Solutions Manual
COST ACCOUNTING Fifteenth Edition
Charles T. Horngren Srikant M. Datar Madhav V. Rajan
TABLE OF CONTENTS Preface
iv
Dedication ........................................................................................................................................v Supplements Available for 15th Edition
vi
Alternative Suggested Chapter Sequences
viii
Categorization of Assignment Material
xii
Presentation of Solutions
xxviii
Major Changes in Text for the 15th Edition
xxix
Changes in Assignment Material for the 15th Edition
xxxv
Chapter Solutions 1
The Manager and Management Accounting
1-1
2
An Introduction to Cost Terms and Purposes
2-1
3
Cost-Volume-Profit Analysis
3-1
4
Job Costing
4-1
5
Activity-Based Costing and Activity-Based Management
5-1
6
Master Budget and Responsibility Accounting
6-1
7
Flexible Budgets, Direct-Cost Variances, and Management Control
7-1
8
Flexible Budgets, Overhead Cost Variances, and Management Control
8-1
9
Inventory Costing and Capacity Analysis
9-1
10
Determining How Costs Behave
10-1
11
Decision Making and Relevant Information
11-1
12
Strategy, Balanced Scorecard, and Strategic Profitability Analysis
12-1
13
Pricing Decisions and Cost Management
13-1
14
Cost Allocation, Customer-Profitability Analysis, and Sales-Variance Analysis
14-1
15
Allocation of Support-Department Costs, Common Costs, and Revenues
15-1
16
Cost Allocation: Joint Products and Byproducts
16-1
17
Process Costing
17-1
18
Spoilage, Rework, and Scrap
18-1
19
Balanced Scorecard: Quality, Time, and the Theory of Constraints
19-1
20
Inventory Management, Just-in-Time, and Simplified Costing Methods
20-1
21
Capital Budgeting and Cost Analysis
21-1
22
Management Control Systems, Transfer Pricing, and Multinational Considerations
22-1
23
Performance Measurement, Compensation, and Multinational Considerations
23-1
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SUPPLEMENTS AVAILABLE FOR THE 15TH EDITION A complete package of supplements is available to assist students and instructors in using Horngren, Cost Accounting, 15th edition.
MyAccountingLab MyAccountingLab is an online homework and assessment tool designed to help students practice cost accounting problems and concepts and to give their instructors feedback on student performance. It lets cost accounting professors assign a homework deliverable that is automatically graded but that also serves as a tutorial experience for students. Based on Pearson’s MathXL platform, which has graded millions of assignments, MyAccountingLab provides a strong, reliable platform with a rock solid performance history. To learn more, visit www.myaccountinglab.com.
For Instructors Instructor Resource Center (IRC) These password-protected resources are accessible from www.pearsonhighered.com for Cost Accounting, 15th ed. Resources include the following: • • • • •
Solutions Manual Test Bank in Word and in TestGen, including algorithmic questions Instructor’s Manual PowerPoint Presentations Image Library
Instructor’s Manual By Sandra J. Cereola © 2015 | 0-13-342875-3 | Online The chapter-by-chapter manual offers helpful classroom suggestions and teaching tips. Test Item File © 2015 | 0-13-342872-9 | Online This collection of tests for each chapter offers an array of questions ranging from easy to difficult. An electronic version of these questions is also available. The Test Item File now supports Association to Advance Collegiate Schools of Business (AACSB) International Accreditation.
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Solutions Manual © 2015 | 0-13-342877-X | Online This manual contains the fully worked-out and accuracy-checked solutions for every question, exercise, and problem in the text. PowerPoint Presentations © 2015 | 0-13-342876-1 | Online These chapter-by-chapter presentations provide you with a slide show ready for classroom use. Use the slides as they are or edit them to meet your classroom needs.
For Students In addition to this textbook and MyAccountingLab, a companion Web site is available for students at www.pearsonhighered.com/horngren.
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ALTERNATIVE SUGGESTED CHAPTER SEQUENCES The Preface to Cost Accounting noted that our aim in organizing the material was to present a modular, flexible organization that permits a course to be custom tailored. This section presents six possible sequences for a first course in cost accounting. For each of these six sequences, we also present the sequence of a second course that would result in coverage of many or all of the topics in Cost Accounting. Outlines I–V all include Chapters 1 to 9 in varying orders of sequence. Outline VI has a strong (almost exclusive) focus on the decision making role of cost accounting. We analyzed the sequences of chapters assigned by many users of the 14th edition. Although many instructors tended to follow the sequence in the text, other instructors tailored sequences to fit their particular desires. These tailored sequences varied considerably. By far the most popular departure was to assign the chapter on process costing (Chapter 17) immediately after the coverage of job costing (Chapter 4) and activity-based costing (Chapter 5). The next most popular departure was to assign Chapter 10 after Chapter 2 or 3. All the accompanying alternative assignment schedules have an optional provision to facilitate tailoring a course. Obviously, instructors should alter any suggested sequence to suit their preferences. OUTLINE I: This basic course provides a balance of topics between the major purposes of cost accounting: 1. Calculating the cost of products, services, and other cost objects 2. Obtaining information for planning and control and performance evaluation 3. Analyzing relevant information for making decisions Finishing the first course with Chapters 11 and 13 means that topics with less procedural emphasis are highlighted in the last weeks of the course; these two chapters also introduce topics covered in more detail in a second course. Some instructors may assign Chapter 10 without using the Appendix on “Regression Analysis,” preferring to delay use of the Appendix until the second course (especially if many students have not been exposed to regression analysis at the time of the basic course). OUTLINE II: This basic course covers the same chapters as Outline I but assigns Chapter 10 (Determining How Costs Behaves) immediately after Chapter 3 (Cost Volume-Profit Analysis). It also assigns Chapter 12 on Strategy, Balanced Scorecard, and Strategic Profitability Analysis. This first part of the second course emphasizes cost management and performance evaluation before covering the six chapters (14–20) on cost allocation and other aspects of costing systems. OUTLINE III: After covering Chapters 1 to 9 and 11 in the basic course, this sequence finishes with a chapter on strategic issues (Chapter 12) and two chapters on cost allocation topics (Chapters 14 and 15). Some instructors view it as important that students who take only one cost accounting course become aware of how pervasive cost allocation issues are in practice.
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