Professional Documents
Culture Documents
For each of the following activities, identify the main role the accountant is performing - problem
solving, scorekeeping, or attention directing.
1. Preparing a monthly statement of Australian sales for the IBM marketing vice president. 2.
Interpreting differences between actual results and budgeted amounts on a performance report for
the Customer Warranty Department of General Electric.
3. Preparing a schedule of depreciation for forklift trucks in the Receiving Department of a Hewlett
Packard plant in Scotland.
4. Analyzing, for a Mitsubishi international manufacturing manager, the desirability of having some
auto parts made in Korea.
5. Interpreting why a Birmingham distribution center did not adhere to its delivery costs budget.
6. Explaining a Xerox Shipping Department's performance report.
7. Preparing, for the manager of production control of a U.S. steel plant, a cost comparison of two
computerized manufacturing control systems.
8. Preparing a scrap report for the Finishing Department of a Toyota parts plant. 9. Preparing the
budget for the Maintenance Department of Mount Sinai Hospital. 10. Analyzing, for a General
Motors product designer, the impact on product costs of some new headlight lamps.
Listed below are a number of terms that relate to organizations, the work of management, and the role
of managerial accounting:
Budgets Line
Choose the term or terms above that most appropriately complete the following statements.
1. _______________________ is concerned with providing information for the use of those who are
inside the organization, whereas _______________________ is concerned with providing
information for the use of those who are outside the organization.
ACTIVITY 1: OVERVIEW OF MANAGEMENT ACCOUNTING
MANAGEMENT ACCOUNTING PART 1 (AC17)
Case 1: Maria Reyes was hired by a popular fast-food restaurant as an order-taker and cashier. Shortly
after taking the job, she was shocked to overhear an employee bragging to a friend about shortchanging
customers. She confronted the employee who then snapped back: "Mind your own business. Besides,
everyone does it and the customers never miss the money. Maria didn't know how to respond to this
aggressive stance.
Required:
What would be the practical consequences on the fast-food industry and on consumers if cashiers
generally shortchanged customers at every opportunity?
Case 2: Pedro Santos is the controller of a corporation whose stock is not listed on a national stock
exchange. The company has just received a patent on a product that is expected to yield substantial
profits in a year or two. At the moment, however, the company is experiencing financial difficulties; and
because of inadequate working capital, it is on the verge of defaulting on a note held by its bank.
ACTIVITY 1: OVERVIEW OF MANAGEMENT ACCOUNTING
MANAGEMENT ACCOUNTING PART 1 (AC17)
At the end of the most recent fiscal year, the company's president instructed Santos not to record
several invoices as accounts payable. Santos objected since the invoices represented bona fide liabilities.
However, the president insisted that the invoices not be recorded until after year-end, at which time it
was expected that additional financing could be obtained. After several very strenuous objections -
expressed to both the president and other members of senior management Santos finally complied with
the president's instructions.
Required:
Case 3: Andres Romero was recently hired as assistant controller of PhilChem, Inc., which processes
chemicals for use in fertilizers. Romero was selected for this position because of his past experience in
chemical processing. During his first month on the job, Romero made a point of getting to know the
people responsible for the plant operations and learning how things are done at PhilChem.
During a conversation with the plant supervisor, Romero asked about the company procedures for
handling toxic waste materials. The plant supervisor replied that he was not involved with the disposal of
wastes and suggested that Romero might be wise to ignore this issue. This response strengthened
Romero's determination to probe this area further to be sure that the company was not vulnerable to
litigation.
Upon further investigation, Romero discovered evidence that PhilChem was using a nearby residential
landfill to dump toxic wastes. It appeared that some members of PhilChem's management team were
aware of this situation and may have been involved in arranging for this dumping; however, Romero was
unable to determine whether his superior, the controller, was involved.
Uncertain how he should proceed, Romero began to consider his options by outlining the following three
alternative courses of action:
Required:
1. Discuss why Andres Romero has an ethical responsibility to take some action in the matter of
PhilChem, Inc., and the dumping of toxic wastes. Refer to the specific standards (competence,
confidentiality, integrity, and/or objectivity) in the Standards of Ethical Conduct for Management
Accountants to support your answer.
2. For each of the three alternative courses of action that Andres Romero has outlined, explain
whether or not the action is appropriate according to the Standards of Ethical Conduct for
Management Accountants.
ACTIVITY 1: OVERVIEW OF MANAGEMENT ACCOUNTING
MANAGEMENT ACCOUNTING PART 1 (AC17)
3. Assume that Andres Romero sought the advice of his superior, the controller, and discovered that
the controller was involved in the dumping of toxic wastes. Describe the steps the Romero
should take to resolve this situation.