1. Solution Manual For Managerial Accounting Case Study
2. Solution Manual For Managerial Accounting Case Study Examples
3. Accounting Case Studies And Solutions

CHAPTER 10 Budgetary Control and Responsibility Accounting ASSIGNMENT CLASSIFICATION TABLE Learning Objectives Questions Brief Exercises Do It! A Problems B Problems 1, 2, 8, 10 3A 3B 1, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12 1A, 2A, 3A 1B, 2B, 3B 13 6A 6B Exercises 1. Describe the concept of budgetary control. Evaluate the usefulness of static budget reports. 3, 4, 5 1, 2 3. Explain the development of flexible budgets and the usefulness of flexible budget reports.

Fundamental accounting principles, 4th edition. See ALEXANDER, RALPH S. Instructor's guide for Marketing, text, techniques and cases, third edition. See NTEBEL, BENJAMIN W. Managerial attitudes and performance. See BOWEN, EARL K. Solutions manual for Statistical analysis for business decisions, third. To read management accounting atkinson kaplan solution manual or ebook. Are you fond. Drury management accounting case study solution as management. Case material: Managerial Accounting, Fifth Canadian Edition has an exhaustive set of cases to complement the problem material, and includes a wide variety of cases to provide instructors with unparalleled opportunity for active learning, in-class discussion, and precision in selecting assignment material.

6, 7, 8, 9, 10, 11, 12 3, 4, 5 4. Describe the concept of responsibility accounting. 13, 14, 15, 16, 17, 18, 24 5.

Indicate the features of responsibility reports for cost centers. Identify the content of responsibility reports for profit centers. 20, 21 7 3 15, 16 4A 4B 7.

Explain the basis and formula used in evaluating performance in investment centers. 22, 23, 24 8, 9, 10 4 16, 17, 18, 19 5A 5B Explain the difference between ROI and residual income. 25, 26 11, 12 20, 21 7A 7B.8. 1 1, 2 9, 11, 14.Note: All asterisked Questions, Exercises, and Problems relate to material contained in the appendix to the chapter. Copyright © 2012 John Wiley & Sons, Inc. Weygandt, Managerial Accounting, 6/e, Solutions Manual (For Instructor Use Only) 10-1 ASSIGNMENT CHARACTERISTICS TABLE Problem Number Description Difficulty Level Time Allotted (min.) Simple 20–30 Moderate 30–40 Simple 20–30 1A Prepare flexible budget and budget report for manufacturing overhead. 2A Prepare flexible budget, budget report, and graph for manufacturing overhead.

3A State total budgeted cost formula, and prepare flexible budget reports for two time periods. 4A Prepare responsibility report for a profit center. Moderate 20–30 5A Prepare responsibility report for an investment center, and compute ROI. Moderate 40–50 6A Prepare reports for cost centers under responsibility accounting, and comment on performance of managers. Moderate 40–50 Compare ROI and residual income. Moderate 25–35 Simple 20–30 Moderate 30–40 Simple 20–30.7A 1B Prepare flexible budget and budget report for manufacturing overhead. 2B Prepare flexible budget, budget report, and graph for manufacturing overhead.

3B State total budgeted cost formula, and prepare flexible budget reports for two time periods. 4B Prepare responsibility report for a profit center. Moderate 20–30 5B Prepare responsibility report for an investment center, and compute ROI. Moderate 40–50 6B Prepare reports for cost centers under responsibility accounting, and comment on performance of managers. Moderate 40–50 Compare ROI and residual income. Moderate 25–35.7B 10-2 Copyright © 2012 John Wiley & Sons, Inc. Weygandt, Managerial Accounting, 6/e, Solutions Manual (For Instructor Use Only) Copyri Correlation Chart between Bloom’s Taxonomy, Learning Objectives and End-of-Chapter Exercises and Problems ght © 2012 John Wiley & Sons, Inc.

