Chapter # 01
01) How does managerial accounting differ from financial accounting?
A: Managerial accounting is concerned with providing information to managers for use inside the organization. Financial accounting is con¬cerned with providing information to stockhold¬ers, creditors, and others outside of the organi¬zation.
02) Pick any major television network and describe some planning and control activities that its managers would engage in.
A: Five examples of planning activities include:
1. Estimating the advertising revenues for a future period.
2. Estimating the total expenses for a future period, including the salaries fo all actors, news reporters and sportscasters.
3. Planning how many new television shows to introduce to market.
4. Planning the network’s advertising activities and expenditures.
5. Planning each television show’s designated broadcast time.
Five examples of controlling activities:
1. Comparing the actual number of viewers for each show to its viewership projections.
2. Comparing the actual costs of running a production studio to the budget
3. Comparing the revenues earned from broadcasting a sporting event to the costs incurred to broadcast the event.
4. Comparing the actual costs of producing a made for television movie to its budget.
5. Comparing the actual cost of providing global and local news coverage to the budget.
03) If you have to decide whether to continue making a component part or to begin buying the part from an overseas supplier, what quantitative and qualitative factors would influence your decision?
A: the quantitative analysis would focus on determining the potential cost saving from buying the part rather than making it. The qualitative analysis would focus on broader issues such as strategy, risks, and corporate social responsibility.
04) Why do companies prepare budgets?
A: companies use budgets to translate into formal quantitative terms. Budgets are