CHAPTER 1
Managerial Accounting
ASSIGNMENT CLASSIFICATION TABLE
Learning Objectives
Questions
Brief
Exercises
Do It!
Exercises
A
Problems
B
Problems
*1. Explain the distinguishing
features of managerial
accounting.
1, 2, 3
1
1
1
*2. Identify the three broad
functions of management.
4, 5, 6,
7, 8
2, 3
1
*3. Define the three classes
of manufacturing costs.
11, 12
4, 5, 7
2
2, 3, 4,
5, 6
1A, 2A
1B, 2B
*4. Distinguish between
product and period costs.
13
6
2
3, 4, 5,
7, 13
1A, 2A
1B, 2B
*5. Explain the difference
between a merchandising
and a manufacturing
income statement.
9, 14
8, 12, 13,
14, 15, 17
3A, 4A, 5A
3B, 4B, 5B
*6. Indicate how cost of
goods manufactured
is determined.
15, 16,
17, 18
8, 10, 11
3
8, 9, 10, 11,
12, 13, 14,
15, 16, 17
3A, 4A, 5A
3B, 4B, 5B
*7. Explain the difference
between a merchandising
and a manufacturing
balance sheet.
10, 19,
20, 21
9
14, 15,
16, 17
3A, 4A
3B, 4B
*8. Identify trends in managerial
accounting.
22, 23, 24
25, 26
4
18
chapter.
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
1B
Classify manufacturing costs into different categories and
compute the unit cost.
Simple
20–30
2B
Classify manufacturing costs into different categories and
compute the unit cost.
Simple
20–30
3B
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
4B
Prepare a cost of goods manufactured schedule, a partial
income statement, and a partial balance sheet.
Moderate
30–40
5B
Prepare a cost of goods manufactured schedule and a
correct income statement.
Moderate
30–40
BLOOM’S TAXONOMY TABLE
Copyright © 2012 John Wiley & Sons, Inc. Weygandt, Managerial Accounting, 6/e, Solutions Manual (For Instructor Use Only) 1-3
* 2. Identify the three broad functions
of management.
Q1-4
Q1-5
Q1-6
Q1-7
Q1-8
BE1-2
BE1-3
DI1-1
* 3. Define the three classes
of manufacturing costs.
Q1–11
Q1–12
BE1-4
BE1-5
BE1-7
DI1-2
E1-2
E1-3
E1-6
E1-4
E1-5
P1–1A
P1–2A
P1–1B
P1–2B
* 4. Distinguish between product
and period costs.
Q1–13
BE1-6
DI1-2
E1-3
E1-4
E1-5
E1-7
E1–13
P1–1A
P1-2A
P1–1B
P1–2B
* 5. Explain the difference between a
merchandising and a manufacturing
income statement.
Q1-9
Q1–14
E1–15
E1-8
E1–12
E1–13
E1–14
E1–17
P1–4A
P1–4B
P1–3A
P1–5A
P1–3B
P1–5B
* 6. Indicate how cost of goods
manufactured is determined.
E1–15
Q1–15
Q1–16
Q1–17
Q1–18
BE1-8
BE1-10
BE1-11
DI1-3
E1-8
E1-9
E1–10
E1–11
E1–12
E1–13
E1–14
E1–16
E1–17
P1–4A
P1–4B
E1–10
E1–11
P1–3A
P1–5A
P1–3B
P1–5B
* 7. Explain the difference between a
merchandising and a manufacturing
balance sheet.
Q1–19
Q1–10
Q1–20
Q1–21
E1–15
BE1-9
E1–14
E1–16
E1–17
P1–4A
P1–4B
P1–3A
P1–3B
* 8. Identify trends in managerial
accounting.
Q1–22
Q1–23
Q1–24
Q1–25
Q1–26
DI1-4
E1–18
Broadening Your Perspective
BYP1-4
BYP1-1
BYP1-2
BYP1-3
BYP1-5
BYP1-6
BYP1-7
BYP1-8
BYP1-9
ANSWERS TO QUESTIONS
1. (a) Disagree. Managerial accounting is a field of accounting that provides economic and financial
and manufacturing.
2. (a) Financial accounting is concerned primarily with external users such as stockholders, creditors,
as officers and managers.
(b) Financial statements are the end product of financial accounting. The statements are prepared
as needed.
(c) The purpose of financial accounting is to provide general-purpose information for all users.
decisions.
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.
managerial accountants.
