CHAPTER 18MANAGERIAL ACCOUNTING CONCEPTSAND PRINCIPLESEYE
OPENERS1. Financial accounting and managerialaccounting are
different in several ways.Financial accounting information is
reportedin statementsthat are usefultopersons orgroups outside of a
company. Thesestatementsobjectivelyreport theresultsofpast
operations at fixed periods and thefinancial condition of the
business undergenerally accepted accounting principles.Managerial
accounting information usesboth subjective and objective
information tomeet thespecific needsof management.The information
can be reported periodicallyorasneededbymanagement andcanbereported
for the entire entity or for segmentsof the organization.2. a. A
line department is directly involved inthe basic objectives of the
organization,while a staff department providesservice, assistance,
or advice to linedepartments or other staff departments.b. !" #ales
$epartment%" &ersonnel $epartment3. a. Theroleof thecontroller
istoprovidefinancial and accounting advice andassistance to
management.b. The controller has a staff responsibility.4.
Thefivebasicphasesof themanagementprocessareplanning, directing,
controlling,improving, and decision ma'ing. &lanning isthe
process of establishing financialexpectationsfor the future
throughthe useof planning documents. $irecting is theprocess of
assigning responsibility and usingdatatoguidetheoperationsof
thefirm.(ontrolling is using information as feedbac'to correct
operations. )mproving is usingdata to monitor and guide
processimprovement. $ecisionma'ingisinvolvedwithall of
thepreviousfour processesofmanagement.5. The strategic plan is used
to guide the useof business resources over long*rangehorizons.6.
The process of running day*to*dayoperations,
givenassignedresponsibilities,is directing.7. (ontrolling8.
Management by exception involvesmonitoring results of implemented
plans andcomparingthe expectedresultswithactualresults.
Thefeedbac'allowsmanagementto isolate significant variances for
furtherinvestigation and possible remedial action.9. (ost10. Memory
chips would be considered a directmaterials cost and, hence, would
be a directcost associated with each microcomputer.11. $irect
materials cost, direct labor cost, andfactory overhead cost12.
$irect materials cost13. )f the cost of wages paid to employees is
nota significant portion of the total product cost,thewagescost
would beclassifiedaspartof factory overhead cost.14.
&rimecostsarethecombinationof directmaterials and direct labor
costs, whileconversion costs are the combination ofdirect labor
costs and factory overheadcosts. 15. &roduct costs are composed
of threeelements of manufacturing costs+ directmaterials cost,
direct labor cost, and
factoryoverheadcost.Thesecostsaretreatedasassets until the product
is sold. &roductcosts are sometimes referred to
asinventoriablecosts. &eriodcostsarecoststhatare usedin
generating revenue duringthecurrentperiod.Theyarerecognized
asexpenseson the current period,sincomestatement.16. The three
inventory accounts for amanufacturing business are as follows+a.
Finishedgoods, representinggoodsinthe state in which they are to be
sold.b. -or' in process, representing goods inthe process of
manufacture.1. Materials, representing goods in thestate in which
they were ac.uired.17. Finished goods, wor' in process,
andmaterials18. The cost of finished goods and thecost ofwor' in
process included the following+a. $irect materials/the costs of
materialsthat enter directly into the finishedproduct.b. $irect
labor/the wages of factorywor'erswhoconvert materials into
afinished product.. Factory overhead/the remaining costs,other
thandirect materials anddirectlabor, of operating a factory.19.
(ost of goods sold 20. The cost of direct materials used
inproduction is 0%12,222. 032,222 beginningmaterialsinventory"
40%52,222materialspurchases" 6 072,222 ending
materialsinventory".21. A merchandising business
purchasesmerchandiseproducts" inafinishedstatefor resale to
customers. The cost of productsoldiscalledcost of merchandisesold.
Amanufacturer ma'es the product it sellsusing direct materials,
direct labor, andfactoryoverhead. Thecost of theproductsold is
generally called cost of goods sold.22. a. An automobile
manufacturer might use managerial reports to evaluate how
effi*ciently raw materials, such as steel, anddirect labor, such as
assembly line em*ployee wages, are used in the manufac*turing
process. b. 8ther reports mighthelp managementdetermine the
appropriate cost of the fi*nal product or help determine ifa new
automated paint robot is a good invest*ment.PRACTICE E!ERCISESPE
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