Managerial Accounting for Managers 4th Edition Solution Manual

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Solutions Manual,Chapter 11Chapter 1Managerial Accounting: An OverviewSolutions to Questions1-1Financial accountingis concerned withreporting financial information to externalparties, such as stockholders, creditors, andregulators.Managerial accountingis concernedwith providing information to managers for usewithin the organization. Financial accountingemphasizes the financial consequences of pasttransactions, objectivity and verifiability,precision, and companywide performance,whereas managerial accounting emphasizesdecisions affecting the future, relevance,timeliness, andsegmentperformance. Financialaccounting is mandatory for external reports andit needs to comply with rules, such as generallyaccepted accounting principles (GAAP) andinternational financial reporting standards(IFRS), whereas managerial accounting is notmandatory and it does not need to comply withexternally imposed rules.1-2Five examples of planning activitiesinclude (1) estimating the advertising revenuesfor a futureperiod, (2) estimatingthetotalexpensesfor a future period,including thesalaries of all actors,news reporters, andsportscasters,(3) planning how many newtelevision shows to introduce to the market, (4)planningeachtelevision show’sdesignatedbroadcast time slot, and (5) planning thenetwork’s advertising activities andexpenditures.Five examples of controllingactivitiesinclude (1) comparing the actual number ofviewers for each show toitsviewershipprojections, (2)comparing the actual costs ofproducing a made-for-television movie to itsbudget, (3) comparing the revenues earnedfrom broadcasting a sporting event to the costsincurred tobroadcast that event, (4) comparingthe actual costs of running a production studioto the budget, and (5) comparing the actual costof providing global, on-location news coverageto the budget.1-3The quantitative analysis would focus ondetermining the potential cost savings frombuying the part rather than making it. Thequalitative analysis would focus on broaderissues such as strategy, risks, and corporatesocial responsibility.For example, if the part iscritical to the organization’s strategy, it maycontinue making the part regardless of anypotential cost savings from outsourcing. If theoverseas suppliermight createquality controlproblems that could threaten theendconsumers’welfare, then the risks ofoutsourcing may swamp any cost savings.Finally,from a social responsibility standpoint,acompany may decide against outsourcing if itwould result in layoffs at its domesticmanufacturing facility.1-4Companiespreparebudgets to translateplans into formal quantitative terms. Budgetsareusedfor various purposes, such asforcingmanagers to plan ahead, allocatingresourcesacross departments, coordinatingactivitiesacross departments, establishinggoals thatmotivate people, and evaluatingand rewardingemployees. These various purposes oftenconflict with one another, which makesbudgeting one of management’s mostchallenging activities.1-5Managerial accounting is relevant to allbusiness students because all managers engageinplanning, controlling, and decision makingactivities. If managers wish to influence co-workers across the organization, they must beable tospeak in financial terms tojustify theirproposed courses of action.1-6The Institute of ManagementAccountants estimates that 80% of accountantswork in non-public accounting environments.Accountants that work in corporate, non-profit,and governmental organizations are expected to

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