accounting ch.1 solution

Topics: Ethics, Management accounting, Business ethics Pages: 3 (957 words) Published: April 22, 2014
Solutions to Chapter 1

Exercise 1–11
a. Decision making
b. Controlling
c. Planning
d. Decision making
e. Planning
f. Decision making

Exercise 1–12
a. Managerial accounting oriented
b. Financial accounting oriented
c. Managerial accounting oriented
d. Financial accounting oriented
e. Managerial accounting oriented

Exercise 1–13
1. The total product is the product and its features (processing speed, disk drives, software packages, and so on), the service, the operating and maintenance requirements, and the delivery speed.

2. One company is emphasizing low costs, and the other is attempting to differentiate its PC by offering faster delivery and higher-quality service. 3. The Confiar’s service component and its delivery time appear to be better than Drantex’s. Thus, the realization of these features appears to outweigh the additional sacrifice (the additional operating and maintenance cost) associated with the Confiar PC. The implications for management accounting are straightforward. The management accounting information system should collect and report information about customer realization and sacrifice. Much of this information is external to the firm but clearly needed by management.

4. Better quality and shorter delivery time increase the value of what the customer receives, while lowering the price decreases the amount paid. In total, customer value has increased and presumably this should make the Drantex PC much more competitive. This example illustrates how quality, time, and costs are essential competitive weapons. It also illustrates how critical it is for the management accounting system to collect and report data concerning these three dimensions.

Exercise 1–14
Joan Dennison is staff. She is in a support role—she prepares reports and helps explain and interpret them. Her role is to help the line managers more effectively carry out their responsibilities.

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