Management Accounting Mcgraw Hill Manual Case Solution
Instructor’s Manual Management and Cost Accounting Fifth edition Alnoor Bhimani Charles T. Horngren Srikant M.
Datar Madhav V. Rajan Farah Ahamed For further instructor material please visit: www.pearsoned.co.uk/bhimani ISBN: 978-0-273-75986-7 Pearson Education Limited 2012 Lecturers adopting the main text are permitted to download and photocopy the manual as required. Pearson Education Limited Edinburgh Gate Harlow Essex CM20 2JE England and Associated Companies around the world Visit us on the World Wide Web at: www.pearson.com/uk This edition published 2012 © Pearson Education Limited 2012 The rights of Alnoor Bhimani, Charles T. Horngren, Srikant M. Datar, Madhav V.
Rajan, Farah Ahamed to be identified as the authors of this Work have been asserted by them in accordance with the Copyright, Designs and Patents Act 1988. Pearson Education is not responsible for the content of third-party internet sites. ISBN: 978-0-273-75986-7 All rights reserved. Permission is hereby given for the material in this publication to be reproduced for OHP transparencies and student handouts, without express permission of the Publishers, for educational purposes only. In all other cases, no part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise without either the prior written permission of the Publishers or a licence permitting restricted copying in the United Kingdom issued by the Copyright Licensing Agency Ltd. Saffron House, 6-10 Kirby Street, London EC1N 8TS.
This book may not be lent, resold, hired out or otherwise disposed of by way of trade in any form of binding or cover other than that in which it is published, without the prior consent of the Publishers. Preface This manual is intended to assist lecturers’ discussion of assignments and lecture topics. ‘Points to stress and teaching tips’ are provided for each chapter to give broad guidance on relevant issues or potential areas of difficulty to students. Solutions are offered for end-of-chapter ‘assessment material’ in the text.
Case notes prepared (in most cases) by the case writer to all cases included in the text are also provided. The assistance of Pauline Gleadle, Laurence Habib, Imran Malik, Rishi Zaveri and Marvish Shami with reviewing and checking many of the problems and their solutions is gratefully acknowledged.
Ahamed 4 © Pearson Education Limited 2012 PART I MANAGEMENT AND COST ACCOUNTING FUNDAMENTALS 5 © Pearson Education Limited 2012 Bhimani, Horngren, Datar and Rajan, Management and Cost Accounting, 5th Edition, Instructor’s Manual Costs, benefits and context The ‘best’ information system depends on both technical and human aspects of the specific situation. This is a major difference between financial accounting, where firms generally need to comply with external reporting requirements where they exist, and management accounting, where choices are based on an explicit or implicit cost–benefit analysis. Management accounting students must do more than memorising rules. They must evaluate the situation and context, decide which technique or information system is most appropriate and implement it. Themes in the design of management accounting systems Customer satisfaction is the dominant theme. All other themes are directed toward attracting and retaining profitable customers who remain satisfied. These themes can also be applied to functions within a business.
Management Accounting Mcgraw Hill Manual Case Solution Outline
For example, management accountants (MAs) must satisfy their customers (managers) by satisfying key success factors. MAs must provide high-quality information on a timely basis for a reasonable cost. MAs can develop innovative formats and analyses to facilitate management decisions.
They should provide information regarding all elements of the value chain and must prepare information for internal decisions as well as external financial reporting. MAs should continually strive to provide better quality information, faster, at a lower cost. Solutions to review questions 1.1 The five broad purposes are: Purpose 1: Formulating overall strategies and long-range plans. Purpose 2: Resource allocation decisions such as product and customer emphasis and pricing.
Purpose 3: Cost planning and cost control of operations and activities. Purpose 4: Performance measurement and evaluation of people. Purpose 5: Meeting external regulatory and legal reporting requirements where they exist. 1.2 Management accounting measures and reports financial as well as other types of information that may be useful to managers in fulfilling the goals of the organisation. Financial accounting focuses on external reporting that is guided by generally accepted accounting principles. 1.3 The business functions in the value chain are:.
Research and development – the generation of, and experimentation with, ideas related to new products, services or processes. Design of products, services and processes – the detailed planning and engineering of products, services or processes. Production – the coordination and assembly of resources to produce a product or deliver a service.
7 © Pearson Education Limited 2012 Bhimani, Horngren, Datar and Rajan, Management and Cost Accounting, 5th Edition, Instructor’s Manual. Marketing – the process by which individuals or groups (a) learn about and value the attributes of products or services and (b) purchase those products or services. Distribution – the mechanism by which products or services are delivered to a customer. Customer service – the support activities provided to the customers.
