sm_18 21e - CHAPTER 18 INTRODUCTION TO MANAGERIAL...

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CHAPTER 18 INTRODUCTION TO MANAGERIAL ACCOUNTING AND JOB ORDER COST SYSTEMS CLASS DISCUSSION QUESTIONS 1. Managerial accounting and financial ac- counting are different in several ways. Ma- nagerial accounting is concerned with the information needs of internal decision makers, rather than external decision makers. As such, managerial accounting is not subject to a defined set of reporting rules. Management accountants have reas- onable latitude in providing information that is useful to managers. Managerial account- ing has very few set rules to govern how it is done. The idea of different costs for dif- ferent needs suggests that there isn’t just one way to view business events. Like fin- ancial accounting, managerial accounting reports can be prepared periodically. In ad- dition, managerial accounting reports can also be prepared at any time to support a decision. Like financial accounting, mana- gerial accounting reports provide informa- tion about the business as a whole. Also, managerial accounting reports provide in- formation about any level of the organiza- tion as required by management. 2. a. A line department is directly involved in the basic objectives of the organization, while a staff department provides ser- vice, assistance, or advice to line de- partments or other staff departments. b. (1) Sales Department (2) Personnel Department 3. a. The role of the controller is to provide financial and accounting advice and assistance to management. b. The controller has a staff responsibility. 4. Memory chips would be considered a direct materials cost for a desktop computer. 5. Product cost information is used by man- agers to (1) establish product prices, (2) control operations, and (3) develop finan- cial statements. 6. a. Job order cost system and process cost system. b. The job order cost system provides a separate record of each quantity of product that passes through the fact- ory. c. Process cost systems accumulate costs for each department or process within a factory. 7. Job order costing is used by firms that sell custom goods and services to customers. The job order system is frequently associ- ated with firms that will produce a product or service specifically to a customer order. 8. No. A job order cost system is not appropri- ate because workers could not physically differentiate between the products being worked on in different orders. 9. Materials should not be issued by the store- keeper without a properly authorized mater- ials requisition. Both the storekeeper and the recipient of the materials should initial the materials requisition when the materials are issued to indicate release of the proper amount of materials from the storeroom. 10. a. The clock card is a means of recording the hours spent by employees in the factory. The time ticket is a means of recording the time the employee spends on a specific job or, in cases of indirect labor (factory overhead), the department in which the time was spent.
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sm_18 21e - CHAPTER 18 INTRODUCTION TO MANAGERIAL...

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