Weygandt Managerial 6e SM Release To Printer Ch01

CHAPTER 1Managerial AccountingASSIGNMENT CLASSIFICATION TABLELearning ObjectivesQuestionsBriefExercisesDo It!Exercises*1.Explain the distinguishingfeatures of managerialaccounting.1, 2, 3111*2.Identify the three broadfunctions of management.4, 5, 6,7, 82, 31*3.Define the three classesof manufacturing costs.11, 124, 5, 72*4.Distinguish betweenproduct and period costs.1362*5.Explain the differencebetween a merchandisingand a manufacturingincome statement.9, 14*6.Indicate how cost ofgoods manufacturedis determined.15, 16,17, 188, 10, 11*7.Explain the differencebetween a merchandisingand a manufacturingbalance sheet.10, 19,20, 219*8.Identify trends in managerialaccounting.22, 23, 2425, 2634AProblemsBProblems2, 3, 4,5, 61A, 2A1B, 2B3, 4, 5,7, 131A, 2A1B, 2B8, 12, 13,14, 15, 173A, 4A, 5A3B, 4B, 5B8, 9, 10, 11, 3A, 4A, 5A12, 13, 14,15, 16, 173B, 4B, 5B14, 15,16, 173B, 4B3A, 4A18*Note: All asterisked Questions, Exercises, and Problems relate to material contained in the appendix to thechapter.Copyright 2012 John Wiley & Sons, Inc.Weygandt, Managerial Accounting, 6/e, Solution Transparencies(For Instructor Use Only)1-1

ASSIGNMENT CHARACTERISTICS eAllotted (min.)1AClassify manufacturing costs into different categories andcompute the unit cost.Simple20–302AClassify manufacturing costs into different categories andcompute the unit cost.Simple20–303AIndicate the missing amount of different cost items, andprepare a condensed cost of goods manufactured schedule,an income statement, and a partial balance sheet.Moderate30–404APrepare a cost of goods manufactured schedule, a partialincome statement, and a partial balance sheet.Moderate30–405APrepare a cost of goods manufactured schedule and acorrect income statement.Moderate30–401BClassify manufacturing costs into different categories andcompute the unit cost.Simple20–302BClassify manufacturing costs into different categories andcompute the unit cost.Simple20–303BIndicate the missing amount of different cost items, andprepare a condensed cost of goods manufactured schedule,an income statement, and a partial balance sheet.Moderate30–404BPrepare a cost of goods manufactured schedule, a partialincome statement, and a partial balance sheet.Moderate30–405BPrepare a cost of goods manufactured schedule and acorrect income statement.Moderate30–40Copyright 2012 John Wiley & Sons, Inc.Weygandt, Managerial Accounting, 6/e, Solution Transparencies(For Instructor Use Only)

Copyright 2012 John Wiley & Sons, Inc.Weygandt, Managerial Accounting, 6/e, Solution TransparenciesBroadening Your Perspective* 7. Explain the difference between amerchandising and a manufacturingbalance sheet.* 8. Identify trends in managerialaccounting.* 5. Explain the difference between amerchandising and a manufacturingincome statement.* 6. Indicate how cost of goodsmanufactured is determined.* 4. Distinguish between productand period costs.* 3. Define the three classesof manufacturing costs.* 2. Identify the three broad functionsof management.Learning Objective* 1. Explain the distinguishing featuresof managerial BBYP1-2BYP1-3BYP1-5BYP1-6E1-17 P1-3AP1-4A P1-3BP1-4BE1-14E1-16E1-17P1-4AP1-4BP1-4B isBYP1-7BYP1-8BYP1-9EvaluationCorrelation Chart between Bloom’s Taxonomy, Learning Objectives and End-of-Chapter Exercises and ProblemsBLOOM’S TAXONOMY TABLE(For Instructor Use Only)1-3

ANSWERS TO QUESTIONS1.(a) Disagree. Managerial accounting is a field of accounting that provides economic and financialinformation for managers and other internal users.(b) Joe is incorrect. Managerial accounting applies to all types of businesses—service, merchandising,and manufacturing.2.(a) Financial accounting is concerned primarily with external users such as stockholders, creditors,and regulators. In contrast, managerial accounting is concerned primarily with internal users suchas officers and managers.(b) Financial statements are the end product of financial accounting. The statements are preparedquarterly and annually. In managerial accounting, internal reports may be prepared as frequentlyas needed.(c) The purpose of financial accounting is to provide general-purpose information for all users.The purpose of managerial accounting is to provide special-purpose information for specificdecisions.3.Differences in the content of the reports are as follows:FinancialManagerial Pertains to business as a whole and is highlyaggregated. Limited to double-entry accounting and costdata. Generally accepted accounting principles. Pertains to subunits of the business andmay be very detailed. Extends beyond double-entry accountingsystem to any relevant data. Standard is relevance to decisions.In financial accounting, financial statements are verified annually through an independent auditby certified public accountants. There are no independent audits of internal reports issued bymanagerial accountants.4.Budgets are prepared by companies to provide future direction. Because the budget is also usedas an evaluation tool, some managers try to game the budgeting process by underestimatingtheir division’s predicted performance so that it will be easier to meet their performance targets.On the other hand, if the budget is set at unattainable levels, managers sometimes take unethicalactions to meet targets to receive higher compensation or in some cases to keep their jobs.5.Linda should know that the management of an organization performs three broad functions:(1) Planning requires management to look ahead and to establish objectives.(2) Directing involves coordinating the diverse activities and human resources of a company toproduce a smooth-running operation.(3) Controlling is the process of keeping the company’s activities on track.6.Disagree. Decision making is not a separate management function. Rather, decision making involvesthe exercise of good judgment in performing the three management functions explained in theanswer to question five above.7.Employees with line positions are directly involved in the company’s primary revenue generatingoperating activities. Examples would include plant managers and supervisors, and the vice presidentof operations. In contrast, employees with staff positions are not directly involved in revenuegenerating operating activities, but rather serve in a support capacity to line employees. Examplesinclude employees in finance, legal, and human resources.1-4Copyright 2012 John Wiley & Sons, Inc.Weygandt, Managerial Accounting, 6/e, Solution Transparencies(For Instructor Use Only)

