978-0077862275 Chapter 18 Solution Manual Part 6

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Comparative Analysis — BTN 18-2

1. The purpose of Apple’s audit committee is to:

a. Assist the Board in oversight and monitoring of:

i. the Corporation’s financial statements and other financial

information provided to shareholders and others;

ii. compliance with legal, regulatory, and public

2. The purpose of Google’s audit committee is to:

a. Oversee Google’s accounting and financial reporting processes.

3. Management accountants would be involved in:

Ensuring compliance with regulations.

Ethics Challenge — BTN 18-3

1. Raw materials are part of inventory and should be capitalized (set up as

assets). Their costs are subsequently reported as part of cost of goods

2. The challenge is how to handle a request to use one’s accounting skills

in an inappropriate manner. It is important to remember that the

Communicating in Practice — BTN 18-4

Instructor note: The solution to this project depends on the database and career fields reviewed.

The objective of this Communicating in Practice project is to make

students aware of the earnings potential of different professions—

Taking It to the Net — BTN 18-5

1. Standards of Ethical Conduct for Management Accountants are posted

at the Web site: http://www.IMAnet.org.

These standards (in abbreviated form) are:

3. The IMA suggests first trying to resolve ethical conflicts by applying the

policies of your organization. If this is unsuccessful, contact your

Teamwork in Action — BTN 18-6

Part 1

a. Materials used = Beg. Materials + Materials purchased – End. materials

b. Factory overhead

= Depreciation on factory equipment + factory supervision + factory supplies used +

factory utilities + Indirect labor + Miscellaneous production costs + Rent on factory

building + Maintenance on factory equipment

c. Total manufacturing costs

= Materials used (from a) + Direct labor + Factory overhead (from b)

d. Total cost of work in process

= Beg. WIP Inv. + Total manufacturing costs (from c)

e. Cost of goods manufactured

= Total cost of work in process (from d) – Ending WIP Inventory

Part 2

Requires that the team check answer to part (1e) with instructor before

proceeding to part (3).

Teamwork in Action (Continued)

Part 3

a. Net sales

= Sales – Sales discounts

b. Cost of goods sold

= Beg. finished goods + Cost of goods manuf. (from 1e) – End. finished

goods

c. Gross profit

= Net sales (from a) – Cost of goods sold (from b)

d. Total operating expenses

= Advertising expense + Depreciation expense on office equipment +

Depreciation expense on selling equipment + Office salaries expense

+ Rent expense on office space + Rent expense on selling space +

Sales salaries expense

e. Net income before taxes

= Gross profit (from c) – Total operating expenses (from d)

Entrepreneurial Decision — BTN 18-7

1. Manufacturing costs for SunSaluter include (a) direct materials such as

solar panels and water filters, (b) direct labor to install the systems, and

2. Four goals of a total quality management (TQM) process include reduced

waste, better inventory control, fewer defects, and continuous

Hitting the Road — BTN 18-8

Instructor note: Student responses will vary depending on the restaurant chosen.

The general framework of a good response includes:

1. The usual activities are

serving customer at counter

serving customer at drive-up

2. Costs associated with each activity include

Direct and indirect materials – such as meat, bread, pickles, and

other direct and indirect material costs.

The student should observe that most available cost information is

3. Answers will vary because classification of fixed or variable depends

on the costs identified in part 2.