and variances 2. Suppose the fraternity uses a management-by-exceptin rule. Which costs deserve further exami- ration? Why? A3 Professional Et [Exhibit 7 lists four main categories of ethical standards for management accountants: competence, confidentiality, integrity, and credibility. For each ofthe following situations, indicate which ofthese {our should influence the manager and what the appropriate action should be |. Ata dinner party, a guest asked a General Mills manager how a major new cereal was doing ‘The manager had just read a report that said sales lagged much below expectation. What should he say? Felix just graduated from business school with an accounting major and joined the controller's ‘department of Pioneer Enterprises. His bos asked im o evaluate a market analysis fora potenti new product prepared by the marketing department. Felix knows very Fite about the industry, and he never had a class to teach him how to make a market analysis. Should he just do the best fhe can on the analysis without asking for help? 3. Mary Sue prepared a buulget fora division of Southeasten Electronics, Her supervisor, the division ‘manager, was not happy that she included results for an excitiag new product that was tO be introduced in month He asked her to leave the results forthe product ou af the budge. That way, the financial results for the product would boost actual profits well above the amount budgeted, resulting in favorable reviews forthe division and its managers. What should Mary Sve do? BI Scorekeeping, Attention Directing, and Problem Solving For each of the following activities, identify te function the accountants performing —scorekeeping, attention directing, or problem solving. Explain each of your answers 1. Estimating the operating costs and outputs that could be expected for each of two large metal: stamping machines offered forsale by different manufacturers; only one of these machine is to be acquired by your company 2, Recording daily material purchase vouchers Analyzing the expected costs of acquiring and using each of two alternate types of welding equipment Preparing a report of overtime bor costs by produetion department Estimating the costs of moving corporat headquarters to another city Interpreting increases in nursing costs per patient-day in a hospital Analyzing deviations from the budget of he factory maintenance department Assisting ina study by the manufacturing vic president to determine whether to buy certain pars needed in large quantities for manufacturing products of to acquire facilities for manufacturing these parts 25 26 MyAccountingLab [MANAGERIAL ACCOUNTING, THE BUSINESS ORGANIZATION, AND PROFESSIONAL ETHICS 9. Preparing estimated costs fora new marketing campaign 10. Recording overtime hours of the product finishing department 1. Compiling data for a report showing the ratio of advertising expenses to sales for each branch store 12, Investigating reason for increased returns and allowances for drugs purchascd by a hospital 13. Preparing a schedule of fuel costs by months and government departments 14, Computing and recording end-of-year adjustments for expired fire insurance on the factory warehouse B2 Management by Exception ‘The Skokomish Indian tie sells fireworks for the $ weeks preceding July 4, The tribe's stand on Highway 101 near Hoodsport had budgeted sales of $80,000, Expected expenses were a follows Cost of reworks Labor cost Otter costs Total costs ‘340000 ro,000 —7.000 $5700 ‘Actual sales were $79.40, almost equal tothe budget. The tribe spent $39,400 for fireworks, $13,100 for labor, and $6,900 for other cost 1. Compute budgeted profit and actual prof. 2. Proparea performance report to help identify those costs that were significantly different from the badger. 3. Suppose the tbe uses a management-by-exception rule. What costs deserve further explanation? why? B3 Ethical Code of Conduct ‘According fo the Financial Executives Institute, “corporate governance consultants and aco ddemios agree that a company needs to have & code of conduct" for its employees. Most companies, even many of those who experienced ethical breakdowns, have such code. Answer the following {questions about corporate codes of conduct, 1. Whats a comporate code of eanduct? 2. What ¢pes of issues are covered in a corporate code of conduct? At what level of detail? 3. Insome eases, codes of conduct were not effective. What, besces simply having a code, is neces sary fora code of conduet to be effective? Additional Assignment Material QUESTIONS | Who uses information from an accounting system? 2 “The emphases of financial accounting and ‘management accountng differ” Explain, 3 “The field is less sharply defined, There is heavier use of economics, decision sciences, and behavioral sciences.” Identify the branch of accounting described in the quotation, 4 Distinguish among. seorekeeping. axtention Aiecting, and problem solving 5 "Generally accepted accounting principles (GAAP) assist the development of management accounting systems” Do you agree? Explai. 6 “The Foreign Comupt Proctices Act applies to bribes paid outside the United States” Do you agzee? Explain 7 Why isthe Sarbanes-Oxley Act controversial? 8 Why is intesrity so important to accountants? 