Provides protection for employees when dealing with superiors given the guide-

© McGraw Hill Ltd. 2024. All rights reserved.Solutions Manual, Chapter 1 1 Chapter 1 Managerial Accounting and the Business Environment Solution to Discussion Case

Benefits to employees of having a code of conduct:

•Creates clarity as to how all employees are expected to behave. This should help employees avoid behaviours that the company prohibits.•Provides protection for employees when dealing with superiors given the guide- lines related to protection from discrimination and harassment.•Establishes guidelines for workplace safety, which should help protect the health of employees.•Provides information on the consequences of code violations, which will help un- derstand employees understand the outcomes of prohibited behaviours, if de- tected.•Provides guidance as to what employees should do if they witness a violation of the code and protects those employees who do report an incident.

Disadvantages to CIBC of having a code of conduct:

•May create the impression among employees that they are not trusted by senior management to act appropriately.•The obligation to report violations could create a culture of suspicion and mis- trust among employees.•Enforcing the code may be costly and time consuming in large organizations such as CIBC. For example, investigations of possible violations could take weeks.•CIBC may be at a competitive disadvantage versus firms that have a less ‘restric- tive’ code of behaviour.Managerial Accounting, 13th Canadian Edition, 13e Ray Garrison, Theresa Libby, Alan Webb (Solutions Manual All Chapters, 100% original verified, A+ Grade) All Chapters Download Link At The End Of This File 1 / 4

• Managerial Accounting, 13th Canadian Edition

Solutions to Questions 1-1 Given rapid changes to the competitive environment in many industries, having infor- mation on a timely basis to make decisions is critical. For example, getting timely information on customer reactions to product changes, price changes, new marketing campaigns, and so on, is necessary to allow managers to decide if fur- ther changes are needed and to make plans for those changes.1-2 Directing activities involve mobilizing people to carry out plans and run routine opera- tions on a day-to-day basis. Controlling activities involve ensuring that the plan is actually carried out and is appropriately modified as circum- stances change. As such, controlling is an ‘after the fact’ test versus plan.1-3 A budget is a detailed quantitative plan for the acquisition and use of financial and other resources over a specified future time period.1-4 Predictive analytics could be used to es- timate any number of metrics such as sales vol- umes, customer returns, customer satisfaction, warranty returns, product defects and so on.1-5 A performance reports compares actual results to expected or budgeted results and is prepared on a periodic basis (e.g., monthly). Be- cause it allows managers to see if actual results have departed from the plan, it can allow them to take corrective action where necessary. Per- formance reports can also be used to evaluate the performance of employees or business seg- ments such as product lines. As such, perfor- mance reports can be a very important part of the control process in any organization.1-6 The Royal Bank of Canada could seg- ment its companywide performance by individ- ual customer, by geographic area (e.g., province or country), and by product line (e.g. asset management, personal loans, mortgages, etc.).Procter & Gamble could segment its perfor- mance by product category (e.g., beauty and grooming, household care, and health and well- being), product line (e.g., Crest, Tide, and Bounty), and stock keeping units (e.g., Crest Cavity Protection toothpaste, Crest Extra Whitening toothpaste, and Crest Sensitivity toothpaste).1-7 Managerial accounting plays an im- portant role in strategic management by provid- ing information to allow managers to effectively implement strategy and to monitor progress to- wards achieving strategic objectives. For exam- ple, performance measurement systems usually contain metrics related to the organization’s tar- get customers (e.g., customer satisfaction) to whom the value proposition is being delivered.1-8 Planning, controlling, directing and moti- vating, and decision making must be performed within the context of a company’s strategy. For example, if a company that competes as a prod- uct leader plans to grow too quickly, it may di- minish quality and threaten the company’s cus- tomer value proposition. A company that com- petes in terms of operational excellence would select control measures that focus on time- based performance, convenience, and cost. A company that competes in terms of customer in- timacy may decide against outsourcing em- ployee training to cut costs because it might di- minish the quality of customer service.1-9 The six business functions that make