Questions Chapter 1 (Continued)8.CEOs and CFOs must now certify that financial statements give a fair presentation of the company’soperating results and its financial condition and that the company maintains an adequate systemof internal controls. In addition, the composition of the board of directors and audit committees receivesmore scrutiny, and penalties for misconduct have increased.9.The differences between income statements are in the computation of the cost of goods sold asfollows:Manufacturingcompany:Beginning finished goods inventory plus cost of goods manufactured minusending finished goods inventory cost of goods sold.Merchandisingcompany:Beginning merchandise inventory plus cost of goods purchased minus endingmerchandise inventory cost of goods sold.10.The difference in balance sheets pertains to the presentation of inventories in the current assetsection. In a merchandising company, only merchandise inventory is shown. In a manufacturingcompany, three inventory accounts are shown: finished goods, work in process, and raw materials.11.Manufacturing costs are classified as either direct materials, direct labor, or manufacturing overhead.12.No, Mel is not correct. The distinction between direct and indirect materials is based on two criteria:(1) physical association and (2) the convenience of making the physical association. Materials whichcannot be easily associated with the finished product are considered indirect materials.13.Product costs, or inventoriable costs, are costs that are a necessary and integral part of producingthe finished product. Period costs are costs that are identified with a specific time period ratherthan with a salable product. These costs relate to nonmanufacturing costs and therefore are notinventoriable costs.14.A merchandising company has beginning merchandise inventory, cost of goods purchased, andending merchandise inventory. A manufacturing company has beginning finished goods inventory,cost of goods manufactured, and ending finished goods inventory.15.(a)(b)16.Raw materials inventory, beginning.Raw materials purchases .Total raw materials available for use .Raw materials inventory, ending .Direct materials used . 12,000170,000182,000(15,000) 167,00017.Direct materials used.Direct labor used .Total manufacturing overhead.Total manufacturing costs . 240,000220,000180,000 640,00018.(a)(b) 666,000 634,00019.The order of listing is finished goods inventory, work in process inventory, and raw materials inventory.X total cost of work in process.X cost of goods manufactured.Total cost of work in process ( 26,000 640,000) .Cost of goods manufactured ( 666,000 – 32,000).Copyright 2012 John Wiley & Sons, Inc.Weygandt, Managerial Accounting, 6/e, Solution Transparencies(For Instructor Use Only)1-5

Questions Chapter 1 (Continued)20. The products differ in how each are consumed by the customer. Services are consumedimmediately; the product is not put into inventory. Meals at a restaurant are the best examplewhere they are consumed immediately by the customer. There could be a long lead time beforethe product is consumed in a manufacturing environment.21. Yes, product costing techniques apply equally well to manufacturers and service companies. Eachneeds to keep track of the cost of production or services in order to know whether it is generatinga profit. The techniques shown in this chapter, to accumulate manufacturing costs to determinemanufacturing inventory, are equally useful for determining the cost of services.22. The value chain refers to all activities associated with providing a product or service. For a manufacturer, these include research and development, product design, acquisition of raw materials, production,sales and marketing, delivery, customer relations, and subsequent service.23. An enterprise resource planning (ERP) system is an integrated software system that provides acomprehensive, centralized resource for information. Its primary benefits are that it replaces themany individual systems typically used for receivables, payables, inventory, human resources,etc. Also, it can be used to get information from, and provide information to, the company’s customersand suppliers.24. In a just-in-time inventory system, the company has no extra inventory stored. Consequently, ifsome units that are produced are defective, the company will not have enough units to deliver tocustomers.25. The balanced scorecard is called “balanced” because it strives to not over emphasize any oneperformance measure, but rather uses both financial and non-financial measures to evaluate allaspects of a company’s operations in an integrated fashion.26. Activity-based costing is an approach used to allocate overhead based on each product’s relativeuse of activities in making the product. Activity-based costing is beneficial because it results inmore accurate product costing and in more careful scrutiny of all activities in the value chain.1-6Copyright 2012 John Wiley & Sons, Inc.Weygandt, Managerial Accounting, 6/e, Solution Transparencies(For Instructor Use Only)