Strategic Cost Management Exercises and Problems Answer Key Chapter 2 Exercise 1 (Problem Solving, Scorekeeping, and Attention Directing) Because the accountant’s duties are often not sharply defined, some of these answers might bechallenged: 1.Scorekeeping 2.Attention directing 3.Scorekeeping 4.Problem solving 5.Attention directing 6.Attention directing 7.Problem solving 8.Scorekeeping (depending on the extent of the report) or attention getting 9.This question is intentionally vague.The give-and-take of the budgetary process usuallyencompasses all three functions, but it emphasizes scorekeeping the least. The main functionis attention directing, but problem solving is also involved. 10.Problem solving Exercise 2 (Management Accounting Information System) 1.Inputs: b, g, i, m 2.Processes: a, d, f, j 3.Outputs: e, k, n 4.System objectives: c, h, l Exercise 7 (The Roles of Managers and Management Accountants) 1.Managerial accounting, Financial accounting 2.Planning 3.Directing and motivating 4.Feedback 5.Decentralization 6.Line 7.Staff 8.Controller 9.Budgets 10.Performance report 11.Chief Financial Officer 12.Precision; Nonmonetary data Exercise 11 (Ethics in Business) Requirement 1
No, Santos did not act in an ethical manner. In complying with the president’s instructions to omitliabilities from the company’s financial statements he was in direct violation of the IMA’sStandardsof Ethical Conduct for Management Accountants.He violated both the “Integrity” and “Objectivity”guidelines on this code of ethical conduct.The fact that the president ordered the omission of theliabilities is immaterial. Requirement 2 No, Santos’ actions can’t be justified. In dealing with similar situations, the Securities and ExchangeCommission (SEC) has consistently ruled that “…corporate officers…cannot escape culpability byasserting that they acted as ‘good soldiers’ and cannot rely upon the fact that the violative conductmay have been condoned or ordered by their corporate superiors.” (Quoted from: Gerald H. Lander,Michael T. Cronin, and Alan Reinstein, “In Defense of the Management Accountant,”ManagementAccounting,May, 1990, p. 55) Thus, Santos not only acted unethically, but he could be held legallyliable if insolvency occurs and litigation is brought against the company by creditors or others. It isimportant that students understand this point early in the course, since it is widely assumed that “goodsoldiers” are justified by the fact that they are just following orders.In the case at hand, Santosshould have resigned rather than become a party to the fraudulent misrepresentation of the company’sfinancial statements. Chapter 5 Answer to Matching Type1.C 6.A 2.H 7.B 3.E 8.J 4.F 9.D 5.I 10. G Exercises 1 (Schedule of Expected Cash Collections) Requirement 1 July August September Total May sales: P430,000 × 10%P 43,000 P 43,000 June sales: P540,000 × 70%, 10%378,000 P54,000 432,000 July sales: P600,000 × 20%, 70%, 10%120,000 420,000 P 60,000 600,000 August sales: P900,000 × 20%, 70%180,000 630,000 810,000 September sales:
P500,000 × 20%100,000 100,000 Total cash collectionsP541,000 P654,000 P790,000 P1,985,000 Notice that even though sales peak in August, cash collections peak in September.