9 “integrity is moze important for business pro- fessionals than it is for business students” Do you agree? Explain, 10 Givethree examples of service organizations. What distinguishes service organizations from ‘ther types of organizations? TL What two major considerations affect the design ofall accounting systems? Expltin each, 12 “The accounting system is intertwined with ‘operating management. Business operations would ‘be ina hopeless tangle without the recordkeeping that is s0 often regaréed with disdain” Do you ‘agree? Explain, giving examples, 13 Distinguish among a budget, a performance report, and a varie, 14 "Monagement by exception abbdieating management responsibility planning and control" Do you agree? Explain. 15. Why are accountants eoncetmed about prod wet life eyeles? 16 Nanve the six primary business functions (excluding support functions) that make up the valve chain, and briefly deseribe each, 17 “Accountants in every company should rmeasore and report on every function in the ‘Company's vate chain” Do you agree? Explain 18 Distinguish between the duties of line man- agers and staff manager, 19 The role of management accountants is hanging, especially in companies witha “fatter” frganizational steuure. What are some of the changes? for CRITICAL THINKING EXERCISES 28 Finance and Management Accounting Cften thee is confusion between the roles played ompanies a single person performs activites related to both functions. ‘Distinguish between the controle andthe teasarer functions by listing typical activites that are many small associated with each, 29 Accounting’s Position in the Organization: Controller and Treasurer Foreash of the following activities, indica whether itis more likely tbe performed by the controller cor by the treasurer, Explain each answer. Prepare divisional Financial statements. Help managers prepare budgets {Advise which alternative action is east costly. ‘Meet with financial analysts from Wall Street. Prepare ax returns. ‘Arrange insurance coverage 1 2 3 4 5. Ammange short-term financing 6 a 8, Prepare edit checks on customers, 30 Marketing and Management Accounting ‘A crose-functionl team of managers, including the management accountant, performs each of the following activities. However, depending on the nature ofthe devsion to be trea will take the leadership role. Which ofthese activities is primarily @ marketing decision? What ‘would the management accountant contribute to each of the marketing decisions? 1. Porsche Motor Company mast decide whether to buy apart fr one of its cars orto mas the pat at one ofits plans. 2, Airbus must decide the price to charge for spare pars it sells over the Internet using its Spare Parts Web site 3, St. Luke's Hospital mast decide how to finance the purchase of expensive new medical analysis ‘equipment. 4, Amazon.com must forecast the impact on video sales of a new advertising program. 5. Mission Foods, a leading producer and distributor of tortillas to retail and food service industries, aust decide whether to aceept a special order for tortilla chips by large, national retail chai, 6, Target Stores must decide whether to close one of is retail stores thats eurenty operating at a loss. MANAGERIAL ACCOUNTING, THE BUSINESS ORGANIZATION, AND PROFESSIONAL ETHICS by the controller and treasurer in an organization. In 20 Does every company have both a controller nd a treasurer? Explain. 2I Describe the two parts of the qualifying ‘examination for becoming a CMA. 22 “The problem with secounting is that accountants never get to become top managers seh as CEOs" Do you agree? Explain 23 How are changes in technology affecting ‘management accounting? 24, What isthe essence of the ITT philosophy? 25 Briefly describe how a change in «plant's Tayout can make its operation more efficient. 26 Standards of ethical conduct for manage ‘ment accountants have been divided into four ‘major responsibilities. Describe each of the four {in 20 words or fewer. 27 “Why ace there cthica dilemmas? I thought accountants had standards that specified what ethical behavir is" Discus this quote. Je, one functional [MANAGERIAL ACCOUNTING, THE BUSINESS ORGANIZATION, AND PROFESSIONAL ETHICS 31 Production and Management Accounting A cross-functional team of managers, including the management accountant, performed each ofthe I following activities, However depending on the nature ofthe decision tobe mae, one funcional nee | Will ake the leadership role Which of these activities i primarily a production decision? What would the management sccountant contribute to each ofthe production devisions? Saab Automobile AB must decide whether to buy a par for one ofits cars orto make the pat tone of its plant, 2 Boeing Company must decide the price for spare pans it ells over the Internet using its Spare Pants Web site 3. St. Mary's Hospital mus decide how to finance the purchase of expensive new medical analysis equipment 4 Amazon.com mus forecast how a new advertising program will affect DVD sales, 5. Mission Foods, a leading producer and distributor of tortillas to retail and food service industries, must decide whether to accept a special order for totillachips by a large, national retail chai, 6. Kmart must evaluate its overall vision and strategic gous in the light of competitive pressures from Target, Sears, and Wal-Mart 7, Dell Computers must decide whether to spend tnoney on training workers to perform setups and changcovers faster. This will free up capacity tobe used to make more computers witheat purchasing more equipment 8. Ford Motor Company must decide whether to keep or replace 4-year-old equipment used in ‘one of is Escape plants, EXERCISES 32 Management Accounting and Financial Accounting Consider the following shor descriptions. Indicate whether each ofthe following descriptions more | Closely relates toa major feature of financial accounting or management accouneg 1, Field sles sharply defined 2, Provides intemal consulting advice to managers 3. Has less Mexbilty 4. Is characterized by detailed reports 5. Has a future orientation 6. Is constrained by GAAP | 7. Behavioral impact is secondary 33 Planning and Control, Management by Exception Study the framework for planning and control of » Starbueks store in Exhibit 27. Suppose that for ‘ext year a particular store budgeted revenue of $356,400, an 8% increase over the current revere of $230000. The actions listed in Exhibit 2 resulted in six new budgeted products and a total advertising budget of $33,000. Actual rsulis were as follows: | New productsadded ~~ Advertsing 8 35,640 Revenues 351,400 Prepare a performance repor for revenues and advertising costs using the format of Exhibit 3. 