1.4 Cost management refers to actions that managers undertake to satisfy customers while continuously reducing and controlling costs. 1.5 A successful accountant requires general business skills (such as understanding the strategy of an organisation) and people skills (such as motivating other team members) as well as technical skills (such as computer knowledge). Drucker is advocating that accountants do more than scorekeeping, which is often interpreted as being a ‘bobby on the beat’ or a watchdog.
It is also essential that accountants emphasise their attention-directing and problem-solving functions. 1.7 The new accountant could reply in one or more of several ways: a Demonstrate to the plant manager how he or she could make better decisions, if the plant accountant was viewed as a resource rather than a dead weight. In a related way, the plant accountant could show how the plant manager’s time and resources could be saved by viewing the new plant accountant as a team member. B Demonstrate to the plant manager a good knowledge of technical aspects at the plant. This approach may involve doing background reading. It certainly will involve spending much time on the plant floor speaking to plant personnel. C Show the plant manager’s examples of the new plant accountant’s past successes in working with line managers in other plants.
Examples could include d 1.8 1.9. assistance in preparing the budget,. assistance in analysing problem situations and. assistance in submitting capital budget requests. Seek assistance from the corporate accountant to highlight to the plant manager the importance of many tasks undertaken by the new plant accountant. This approach is a last resort but may be necessary in some cases. A customer-driven management accountant function would a approach its customers (such as managers in different parts of the value chain) to determine how it can facilitate those managers making better decisions, and b solicit regular and systematic feedback from those customers about its performance.
Yes, management accountants have customers just as companies have customers who purchase their products or services. Management accountants provide information and advice to many line and staff people in the organisation and to various external parties. It is essential that they provide information and advice that line and staff customers and external parties view as timely and relevant. 8 © Pearson Education Limited 2012 Bhimani, Horngren, Datar and Rajan, Management and Cost Accounting, 5th Edition, Instructor’s Manual 1.15 Uses of feedback. (10 min) Item 1.16 Use of feedback a 2 b 6 c 4 d 3 e 5 f 1 Scorekeeping, attention directing and problem solving. (15 min) Because the accountant's duties are often not sharply defined, some of these answers might be challenged.
Activity 1.17 Function a Scorekeeping b Attention directing c Scorekeeping d Problem solving e Attention directing f Attention directing g Problem solving h Scorekeeping, depending on the extent of the report i This question is intentionally vague. The give-and-take of the budgetary process usually encompasses all three functions, but it emphasises scorekeeping the least. The main function is attention directing, but problem solving is also involved. J Problem solving Scorekeeping, attention directing and problem solving. (15 min) The accountant’s duties are often not sharply defined, so some of these answers might be challenged. Activity Function a Attention directing b Problem solving c Scorekeeping 10 © Pearson Education Limited 2012 Bhimani, Horngren, Datar and Rajan, Management and Cost Accounting, 5th Edition, Instructor’s Manual Activity 1.18 1.19 Function d Scorekeeping e Scorekeeping f Attention directing g Problem solving h Scorekeeping i Problem solving j Attention directing Changes in management and changes in management accounting. Pipefitter math made easy.
(15 min) Change in management accounting Key theme in newly management approach evolving a Total value-chain analysis b Key success factors (quality) or total value-chain analysis c Dual external/internal focus d Continuous improvement e Customer satisfaction is priority one Planning and control, feedback. (15–20 min) 1 Planning is choosing goals, predicting results under various ways of achieving those goals and then deciding how to attain the desired goals.
One goal of the European Starting News (ESN) is to increase operating income. Increasing revenues is potentially one way to achieve this if the increase in revenues exceeds any associated increase in costs. ESN expects daily circulation to increase from 250,000 per day in April to 400,000 per day in May. This budgeted circulation gain is expected to increase newspaper revenues from €5,250,000 in April to a budgeted €6,200,000 in May. Control covers both the actions that implement the planning decision and the performance evaluation of the personnel and operations. At ESN, the price drop would be announced to its sales force and probably to customers.
Requirement 2 illustrates a performance report for May 2003. Actual results Newspapers sold Price per paper Newspaper revenue Budgeted amounts Variance 13,600,000 12,400,000 1,200,000 fav €0.50 €0.50 €0.00 fav €6,800,000 €6,200,000 €600,000 fav 11 © Pearson Education Limited 2012 Bhimani, Horngren, Datar and Rajan, Management and Cost Accounting, 5th Edition, Instructor’s Manual 3 Two approaches within the existing organisation reporting relationships are the following: a Placing higher priority on having her performance-analysis staff view the division personnel as important customers and actively seeking out ways to increase customer satisfaction. B Encouraging greater use of teams in which division personnel and corporate control personnel are members. Hopefully, mutual respect will increase by this close interaction. A more extreme approach would be to change the organisatio.