Weyga ndt, Manag Learning Objective Knowledge Comprehension E10-1 Q10-1 Q10-2 2. Evaluate the usefulness of static budget reports. E10-1 Q10-3 Q10-4 3. Explain the development of flexible budgets and the usefulness of flexible budget reports. Q10-9 Q10-12 E10-1 Q10-6 Q10-7 Q10-8 Q10-10 Q10-11 BE10-4 DI10-1 DI10-2 E10-3 E10-5 Q10-13 Q10-14 Q10-15 Q10-16 Q10-17 E10-13 Q10-18 Q10-24 P10-6A P10-6B BE10-6 E10-9 E10-11 E10-14 E10-15 P10-4A P10-4B Accou 6/e, 4.

Solution Manual For Managerial Accounting Case Study

Describe the concept of responsibility accounting. Solutio ns Manua l (For Instruc tor Use Only) Analysis 1.

Describe the concept of budgetary control. Erial nting, Application 5. Indicate the features of responsibility reports for cost centers. Q10-19 Q10-5 BE10-1 BE10-2 E10-2 P10-3A E10-10 P10-3B E10-7 E10-9 E10-10 E10-11 E10-12 BE10-5 E10-4 E10-6 P10-1A P10-3A P10-1B 6.

Identify the content of responsibility reports for profit centers. Q10-20 Q10-21 BE10-7 DI10-3 E10-16 7. Explain the basis and formula used in evaluating performance in investment centers. Q10-22 Q10-23 Q10-24 BE10-8 BE10-9 BE10-10 DI10-4 E10-16 E10-19 E10-17 E10-18 BE10-11 BE10-12 E10-20 E10-21 P10-7A BYP10-5 BYP10-4 BYP10-6 BYP10-7.8.

Explain the difference between ROI and residual income. Broadening Your Perspective Q10-25 Q10-26 Synthesis Evaluation E10-8 P10-3B BE10-3 E10-8 P10-2A P10-2B P10-5A P10-5B P10-7B BYP10-2 BYP10-3 BYP10-8 BYP10-9 BLO OM’ S TAX ONO MY TAB LE ANSWERS TO QUESTIONS 1. (a) Budgetary control is the use of budgets in controlling operations. (b) The steps in budgetary control are: (1) Develop the planned objectives (budget). (2) Analyze differences between actual and budgeted results. (3) Take corrective action. (4) Modify future plans, if necessary.

Purpose (a) (b) (c) Name of Report Scrap Departmental overhead costs Income statement Frequency Daily Monthly Monthly and Quarterly Primary Recipient(s) Production manager Department manager Top management 3. The budget report for the second quarter can include year-to-date information as well as data for the second quarter. There is no justification for Ken’s concern. The sales budget is derived from the sales forecast and it represents management’s best estimate of sales. Thus, it is a useful basis for evaluating sales performance. A static budget is an appropriate basis for evaluating a manager’s effectiveness in controlling costs when: (1) The actual level of activity closely approximates the master budget activity level and/or (2) The behavior of the costs in response to changes in activity is fixed. Yes, this is true.

A flexible budget is a series of static budgets at different levels of activity. The performance is unfavorable. The budgeted indirect labor cost in the static budget is $1.35 per direct labor hour ($54,000 ÷ 40,000). At 45,000 direct labor hours, budgeted costs are $60,750 (45,000 X $1.35).

Thus, indirect labor is $3,250 over budget ($64,000 – $60,750). The performance is favorable. Factory insurance is a fixed cost. At 50,000 direct labor hours, the budgeted cost is still $6,500. Thus, factory insurance is $200 under budget ($6,500 – $6,300). The steps in preparing a flexible budget are: (1) Identify the activity index and the relevant range of activity. (2) Identify the variable costs, and determine the budgeted variable cost per unit of activity for each cost.