4. Budgets are prepared by companies to provide future direction. Because the budget is also used
actions to meet targets to receive higher compensation or in some cases to keep their jobs.
5. Linda should know that the management of an organization performs three broad functions:
produce a smooth-running operation.
(3) Controlling is the process of keeping the company’s activities on track.
6. Disagree. Decision making is not a separate management function. Rather, decision making involves
answer to question five above.
7. 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
Questions Chapter 1 (Continued)
8. CEOs and CFOs must now certify that financial statements give a fair presentation of the company’s
9. The differences between income statements are in the computation of the cost of goods sold as
follows:
Manufacturing
company:
Beginning finished goods inventory plus cost of goods manufactured minus
ending finished goods inventory = cost of goods sold.
Merchandising
company:
Beginning merchandise inventory plus cost of goods purchased minus ending
merchandise inventory = cost of goods sold.
10. The difference in balance sheets pertains to the presentation of inventories in the current asset
11. Manufacturing costs are classified as either direct materials, direct labor, or manufacturing overhead.
12. No, Mel is not correct. The distinction between direct and indirect materials is based on two criteria:
13. Product costs, or inventoriable costs, are costs that are a necessary and integral part of producing
inventoriable costs.
14. A merchandising company has beginning merchandise inventory, cost of goods purchased, and
(b) X = cost of goods manufactured.
16. Raw materials inventory, beginning …………………………………………………………….. $ 12,000
Raw materials purchases …………………………………………………………………………… 170,000
17. Direct materials used ………………………………………………………………………………… $240,000
18. (a) Total cost of work in process ($26,000 + $640,000) ……………………………….. $666,000
19. The order of listing is finished goods inventory, work in process inventory, and raw materials inventory.
Questions Chapter 1 (Continued)
20. The products differ in how each are consumed by the customer. Services are consumed
21. Yes, product costing techniques apply equally well to manufacturers and service companies. Each
22. The value chain refers to all activities associated with providing a product or service. For a manufac–
23. An enterprise resource planning (ERP) system is an integrated software system that provides a
and suppliers.
24. In a just-in-time inventory system, the company has no extra inventory stored. Consequently, if
customers.
25. The balanced scorecard is called “balanced” because it strives to not over emphasize any one
26. 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.
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
BRIEF EXERCISE 1-2
more attention is now paid to the composition of the company’s board of
directors. In particular, the audit committee of the board of directors must
be comprised entirely of independent members (that is, non-employees) and
must contain at least one financial expert. Finally, to increase the likelihood
were substantially increased.
BRIEF EXERCISE 1-3
(a) 1. Planning.
(b) 2. Directing.
(c) 3. Controlling.
BRIEF EXERCISE 1-4
(a) DM Frames and tires used in manufacturing bicycles.
(b) DL Wages paid to production workers.
(c) MO Insurance on factory equipment and machinery.
(d) MO Depreciation on factory equipment.
BRIEF EXERCISE 1-5
(a) Direct materials.
(b) Direct materials.
(c) Direct labor.
BRIEF EXERCISE 1-6
(a) Product.
(b) Period.
BRIEF EXERCISE 1-7
Product Costs
Direct
Materials
Direct
Labor
Factory
Overhead
(a)
(b)
(c)
(d)
X
X
X
X
BRIEF EXERCISE 1-8
(a) Direct materials used ………………………………………………….. $180,000
(b) Beginning work in process ………………………………………….. $ 25,000
BRIEF EXERCISE 1-9
RUIZ COMPANY
Balance Sheet
December 31, 2014
Current assets
Cash …………………………………………………………. $ 62,000
Accounts receivable ………………………………….. 200,000
Inventories
BRIEF EXERCISE 1-10
Direct
Materials Used
Direct
Labor Used
Factory
Overhead
Total
Manufacturing
Costs
(1)
(2)
(3)
$81,000
$144,000
$151,000
BRIEF EXERCISE 1-11
Total
Manufacturing
Costs
Work in
Process
(January 1)
Work in
Process
(December 31)
Cost of Goods
Manufactured
(1)
(2)
(3)
$151,000*
$123,000
$58,000
$189,000
*$40,000 + $61,000 + $50,000 (data from BE 1-10)
SOLUTIONS FOR DO IT! REVIEW EXERCISES
DO IT! 1-1
1. False
2. False
DO IT! 1-2
Period costs:
Advertising
Salaries of sales representatives
Product costs:
Blank CDs (DM)
Depreciation of CD image burner (MO)
Salary of factory manager (MO)