2 Suppose the remaining cost clements of nt income were not available until several months after the store implemented the plan. The net income results were disappointing to manageraca Profits declined even though revenues increased because cost increased by move thee serene. | {st sone factors that might have caused costs oinrease so much and tai management nay ot ‘have considered when it formulated the store's plan 34 Line Versus Staff and Value-Chain Responsibility For each of the following, indicate wheter the employee has line or staf esponsibility. Also indicate ‘Whether the employee primarily provides support for other valve-chain functions or performs aspesc value-chain busines function, [MANAGERIAL ACCOUNTING, THE BUSINESS ORGANIZATION, AND PROFESSIONAL ETHICS 1. President 2. District sales manager 3. Market research analyst 4. Cost accountant 5. Head ofthe legal department 6. Production superitendent 35 Microsoft's Value Chain Microsoft isthe world’s largest software company. For each ofthe following value-chain functions, dliscuss briefly what Microsoft managers would do to achieve that function and how important itis to the overall success of Microsoft RaD rodct (service) and proces design Produetion Marketing } Distribution Customer service ‘Suppor functions 36 Objectives of Management Accounting ‘The Insitute of Management Accountants (IMA) is composed of nearly 70,000 members. The IMA “Objectives of Management Accounting” states, “The management accountant participates, as part of ‘management, in assuring that the organization operates asa unified whole in its long-run, intermediate, And short-run best interests." ‘Based on your reading inthis chapter, prepare a 100-word description ofthe principal ways that accountants participate in managing an entity. 37 Cost-Benefit of the Ethical Environment ‘A poor ethical envionment resulis in costs o the company. On the other hand, a good ethical environ- -ment creates benefits. List several costs of a poor ethical envionment and benefits of a good ethical cenviconment, 38 Early Warning Signs of Ethical Conflict “The following statements are early warning signs of ethical confit © "Tdon’t care how you doit, just gett done!” © “Noone will ever know.” List several other statements that ae early warning signs of ethical cont. PROBLEMS 39 Management and Financial Accounting Lillian Choi, an able mechanical engineer, was informed that she would be promoted to assistant \ factory manager. Lillian was pleased but uncomfortable. In particular, she knew litle about accounting, ‘She had taken one course in financial accounting. Lillian planned to enroll in a management accounting course as soon as possible. Meanwhile, she asked Walt Greenspan, a cost accountant, to state three or four ofthe principal distinctions between financial and management accountng. Prepare Wal's written response to Lillian 40 Use of Accounting Information in Hospitals Most U.S. hospitals do not derive their revenues directly from patients. Instead, revenues come through third parties, such as insurance companies and goverament agencies. Until the 1980s, these payments generally reimbursed the hospital's costs of serving patients. Such payments, however, are now generally fat fees for specified services. For example, the hospital might receive $7,000 for an appendectomy or $28,000 for heart surgecy—no more, no Iss. How might the method of payment change the demand for accountng information in hospitals? Relate your answer to the decisions of top management. 41 Costs and Benefits ) Marks & Spencer, a huge resailer in the United Kingdom with sales of more than £9 billion, was troubled by its paper bureaucracy. Looked atin isolation, each document seemed reasonable, tout overall 9 researcher reported that there was substantial effot in each department to verify the [MANAGERIAL ACCOUNTING, THE BUSINESS ORGANIZATION, AND PROFESSIONAL ETHICS company simplified or eliminated many ofthe documents, ] Describe the rationale that should gover systems design, How should a company such as Marks & Spencer device what documents it neds ad which can be eliminated? information, Bascal, the eft seemed ox of proportion o any valve recive, an, evenly the | | 42 Importance of Accounting } Some companies are run by engineers and other technical specialists For example, a manager in a clvision that is now part of ArvinMeritor, an automaive pars supplice, once said that “there'd be sixty or seventy guys talking technical problems, with never a word on profits" Other companiea,

You might also like

pFad - Phonifier reborn

Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.

Note: This service is not intended for secure transactions such as banking, social media, email, or purchasing. Use at your own risk. We assume no liability whatsoever for broken pages.


Alternative Proxies:

Alternative Proxy

pFad Proxy

pFad v3 Proxy

pFad v4 Proxy