MANAGERIAL ACCOUNTING -WORKSHOP QUESTION

WQ-1:

a. What are the characteristics of management accounting information?

b. In most organizations, customer satisfaction is one of the top priorities. As such, attention to
customers is necessary for success. Briefly describe some demands customers are currently
placing on organizational performance.

c. Identify the four ethical standards for management accountants and briefly explain what they
mean.

d. You have been employed as an entry-level management accountant for a little under a year. You
suspect that your immediate supervisor is involved in a significant fraud involving diverting of
company assets to personal use. Briefly describe the steps you might take to resolve this
dilemma.

WQ-2:

Give an example of management accounting information that could help a manager make each of the
following decisions:

i. The managing director of a car rental company is deciding whether to add luxury cars to the
rental car fleet.
ii. The production manager in an assembly plant is deciding whether to have routine maintenance
performed on a machine weekly or fortnightly.
iii. The manager of a department store is deciding on the number of security personnel to employ
to reduce shoplifting.
iv. The local council is deciding whether to build an addition to the local library. 
WQ-3:

Jeanne Dawson is the new division controller of the snack-foods division of Gourmet Foods. Gourmet
Foods has reported a minimum 15% growth in annual earnings for each of the past five years. The snack-
foods division has reported annual earnings growth of more than 20% each year in this same period.
During the current year, the economy went into a recession. The corporate controller estimates a 10%
annual earnings growth rate for Gourmet Foods this year. One month before the June 30 financial year-
end of the current year, Dawson estimates the snack-foods division will report an annual earnings
growth of only 8%. Warren Ryan, the snack-foods division president, is not happy, but he notes that "the
end-of-year actions" still need to be taken.

Dawson makes some inquiries and is able to compile the following list of end-of-year actions that were
more or less accepted by the previous division controller:

a. Deferring June’s routine monthly maintenance on packaging equipment by an independent

contractor until July of the next financial year
b. Extending the close of the current financial year beyond June 20 so that some sales of next
year are included in the current year
c. Altering dates of shipping documents of July’s sales to record them as sales in June of the
current financial year
d. Giving salespeople a double bonus to exceed June’s sales targets
e. Deferring the current period's advertising by reducing the number of television spots run in
June and running more than planned in July of the next financial year
f. Deferring the current period's reported advertising costs by having Gourmet Foods' outside
advertising agency delay billing June advertisements until July or by having the agency alter
invoices to conceal the June date
g. Persuading carriers to accept merchandise for shipment in June of the current financial year
although they normally would not have done so

Required:
1. Why might the snack-foods division president want to take these end-of-year actions?
2. The division controller is deeply troubled and reads the "Standards of Ethical Conduct for
Practitioners of Management Accounting and Financial Management". Classify each of the
end of-year actions (a-g) as acceptable or unacceptable according to that document.
3. What should Dawson do if Ryan suggests that these end-of-year actions are taken in every
division of Gourmet Foods and that she will greatly harm the snack-foods division if she does
not cooperate and paint the rosiest picture possible of the division's results?
WQ-4:

Jorge Michaels is the Chicago-based controller of Fiesta Foods, a rapidly growing manufacturer and
marketer of Mexican food products. Michaels is currently considering the purchase of a new cost-
management package for use by each of the company's six manufacturing plants and its many marketing
personnel. Four major, competing products are being considered by Michaels.

Horizon 1-2-3 is an aggressive software developer. It views Fiesta as a target of opportunity. Every six
months, Horizon has a three-day users' conference in a Caribbean location. Each conference has
substantial time allowed for "rest and recreation." Horizon offers Michaels an all-expenses-paid visit to
the upcoming conference in Cancun, Mexico. Michaels accepts the offer, believing it will be very useful
to talk to other users of Horizon software. He is especially looking forward to the visit because he has
close relatives in the Cancun area.

Prior to leaving, Michaels receives a visit from the president of Fiesta. She shows him an anonymous
letter sent to her. It argues that Horizon is receiving unfair favourable treatment in Fiesta's software
decision making process. The letter specifically mentions Michaels' upcoming "all-expenses-paid
package to Cancun during Chicago's cold winter." Michaels is deeply offended. He says he has made no
decision, and he believes he is very capable of making a software choice on the merits of each product.
Fiesta currently does not have a formal, written code of ethics.

Required:

1. Do you think Michaels faces an ethical problem in regard to his forthcoming visit to the Horizon
users' group meeting? Explain.
2. Should Fiesta allow executives to attend user meetings while negotiating with other vendors
about a purchase decision? Explain. If yes, what conditions on attending should apply?
3. Would you recommend that Fiesta develop its own code of ethics to handle situations such
as this? What are the pros and cons of having such a written code?
WQ-5:

a. Briefly describe the key differences between financial accounting and management accounting.

b. What is strategy? Briefly describe the two broad types of strategies that companies may choose
to pursue.

c. What is the difference between an organization’s vision and mission? What is the purpose of the
vision statement? What is the purpose of the mission statement?

WQ-6:

Generally, companies follow one of two broad strategies: offering a quality product at a low price, or
offering a unique product or service priced higher than the competition. Is it possible to follow a strategy
that is "in the middle"?

WQ-7:

Consider the descriptors that follow.

1. Is heavily involved with the recordkeeping and reporting of assets, liabilities, and
stockholders' equity.
2. Focuses on planning, decision making, directing, and control.
3. Is heavily regulated.
4. A field that is becoming more "cross-functional" in nature.
5. Much of the field is based on costs and benefits.
6. Is involved almost exclusively with past transactions and events.
7. Much of the information provided is directed toward stockholders, financial
analysts, creditors, and other external parties.
8. Tends to focus more on subunits within an entity rather than the organization as a
whole.
9. May become involved with measures of customer satisfaction, and the amount of
actual cost incurred vs. budgeted targets.

Required:

Determine whether the descriptors are most closely associated with financial accounting or managerial
accounting.