accounting_solutions - Sheet1 Page 1 Chapter 1 Managerial...

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Unformatted text preview: Sheet1 Page 1 Chapter 1 Managerial Accounting and the Business Environment Solutions to Questions 1-1 Managerial accounting is concerned with providing information to managers for use within the organization. Financial accounting is con- cerned with providing information to stockhold- ers, creditors, and others outside of the organi- zation. 1-2 A strategy is a game plan that enables a company to attract customers by distinguishing itself from competitors. The focal point of a company& s strategy should be its target custom- ers. 1-3 Customer value propositions fall into three broad categories& customer intimacy, op- erational excellence, and product leadership. A company with a customer intimacy strategy at- tempts to better understand and respond to its customers¡ individual needs than its competitors. A company that adopts an operational excel- lence strategy attempts to deliver products fast- er, more conveniently, and at a lower price than its competitors. A company that has a product leadership strategy attempts to offer higher quality products than its competitors. 1-4 Managers carry out three major activi- ties in an organization: planning, directing and motivating, and controlling. Planning involves establishing a basic strategy, selecting a course of action, and specifying how the action will be implemented. Directing and motivating involves mobilizing people to carry out plans and run rou- tine operations. Controlling involves ensuring that the plan is actually carried out and is ap- propriately modified as circumstances change. 1-5 The Planning and Control Cycle involves formulating plans, implementing plans, measur- ing performance, and evaluating differences be- tween planned and actual performance. 1-6 In contrast to financial accounting, ma- nagerial accounting: (1) focuses on the needs of managers rather than outsiders decisions affecting the future rather than the financial consequences of past actions phasizes relevance rather than objectivity and verifiability than precision an organization rather than summary data con- Sheet1 Page 2 cerning the entire organization verned by GAAP 1-7 A person in a line position is directly involved in achieving the basic objectives of the organization. A person in a staff position pro- vides services and assistance to other parts of the organization, but is not directly involved in achieving the basic objectives of the organiza- tion. 1-8 The Chief Financial Officer is responsible for providing timely and relevant data to support planning and control activities and for preparing financial statements for external users. 1-9 The three main categories of inventories in a manufacturing company are raw materials, work in process, and finished goods....
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This note was uploaded on 11/07/2010 for the course MKTG BA511 taught by Professor Dick during the Spring '10 term at Andrew Jackson.

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accounting_solutions - Sheet1 Page 1 Chapter 1 Managerial...

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