Questions, Exercises, Problems, and Cases: Answers and Solutions
The first question at the end of each chapter requires the student to review the
important concepts or terms discussed in the chapter. In addition to the
definitions or descriptions in the chapter, the end of the book has a glossary.
Titles could be Controller, Vice-President of Finance, or Chief Financial Officer.
The two major uses of managerial accounting information are (1) information for
managerial decision making (for example, make-or-buy decisions, store closure
decisions, capital investment decisions), and (2) information for managerial
control and performance evaluation (for example, budgeting, comparing actual
performance with norms or standards). The first use, which is the focus of Part
II of this book, usually requires special purpose reports that estimate how
revenues, costs, and investments will differ among the alternatives being
considered. The second use, which is the focus of Part III of this book, usually
involves routine monthly, quarterly, and annual performance reports.
Information for planning requires estimates of future costs, revenues, and other
data, while information for performance evaluation is generally based on data
about the past.
Total Quality Management (TQM) means the organization is managed to excel
on all dimensions and quality is ultimately defined by the customer. Under total
quality management, performance measures are likely to include things such as
product reliability and service delivery, as well as traditional measures like
The purchasing employee subjected himself or herself to real, or perceived,
conflicts of interest by taking gifts from people with whom the employee
conducts business. It is very important for buyers to maintain an objective
relationship with their suppliers so purchases are “arms-length” transactions.
The steps that the accounting employee should take would be to speak with
his, or her, superior in an attempt to stop the violation. The employee should
move up the management ladder until a satisfactory resolution is reached. The
Institute of Management Accountants has an 800 number that the employee can
call to seek additional advice.