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Copyright © 2018 John Wiley & Sons, Inc. Weygandt, Managerial Accounting, 8/e, Solutions Manual (For Instructor Use Only) 1-1
CHAPTER 1
Managerial Accounting
ASSIGNMENT CLASSIFICATION TABLE
Learning Objectives
Questions
Brief
Exercises
Do It!
Exercises
A
Problems
*1. Identify the features of
managerial accounting and
the functions of
management.
1, 2, 3, 4, 5,
6, 7
1, 2
1
1
*2. Describe the classes of
manufacturing costs and the
differences between product
and period costs.
8, 9, 10
3, 4, 5, 6
2
2, 3, 4, 5, 6,
7, 13
1A, 2A
*3. Demonstrate how to compute
cost of goods manufactured
and prepare financial
statements for a
manufacturer.
11,12, 13, 14,
15, 16,
7, 8, 9, 10
3
8, 9, 10, 11,
12, 13, 14, 15,
16, 17
3A, 4A, 5A
*4. Discuss trends in managerial
accounting.
17, 18, 19, 20,
21, 22, 23, 24,
25
11
4
18
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1-2 Copyright © 2018 John Wiley & Sons, Inc. Weygandt, Managerial Accounting, 8/e, Solutions Manual (For Instructor Use Only)
ASSIGNMENT CHARACTERISTICS TABLE
Problem
Number
Description
Difficulty
Level
Time
Allotted (min.)
1A
Classify manufacturing costs into different categories and
compute the unit cost.
Simple
20–30
2A
Classify manufacturing costs into different categories and
compute the unit cost.
Simple
20–30
3A
Indicate the missing amount of different cost items, and
prepare a condensed cost of goods manufactured schedule,
an income statement, and a partial balance sheet.
Moderate
30–40
4A
Prepare a cost of goods manufactured schedule, a partial
income statement, and a partial balance sheet.
Moderate
30–40
5A
Prepare a cost of goods manufactured schedule and a
correct income statement.
Moderate
30–40
BLOOM’S TAXONOMY TABLE
Copyright © 2018 John Wiley & Sons, Inc. Weygandt, Managerial Accounting, 8/e, Solutions Manual (For Instructor Use Only) 1-3
Correlation Chart between Bloom’s Taxonomy, Learning Objectives and End-of-Chapter Exercises and Problems
Learning Objective
Knowledge
Comprehension
Application
Analysis
Synthesis
Evaluation
* 1. Identify the features of managerial
accounting and the functions of
management.
Q1-1
Q1-2
Q1-3
Q1-4
Q1-5
Q1-6
BE1-1
BE1-2
DI1-1
E1-1
* 2. Describe the classes of
manufacturing costs and the
differences between product and
period costs.
Q1-10
Q1-8
Q1-9
BE1-3
BE1-4
BE1-5
BE1-6
DI1-2
E1-2
E1-3
E1-5
E1-6
E1-4
E1-7
E1-13
P1-1A
P1-2A
* 3. Demonstrate how to compute cost of
goods manufactured and prepare
financial statements for a
manufacturer.
Q1-7 Q1-11
Q1-12
E1-15
Q1-13
Q1-14
Q1-15
BE1-7
BE1-8
BE1-9
BE1-10
DI1-3
E1-8
E1-12
E1-13
E1-14
E1-16
E1-17
P1-4A
E1-9
E1-10
E1-11
P1-3A
P1-5A
* 4. Discuss trends in managerial
accounting.
Q1-16
Q1-18
Q1-17
Q1-19
Q1-20
Q1-21
Q1-22
Q1-23
Q1-24
Q1-25
BE1-11
DI1-4
E1-18
Continuing Problems
CD1
WP1
Expand Your Critical Thinking
CT1-3
CT1-6
CT1-1
CT1-2
CT1-4
CT1-5
CT1-7
1-4 Copyright © 2018 John Wiley & Sons, Inc. Weygandt, Managerial Accounting, 8/e, Solutions Manual (For Instructor Use Only)
ANSWERS TO QUESTIONS
1. (a) Disagree. Managerial accounting is a field of accounting that provides economic and financial
information for managers and other internal users.
(b) Joe is incorrect. Managerial accounting applies to all types of businesses—service, merchandising,
and manufacturing.
LO1 BT: C Difficulty: Easy TOT: 3 min. AACSB: None AICPA FC: Measurement IMA: Cost Management
2. (a) Financial accounting is concerned primarily with external users such as stockholders, creditors,
and regulators. In contrast, managerial accounting is concerned primarily with internal users such
as officers and managers.
(b) Financial statements are the end product of financial accounting. The statements are prepared
quarterly and annually. In managerial accounting, internal reports may be prepared as frequently
as needed.
(c) The purpose of financial accounting is to provide general-purpose information for all users.
The purpose of managerial accounting is to provide special-purpose information for specific
decisions.
