Creating Value in a - (Download link at the end of this file) Manager...

Managerial Accounting Creating Value in a Dynamic Business Environment, 13e Ronald Hilton, David Platt (Solutions Manual All Chapters)

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Managerial Accounting, 13/e 1-1 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC.

CHAPTER 1

The Crucial Role of Managerial Accounting in a Dynamic Business Environment FOCUS ON ETHICS (Located before the Chapter Summary in the text.) The focus-on-ethics inset for Chapter 1 is the IMA Statement of Ethical Professional Practice.Instructors can use this list of ethical principles and standards to lead a class discussion.The discussion can also range to consideration of how these standards may have been violated by accountants and managers involved in the various ethical scandals uncovered over the past several years. It is also useful to discuss the pros and cons of the procedures for “Resolving Ethical Issues” that IMA suggests for its members when they believe they know about ethical lapses in their organizations.We also introduce here the connection to the “Ethics Unwrapped” video series that can supplement the discussion of ethics in the context of each chapter. In each chapter of the text, we have suggested topic videos in the series that align with that chapter. Discussion guidance and questions relating to the videos can be found on the “Ethics Unwrapped” site at the URL provided. This resource is provided by permission from the University of Texas at Austin, McCombs School of Business.

ANSWERS TO REVIEW QUESTIONS

1-1 The explosion in e-commerce will affect managers in significant ways. One effect will be a drastic reduction in paperwork. Millions of transactions between businesses are 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, in cloud computing data centers, and while moving across the internet, 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, there will be dramatic changes in the way managerial accounting procedures are carried out, one example being cloud-based budgeting, which is the enterprise-wide and electronic completion of a company’s budgeting process using cloud-based software and data storage.

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1-2 Solutions Manual © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC.

1-2 Plausible goals for the organizations listed are as follows:

(a) Amazon.com: (1) To achieve and maintain profitability, and (2) to grow on-line sales of their many products. Amazon is also famous (infamous) for wanting to have every product in the world on its site.(b) American Red Cross: (1) To raise funds from the general public sufficient to have resources available to meet any disaster that may occur, and (2) to provide assistance to people who are victims of a disaster anywhere in the world on short notice.(c) General Motors: (1) To earn income sufficient to provide a good return on the investment of the company's stockholders, and (2) to provide the highest-quality product possible.(d) Wal-Mart: (1) To penetrate the retail market in virtually every location in the United States, and (2) to grow over time in terms of number of retail locations, total assets, and earnings. Also, to be competitive with Amazon in the e-retail space.(e) City of Seattle: (1) To maintain an urban environment as free of pollution as possible, and (2) to provide public safety, police, and fire protection to the city's citizens.

(f) Hertz: (1) To be a recognizable household name associated with rental car

services, and (2) to provide reliable and economical transportation services to the company's customers.

1-3 The four basic management activities are listed and defined as follows:

(a) Decision making: Choosing among the available alternatives.

(b) Planning: Developing a detailed financial and operational description of

anticipated operations.

(c) Directing operations: Running the organization on a day-to-day basis.

(d) Controlling: Ensuring that the organization operates in the intended manner and achieves its goals.

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Managerial Accounting, 13/e 1-3 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC.

1-4 Examples of the four primary management activities in the context of a national fast-

food chain are as follows:

(a) Decision making: Choosing among several possible locations for a new fast-food outlet.(b) Planning: Developing a cost budget for the food and paper products to be used during the next quarter in a particular fast-food restaurant.(c) Directing operations: Developing detailed schedules for personnel for the next month to provide counter service in a particular fast-food restaurant.(d) Controlling: Comparing the actual cost of paper products used during a particular month in a restaurant with the anticipated cost of paper products for that same time period.1-5 Examples of the objectives of managerial-accounting activity in an airline company

are described below:

(a) Providing information for decision making and planning, and proactively participating as part of the management team in the decision making and planning processes: Managerial accountants provide estimates of the cost of adding a flight on the route from Dallas to Miami and actively participate in making the decision about adding the flight.

(b) Assisting managers in directing and controlling operations: Managerial

accountants provide information about the actual costs of flying the company’s Asian routes during a particular month.

(c) Motivating managers and other employees toward the organization's goals: A

budget is provided for the cost of handling baggage at Chicago O'Hare Airport.The budget is given to the airline's baggage handling manager, who is expected to strive to achieve the budget.(d) Measuring the performance of activities, subunits, managers, and other employees within the organization: Quarterly income statements are prepared for each of the airline's major geographical sectors, and these income reports are used to evaluate the earnings performance of each sector during the relevant time period.(e) Assessing the organization's competitive position and working with other

managers to ensure the organization's long-run competitiveness in its industry:

Information about industry-wide performance standards is obtained and compared with the airline's own performance. For example, how does the airline stack up against its competitors in ticket prices, on-time departures, mishandled baggage, customer complaints, and safety?

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