(3) Identify the fixed costs, and determine the budgeted amount for each cost. (4) Prepare the budget for selected increments of activity within the relevant range. Cali Company can say that total budgeted costs are $20,000 fixed plus $6.50 per direct labor hour ($85,000 – $20,000) ÷ 10,000. (a) At 9,000 hours, total budgeted costs are $86,000, or $50,000 + ($4 X 9,000). (b) At 12,345 hours, total budgeted costs are $99,380, or $50,000 + ($4 X 12,345).

10-4 Copyright © 2012 John Wiley & Sons, Inc. Weygandt, Managerial Accounting, 6/e, Solutions Manual (For Instructor Use Only) Questions Chapter 10 (Continued) 12. Management by exception means that top management’s review of a budget report is focused either entirely or primarily on differences between actual results and planned objectives. The criteria for identifying exceptions are materiality and controllability of the item. Responsibility accounting is a method of controlling operations that involves accumulating and reporting costs (and revenues, where relevant) on the basis of the manager who has the authority to make the day-to-day decisions about the items. The purpose of responsibility accounting is to evaluate a manager’s performance on the basis of matters directly under that manager’s control.

Eve should know that the following conditions contribute to the effective use of responsibility accounting: (1) Costs and revenues can be directly associated with the specific level of management responsibility. (2) The costs and revenues are controllable at the level of responsibility with which they are associated. (3) Budget data can be developed for evaluating the manager’s effectiveness in controlling the costs and revenues. A cost is controllable at a given level of managerial responsibility if the manager has the power to incur the cost within a given period of time.

Most costs incurred directly are controllable, whereas costs incurred indirectly and allocated to a responsibility level are noncontrollable at that level. Responsibility reports differ from budget reports in two respects: (1) a distinction is made between controllable and noncontrollable items and (2) performance reports either emphasize, or only include, items controllable by the individual manager. Usually there is a relationship between a responsibility reporting system and a company’s organization chart. In a responsibility reporting system, reports are prepared for each level of responsibility in the organization chart. There are three types of responsibility centers: (a) A cost center incurs costs (and expenses) but does not generate revenues.

Solution Manual For Managerial Accounting Case Study Examples

(b) A profit center incurs costs (and expenses) and also generates revenues. (c) An investment center incurs costs (and expenses), generates revenues, and controls the investment funds available for use.

(a) Only controllable costs are included in a performance report for a cost center. (b) Variable and fixed costs are not identified in the report. Direct fixed costs relate specifically to one center and are incurred for the sole benefit of that center. An indirect fixed cost relates to the company’s overall activities and is incurred for the benefit of more than one profit center.

Both types of fixed costs are controllable. A direct fixed cost is controllable by a specific center manager and an indirect fixed cost is controllable by an officer higher up in the organization. Controllable margin is contribution margin less controllable fixed costs in a profit center. The purpose of controllable margin is to provide a basis for evaluating the manager’s effectiveness in controlling revenues and costs. Copyright © 2012 John Wiley & Sons, Inc. Weygandt, Managerial Accounting, 6/e, Solutions Manual (For Instructor Use Only) 10-5 Questions Chapter 10 (Continued) 22. The primary basis for evaluating the performance of the manager of an investment center is return on investment (ROI).

Accounting Case Studies And Solutions

The formula is: Controllable Margin divided by Average Operating Assets. ROI can be improved by: (1) increasing controllable margin and (2) reducing average operating assets. Controllable margin can be increased by increasing sales or by reducing variable and controllable fixed costs. (a) The manager being evaluated should have direct input into the process of establishing budget goals and have the opportunity to respond to the evaluation. (b) Top management should make the evaluation entirely on matters controllable by the manager, and should fully support the evaluation process. ROI fails to indicate the dollar amount of change in residual income.

That is, a positive increase in residual income may result from a project that is rejected because of its negative effect on ROI. Residual income is the income that remains after subtracting from the controllable margin the minimum rate of return on a company’s average operating assets.

Residual income as a performance measure ignores the amount of difference in investments (average operating assets) by concentrating only on the amount of additional residual income. 10-6 Copyright © 2012 John Wiley & Sons, Inc.