the value chain are: (1) research and develop-

ment; (2) product design; (3) manufacturing; (4) marketing; (5) distribution; and (6) customer service.1-10 Examples of things socially responsible organizations should provide for their employees

include: (1) safe and comfortable working condi-

tions; (2) fair compensation; (3) job-training and opportunities for advancement; and (4) non-dis- criminatory treatment and the right to file griev- ances; 1-11 Airlines face the risk that large spikes in fuel prices will lower their profitability. There- fore, they need to estimate future fuel prices and create a business plan based on these esti- mates. Monitoring actual fuel prices as com- pared to plan may lead to decisions to change ticket prices, for example. Further, exposure to fuel price spikes may lead to the decision to 2 / 4

© McGraw Hill Ltd. 2024. All rights reserved.Solutions Manual, Chapter 1 3 reduce this risk by spending money on hedging contracts that enable them to lock-in future fuel prices that will not change even if the market price increases.Steel manufacturers face major risks re- lated to employee safety, so they create and monitor control measures related to occupa- tional safety compliance and performance.Restaurants face the risk that an eco- nomic downturn will reduce customer traffic and lower sales. They reduce this risk by choosing to create menus during economic downturns that offer more low-priced entrees.1-12 Having a good ethical reputation is im- portant to companies in maintaining good rela- tions with suppliers, employees and customers.Companies with a poor ethical reputation will likely have trouble finding suppliers for their raw materials, will have difficulty attracting and re- taining employees, and will not be attractive to potential customers. Thus, in the long-run hav- ing good relations with stakeholder groups is critical to a company’s survival.1-13 Companies prepare a code of conduct to demonstrate their morals and values system, of- ten in part to demonstrate corporate social re- sponsibility. The code of ethics indicates what is expected of all employees and directors in their dealings with various stakeholders.1- 14 Organizations are managed by people that have their own personal interests, insecuri- ties, beliefs, and data-supported conclusions that ensure unanimous support for a given course of action is the exception rather than the rule. Therefore, managers must possess strong leadership skills if they wish to channel their co- workers’ efforts towards achieving organizational goals.1-15 The company could use emissions met- rics and tests to monitor whether pollution (e.g., greenhouse gas emission) is within allowable limits.1-16 Intrinsic motivation comes from within whereby individuals are motivated to succeed at something because they take personal pride and enjoyment in doing so. Extrinsic incentives are provided by someone else (e.g., an employer) and are usually in the form of monetary com- pensation for work done or goals achieved.

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• Managerial Accounting, 13th Canadian Edition

Exercise 1-1 (20 minutes)

• Developing sales estimates of a product for use in the annual budget for a

product is a planning activity since doing so will establish a goal for sales lev- els in the coming year.ii. The review of the monthly quality control reports is a controlling activity aimed at determining whether production processes are operating as planned. Identifying the team members to investigate the problem is a direct- ing and motivating activity since it involves assigning tasks to specific individ- uals. The selection of team members is also a decision-making activity since the manager will need to determine which employees are best suited (e.g., which ones have the necessary skills, the time available, etc.) to conduct the investigation.iii. Choosing from the two design alternatives for the speakers is a decision-mak- ing activity. It could also be argued that this is a planning activity since it will affect which speaker design the company decides to offer to its customers in future periods.iv. Reviewing the monthly performance report is a controlling activity. Determin- ing the production schedule in the coming months is both a planning and di- recting and motivating activity since it involves the future scheduling of day- to-day activities related to manufacturing the televisions. Evaluating how to motivate retailers to improve sales is also a directing and motivating activity and has an element of planning as well assuming changes are going to be made to the current incentive system. The evaluation also involves decision- making with respect to continuing or discontinuing the OLED television line, and planning activities such as setting budgets for future sales of televisions.

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