LO1 BT: C Difficulty: Easy TOT: 5 min. AACSB: None AICPA FC: Measurement IMA: Cost Management
3. Differences in the content of the reports are as follows:
Financial
Managerial
Pertains to business as a whole and is highly
aggregated.
Limited to double-entry accounting and cost
data.
Generally accepted accounting principles.
Pertains to subunits of the business and
may be very detailed.
Extends beyond double-entry accounting
system to any relevant data.
Standard is relevance to decisions.
In financial accounting, financial statements are verified annually through an independent audit
by certified public accountants. There are no independent audits of internal reports issued by
managerial accountants.
LO1 BT: C Difficulty: Easy TOT: 5 min. AACSB: None AICPA FC: Measurement IMA: Cost Management
4. Linda should know that the management of an organization performs three broad functions:
(1) Planning requires management to look ahead and to establish objectives.
(2) Directing involves coordinating the diverse activities and human resources of a company to
produce a smooth-running operation.
(3) Controlling is the process of keeping the company’s activities on track.
LO1 BT: C Difficulty: Easy TOT: 3 min. AACSB: None AICPA FC: Measurement IMA: Cost Management
5. Disagree. Decision making is not a separate management function. Rather, decision making involves
the exercise of good judgment in performing the three management functions explained in the
answer to question four above.
LO1 BT: C Difficulty: Easy TOT: 2 min. AACSB: None AICPA FC: Measurement IMA: Cost Management
6. Employees with line positions are directly involved in the company’s primary revenue generating
operating activities. Examples would include plant managers and supervisors, and the vice president
of operations. In contrast, employees with staff positions are not directly involved in revenue-
generating operating activities, but rather serve in a support capacity to line employees. Examples
include employees in finance, legal, and human resources.
LO1 BT: C Difficulty: Easy TOT: 3 min. AACSB: None AICPA FC: Measurement IMA: Cost Management
Copyright © 2018 John Wiley & Sons, Inc. Weygandt, Managerial Accounting, 8/e, Solutions Manual (For Instructor Use Only) 1-5
Questions Chapter 1 (Continued)
7. The difference in balance sheets pertains to the presentation of inventories in the current asset
section. In a merchandising company, only inventory is shown. In a manufacturing company,
three inventory accounts are shown: finished goods, work in process, and raw materials.
LO3 BT: C Difficulty: Easy TOT: 2 min. AACSB: None AICPA FC: Measurement IMA: Cost management
8. Manufacturing costs are classified as either direct materials, direct labor, or manufacturing overhead.
LO2 BT: C Difficulty: Easy TOT: 1 min. AACSB: None AICPA FC: Measurement IMA: Cost management
9. No, Mel is not correct. The distinction between direct and indirect materials is based on two criteria:
(1) physical association and (2) the convenience of making the physical association. Materials which
cannot be easily associated with the finished product are considered indirect materials.
LO2 BT: C Difficulty: Easy TOT: 2 min. AACSB: None AICPA FC: Measurement IMA: Cost management
10. Product costs, or inventoriable costs, are costs that are a necessary and integral part of producing
the finished product. Period costs are costs that are identified with a specific time period rather
than with a salable product. These costs relate to nonmanufacturing costs and therefore are not
inventoriable costs.
LO2 BT: K Difficulty: Easy TOT: 2 min. AACSB: None AICPA FC: Measurement IMA: Cost management
11. A merchandising company has beginning inventory, cost of goods purchased, and ending
inventory. A manufacturing company has beginning finished goods inventory, cost of goods
manufactured, and ending finished goods inventory.
LO3 BT: C Difficulty: Easy TOT: 5 min. AACSB: None AICPA FC: Measurement IMA: Cost management
12. (a) X = total cost of work in process.
(b) X = cost of goods manufactured.
LO3 BT: C Difficulty: Easy TOT: 2 min. AACSB: None AICPA FC: Measurement IMA: Cost management
13. Raw materials inventory, beginning ....................................................................... $12,000
Raw materials purchases ...................................................................................... 170,000
Total raw materials available for use ...................................................................... 182,000
Raw materials inventory, ending ............................................................................ (15,000 )
Direct materials used .................................................................................... $167,000
LO3 BT: AP Difficulty: Easy TOT: 3 min. AACSB: Analytic AICPA FC: Measurement IMA: Cost management
($12,000 + $170,000 - $15,000 = $167,000)
(Beg. RM + RM purch. – End. RM = DM used)
14. Direct materials used ............................................................................................. $240,000
Direct labor used ................................................................................................... 220,000
Total manufacturing overhead ............................................................................... 180,000
Total manufacturing costs ............................................................................. $640,000
LO3 BT: AP Difficulty: Easy TOT: 2 min. AACSB: Analytic AICPA FC: Measurement IMA: Cost management
($240,000 + $220,000 + $180,000 = $640,000)
(DM used + DL used + Tot. MOH = Tot. mfg. costs)
15. (a) Total cost of work in process ($26,000 + $640,000) ...................................... $666,000
(b) Cost of goods manufactured ($666,000 – $32,000) ...................................... $634,000
LO3 BT: AP Difficulty: Easy TOT: 2 min. AACSB: Analytic AICPA FC: Measurement IMA: Cost management
[(a: $26,000 + $640,000 = $666,000); (b: $666,0000 - $32,000 = $634,000)]
[(a: Beg. WIP + Tot. mfg. costs = Tot. cost of WIP); (b: Tot. cost of WIP – End. WIP = COGM)]
