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Unformatted text preview: Chapter 1 Managerial Accounting in the Information Age QUESTIONS 1. The goal of managerial accounting is to provide information needed for planning, control, and decision making. 2. Budgeted performance is a useful benchmark for evaluating current period performance. 3. This question asks students to identify three differences between financial and managerial accounting. In the text, five differences are noted: a) Managerial accounting is directed at internal rather than external users of accounting information. b) Managerial accounting may deviate from generally accepted accounting principles (GAAP). c) Managerial accounting may present more detailed information. d) Managerial accounting may present more nonmonetary information. e) Managerial accounting places more emphasis on the future. 4. Examples of nonmonetary information that might appear in managerial accounting reports include: the quantity of material consumed in production, the number of hours worked by the office staff, and the number of product defects. 5. Total variable costs change in proportion to business activity while total fixed costs do not change. 6. Salaries of the home appliance sales force would be a controllable cost for the manager of the home appliance department at a Sears’ store. Depreciation related to the department store building would be a noncontrollable cost. 7. Incremental analysis involves a comparison of the revenues that change and the costs that change when a decision alternative is selected. If incremental revenue exceeds incremental cost, a decision alternative should be undertaken. 8. “You get what you measure!” suggests that managers’ behaviors are affected by performance measures. 9. Information flows up and down the value chain—between a company and its suppliers and between a company and its customers. Information technology is helping companies track buying patterns of customers and send targeted selling Jiambalvo Managerial Accounting messages to them via email. Information technology is also helping companies better manage their supply chains and gain internal efficiencies. 10. A legal action is not necessarily ethical. Ethical actions involve “what’s right” while legal actions involve operating within boundaries of the law. EXERCISES E1. [LO 6] . Suppose the company selected is Microsoft. Measure 1: Number of errors in a piece of software. Favorable outcome: Number of errors is reduced. Unfavorable outcome: Software products are not released on a timely basis. Measure 2: Percent of sales to new customers. Favorable outcome: Sales staff works hard to develop new clients. Unfavorable outcome: Company loses existing customers who receive less attention from the sales staff....
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This note was uploaded on 04/06/2012 for the course BUS 5601 taught by Professor Muth during the Spring '09 term at FIT.
- Spring '09
- Decision Making