COVERAGE OF LEARNING OBJECTIVES

Introduction to Management Accounting 16e Horngren Sundem, Schatzberg Burgstahler

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Copyright ©2014 Pearson Education, Inc., Publishing as Prentice Hall.1

CHAPTER 1

COVERAGE OF LEARNING OBJECTIVES

LEARNING OBJECTIVE

FUNDA-

MENTAL

ASSIGN-

MENT

MATERIAL

CRITICAL

THINKING

EXERCISES

AND

EXERCISES

PROBLEMS

CASES,

EXCEL,

COLLAB., &

INTERNET

EXERCISES

LO1: Explain why accounting is

essential for decision makers and managers.

30, 31 52, 55

LO2: Describe the major users

and uses of accounting information.

A1, B1 28, 29, 33 39, 40, 42 55

LO3: Explain the role of budgets

and performance reports in planning and control.

A2, B2 32 45 53

LO4: Describe the cost-benefit

and behavioral issues involved in designing an accounting system.

41, 43

LO5: Discuss the role

accountants play in the company’s value chain functions.

A1, B1 30, 31, 34, 35,

36

39, 42, 44, 46

LO6: Identify current trends in

management accounting.54

LO7: Explain why ethics and

standards of ethical conduct are important to accountants.

A3, B3 37, 38 47, 48, 49 51, 52, 55

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Copyright ©2014 Pearson Education, Inc., Publishing as Prentice Hall.2

CHAPTER 1

Managerial Accounting, the Business Organization, and Professional Ethics

1-A1 (10-15 min.)

Information is often useful for more than one function, so the following classifications for

each activity are not definitive but serve as a starting point for discussion:

• Scorekeeping. A depreciation schedule is used in preparing financial statements

to report the results of activities.

• Problem solving. Helps a manager assess the impact of a purchase decision.
• Scorekeeping. Reports on the results of an operation. Could also be attention

directing if scrap is an area that might require management attention.

• Attention directing. Focuses attention on areas that need attention.
• Attention directing. Helps managers learn about the information contained in a

performance report.

• Scorekeeping. The statement reports what has happened. Could also be attention

directing if the report highlights a problem or issue.

• Problem solving. Assuming the cost comparison is to help the manager decide

between two alternatives, this is problem solving.

• Attention directing. Variances point out areas where results differ from

expectations. Interpreting them directs attention to possible causes of the differences.

• Problem solving. Aids a decision about where to make parts.
• Attention directing and problem solving. Budgeting involves making decisions

about planned activities -- hence, aiding problem solving. Budgets also direct attention to areas of opportunity or concern -- hence, directing attention.Reporting against the budget also has a scorekeeping dimension.

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Copyright ©2014 Pearson Education, Inc., Publishing as Prentice Hall.3 1-A2 (15-20 min.)

• Budgeted Actual Deviations

Amounts Amounts or Variances Room rental $ 170 $ 170 $ 0 Food 660 875 215U Entertainment 570 570 0 Decorations 210 270 60U Total $1,610 $1,885 $275U

• Because of the management by exception rule, room rental and entertainment

require no explanation. The actual expenditure for food exceeded the budget by $215. Of this $215, $132 is explained by attendance of 16 persons more than budgeted (the budget of $660/80 = $8.25 per person for food and 16 x $8.25 = $132) and the remaining $83 ($215 – $132) is explained by expenditures above $8.25 per person.

Actual expenditures for decorations were $60 more than the budget. The decorations committee should be asked for an explanation of the excess expenditures.

1-A3 (10 min.)

All of the situations raise possibilities for violation of the integrity standard. In addition,

the manager in each situation must address an additional ethical standard:

• The General Mills manager must respect the confidentiality standard. He or she

should not disclose any information about the new cereal.

• Felix must address his level of competence for the assignment. If his supervisor

knows his level of expertise and wants an analysis from a “layperson” point of view, he should do it. However, if the supervisor expects an expert analysis, Felix must disclose his lack of competence.

• The credibility standard should cause Mary Sue to decline to omit the information

from the budget. It is relevant information, and its omission may mislead readers of the budget.

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