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CHAPTER 1MANAGERIAL ACCOUNTING CONCEPTS AND DECISION-MAKING SUPPORTDISCUSSION QUESTIONS1.Managerial accounting is the provision of in-formation for internal users in a firm.2.The three broad objectives of managerial accounting are planning, controlling, and de-cision making.3.The users of managerial accounting inform-ation are typically managers and other em-ployees of a firm. Managerial accounting in-formation is typically not provided to out-siders but may be in selected cases. For ex-ample, a bank may require budgeting in-formation for the next few years before agreeing to grant a loan.4.A managerial accounting information system typically provides both financial and nonfin-ancial information. For example, financial in-formation on cost of production is tracked. Other information, such as the number of warranty returns, may also be tracked by the management information system.5.Controlling is sometimes called performance evaluation. It involves comparing the expec-ted outcome with the actual outcome to see what differences, if any, exist.6.Managerial accounting is internally focused, does not follow mandatory rules, keeps track of both financial and nonfinancial informa-tion, emphasizes the future, and relies on a broad range of disciplines. Financial ac-counting, on the other hand, is externally fo-cused, follows externally imposed rules (such as GAAP), has a historical orientation, and provides information about the company as a whole.7.Customer value is the difference between what a customer pays for a product or ser-vice and what she or he receives in return. The focus on customer value forces mana-gerial accounting to look at many types of costs, not simply manufacturing cost. These may include the price of the good or service, maintenance costs, search costs, learning costs, and disposal costs.8.Today’s management accountant must un-derstand many functions of the business, from manufacturing to marketing to distribu-tion to customer service, in order to provide appropriate information for managing the value chain. Increased international trade means that the management accountant must be familiar not only with business prac-tices and laws in his or her own country but also in the countries with which his or her company trades.9.The value chain is the set of activities re-quired to design, develop, produce, market, and deliver products and services to cus-tomers. It is important because it helps the company to understand its role in serving customers and to develop strategic compet-ence.10.As the environment in which most busi-nesses operate becomes increasingly com-plex, so too does the managerial accounting information that is prepared to measure and evaluate that environment. In addition, more and more diverse stakeholder groups, in-cluding environmental watchdog organiza-tions, pension fund groups, and human rights groups, are demanding and receiving more types of managerial accounting inform-ation about organizations’ business prac-tices.