16. The order of listing is finished goods inventory, work in process inventory, and raw materials inventory.
LO3 BT: K Difficulty: Easy TOT: 1 min. AACSB: None AICPA FC: Measurement IMA: Cost management
1-6 Copyright © 2018 John Wiley & Sons, Inc. Weygandt, Managerial Accounting, 8/e, Solutions Manual (For Instructor Use Only)
Questions Chapter 1 (Continued)
17. The products differ in how each are consumed by the customer. Services are consumed
immediately; the product is not put into inventory. Meals at a restaurant are the best example
where they are consumed immediately by the customer. There could be a long lead time before
the product is consumed in a manufacturing environment.
LO4 BT: C Difficulty: Easy TOT: 3 min. AACSB: None AICPA FC: Measurement IMA: Cost management
18. The product costing techniques apply equally well to manufacturers and service companies. Each
needs to keep track of the cost of production or services in order to know whether it is generating
a profit. The techniques shown in this chapter, to accumulate manufacturing costs to determine
manufacturing inventory, are equally useful for determining the cost of services.
LO4 BT: K Difficulty: Easy TOT: 3 min. AACSB: None AICPA FC: Measurement IMA: Cost management
19. The value chain refers to all activities associated with providing a product or service. For a manufac-
turer, these include research and development, product design, acquisition of raw materials, production,
sales and marketing, delivery, customer relations, and subsequent service.
LO4 BT: C Difficulty: Easy TOT: 3 min. AACSB: None AICPA FC: Decision Modeling IMA: Strategic Planning
20. An enterprise resource planning (ERP) system is an integrated software system that provides a
comprehensive, centralized resource for information. Its primary benefits are that it replaces the
many individual systems typically used for receivables, payables, inventory, human resources,
etc. Also, it can be used to get information from, and provide information to, the company’s customers
and suppliers.
LO4 BT: C Difficulty: Easy TOT: 3 min. AACSB: None AICPA FC: Decision Modeling IMA: Strategic Planning
21. In a just-in-time inventory system, the company has no extra inventory stored. Consequently, if
some units that are produced are defective, the company will not have enough units to deliver to
customers.
LO4 BT: C Difficulty: Easy TOT: 2 min. AACSB: None AICPA FC: Decision Modeling IMA: Strategic Planning
22. The balanced scorecard is called “balanced” because it strives to not over emphasize any one
performance measure, but rather uses both financial and non-financial measures to evaluate all
aspects of a company’s operations in an integrated fashion.
LO4 BT: C Difficulty: Easy TOT: 3 min. AACSB: None AICPA FC: Decision Modeling IMA: Strategic Planning
23. Budgets are prepared by companies to provide future direction. Because the budget is also used
as an evaluation tool, some managers try to game the budgeting process by underestimating
their division’s predicted performance so that it will be easier to meet their performance targets.
On the other hand, if the budget is set at unattainable levels, managers sometimes take unethical
actions to meet targets to receive higher compensation or in some cases to keep their jobs.
LO4 BT: C Difficulty: Easy TOT: 3 min. AACSB: Ethics AICPA PC: Professional Demeanor IMA: Business Applications
24. CEOs and CFOs must now certify that financial statements give a fair presentation of the company’s
operating results and its financial condition and that the company maintains an adequate system
of internal controls. In addition, the composition of the board of directors and audit committees receives
more scrutiny, and penalties for misconduct have increased.
LO4 BT: C Difficulty: Easy TOT: 3 min. AACSB: Ethics AICPA FC: Measurement AICPA PC: Professional Demeanor IMA: FSA, Business
Applications
25. Activity-based costing is an approach used to allocate overhead based on each product’s relative
use of activities in making the product. Activity-based costing is beneficial because it results in
more accurate product costing and in more careful scrutiny of all activities in the value chain.
LO4 BT: C Difficulty: Easy TOT: 3 min. AACSB: None AICPA FC: Decision Modeling IMA: Cost management
SOLUTIONS TO BRIEF EXERCISES
BRIEF EXERCISE 1-1
Financial Accounting
Managerial Accounting
Primary users
External users
Internal users
Types of reports
Financial statements
Internal reports
Frequency of reports
Quarterly and annually
As frequently as needed
Purpose of reports
General-purpose
Special-purpose information
for specific decisions
Content of reports
Generally accepted
accounting principles
Relevance to decisions
Verification process
Annual audit by certified
public accountant
No independent audits
