Professional Documents
Culture Documents
Chapter 02 - Answer
Chapter 02 - Answer
CHAPTER 2
MANAGEMENT ACCOUNTING
AND THE BUSINESS ENVIRONMENT
I.
Questions
1. Managerial accounting information often brings to the attention of
managers important issues that need their managerial experience and
skills. In many cases, managerial-accounting information will not answer
the question or solve the problem, but rather make management aware that
the issue or problem exists. In this sense, managerial accounting
sometimes is said to serve an attention-directing role.
2. Non-value-added costs are the costs of activities that can be eliminated
with no deterioration of product quality, performance, or perceived value.
3. Managers rely on many information systems in addition to managerialaccounting information. Examples of other information systems include
economic analysis and forecasting, marketing research, legal research and
analysis, and technical information provided by engineers and production
specialists.
4. Becoming the low-cost producer in an industry requires a clear
understanding by management of the costs incurred in its production
process. Reports and analysis of these costs are a primary function of
managerial accounting.
5. Some activities in the value chain of a manufacturer of cotton shirts are as
follows:
(a) Growing and harvesting cotton
(b) Transporting raw materials
(c) Designing shirts
(d) Weaving cotton material
(e) Manufacturing shirts
(f) Transporting shirts to retailers
(g) Advertising cotton shirts
Some activities in the value chain of an airline are as follows:
(a) Making reservations and ticketing
2-1
(b)
(c)
(d)
(e)
(f)
(g)
(h)
Time:
various alternative ways of achieving those goals, and then deciding how
to attain the desired goals. Control decisions include taking actions to
implement the planning decisions and deciding on performance evaluation
and feedback that will help future decision making.
11. Four themes for managers to attain success are customer focus, valuechain and supply-chain analysis, key success factors, and continuous
improvement and benchmarking.
12. Companies add value through R&D; design of products, services, or
processes; production; marketing; distribution; and customer service.
Managers in all business functions of the value chain are customers of
management accounting information.
13. This phrase means that people will direct their attention to work primarily
on those tasks that management monitors and measures. Employees may
not pay as much attention (or no attention) to tasks that are not measured.
Often management will reward people based on how well they perform
relative to a specific measure. As an example, in a manufacturing
organization, if people are measured and rewarded based on the number of
outputs per hour, regardless of quality, employees will focus their
attention on producing as many units of output as possible. A negative
consequence is that the quality of output may suffer.
14. Some of these new measures are quality, speed to market, cycle time,
flexibility, complexity and productivity.
15. Customer satisfaction is often thought to be a qualitative measure of
performance as one cannot directly observe satisfaction. However,
using attitude surveys and psychological measurements, customer
satisfaction can be measured in quantitative terms. For instance, people
who design surveys often employ attitude scales that ask questions in
which customers respond on a 1 to 5 scale. These values can be summed
and averaged to determine satisfaction scores.
16.
Stakeholders
Contribution
Requirements
Employees
Effort, skills,
information
Rewards, interesting
jobs, economic
security, proper
treatment
Partners
Goods, services,
Financial rewards
2-3
information
Owners
Capital
Financial rewards
Community
Allows the
organization to operate
and does not oppose
its operation
Conformance to laws,
good corporate
citizenship and,
perhaps, leadership
Value-added
Nonvalue-added
Nonvalue-added
Value-added
Nonvalue-added
Nonvalue-added
Value-added
Value-added
Nonvalue-added
Value-added
19. Just-in-time means making a good or service only when the customer,
internal or external, requires it. Just-in-time requires a product layout
with a continuous flow (no delays) once production starts. It means that
setup costs must be reduced substantially to eliminate the need to produce
in batches, and it means that processing systems must be reliable. Just-intime production is based on the elimination of all nonvalue-added
2-4
B
A
D
A
D
A
C
B
D
B
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
A
B
C
D
A
A
B
C
B
A
21. B
22. C
23. C
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