Type:
Test Bank
Managerial Accounting for Resource: Managers Edition:
6th Edition
Author(s):
Eric Noreen Peter C. Brewer Ray H. Garrison
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Managerial Accounting for Managers
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Managerial Accounting for Managers Sixth Edition
Eric W. Noreen, Ph.D., CMA Professor Emeritus University of Washington
Peter C. Brewer, Ph.D. Wake Forest University
Ray H. Garrison, D.B.A., CPA Professor Emeritus Brigham Young University
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MANAGERIAL ACCOUNTING FOR MANAGERS, SIXTH EDITION Published by McGraw Hill LLC, 1325 Avenue of the Americas, New York, NY 10019. Copyright ©2023 by McGraw Hill LLC. All rights reserved. Printed in the United States of America. Previous editions ©2020, 2017, and 2014. No part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written consent of McGraw Hill LLC, including, but not limited to, in any network or other electronic storage or transmission, or broadcast for distance learning. Some ancillaries, including electronic and print components, may not be available to customers outside the United States. This book is printed on acid-free paper. 1 2 3 4 5 6 7 8 9 LWI 27 26 25 24 23 22 ISBN 978-1-264-10059-0 (bound edition) MHID 1-264-10059-0 (bound edition) ISBN 978-1-264-44539-4 (loose-leaf edition) MHID 1-264-44539-3 (loose-leaf edition) Senior Portfolio Manager: Noelle Bathurst Product Developer: Erin Quinones Executive Marketing Manager: Lauren Schur Lead Content Project Managers: Pat Frederickson and Angela Norris Buyer: Laura Fuller Designer: Matt Diamond Content Licensing Specialist: Lori Hancock Cover Image: Cavan Images/Alamy Stock Photo Compositor: Straive All credits appearing on page or at the end of the book are considered to be an extension of the copyright page. Library of Congress Cataloging-in-Publication Data Cataloging-in-Publication Data has been requested from the Library of Congress.
The Internet addresses listed in the text were accurate at the time of publication. The inclusion of a website does not indicate an endorsement by the authors or McGraw Hill LLC, and McGraw Hill LLC does not guarantee the accuracy of the information presented at these sites. mheducation.com/highered
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About the Authors Eric W. Noreen has taught at INSEAD in France and the Hong Kong Institute of Science and Technology and is emeritus professor of accounting at the University of Washington. Currently, he is the Accounting Circle Professor of Accounting, Fox School of Business, Temple University. He received his BA degree from Courtesy of Eric W. Noreen the University of Washington and MBA and PhD degrees from Stanford University. A Certified Management Accountant, he was awarded a Certificate of Distinguished Performance by the Institute of Certified Management Accountants. Professor Noreen has served as associate editor of The Accounting Review and the Journal of Accounting and Economics. He has numerous articles in academic journals, including the Journal of Accounting Research; The Accounting Review; the Journal of Accounting and Economics; Accounting Horizons; Accounting, Organizations and Society; Contemporary Accounting Research; the Journal of Management Accounting Research; and the Review of Accounting Studies. Professor Noreen has won a number of awards from students for his teaching. ■ Peter C. Brewer teaches in the Department of Accountancy at Wake Forest University. Prior to joining the faculty at Wake Forest, he was an accounting professor at Miami University for 19 years. He holds a BS degree in accounting from Penn State University, an MS degree in accounting from the University of Virginia, and a PhD from the University of Courtesy of Louise St. Romain— Tennessee. He has published more Fast Cat Studios than 40 articles in a variety of journals, including Management Accounting Research; the Journal of Information Systems; Cost Management; Strategic
Dedication
Finance; the Journal of Accountancy; Issues in Accounting Education; and the Journal of Business Logistics. Professor Brewer has served on the editorial boards of the Journal of Accounting Education and Issues in Accounting Education. His article “Putting Strategy into the Balanced Scorecard” won the 2003 International Federation of Accountants’ Articles of Merit competition, and his articles “Using Six Sigma to Improve the Finance Function” and “Lean Accounting: What’s It All About?” were awarded the Institute of Management Accountants’ Lybrand Gold and Silver Medals in 2005 and 2006. He has received Miami University’s Richard T. Farmer School of Business Teaching Excellence Award. Prior to joining the faculty at Miami University, Professor Brewer was employed as an auditor for Touche Ross in the firm’s Philadelphia office. He also worked as an internal audit manager for the Board of Pensions of the Presbyterian Church (U.S.A.). ■
Ray H. Garrison is emeritus professor of accounting at Brigham Young University, Provo, Utah. He received his BS and MS degrees from Brigham Young University and his DBA degree from Indiana University. As a certified public accountant, Professor Garrison has been involved in management consulting work with both national and regional accountCourtesy of Ray H. Garrison ing firms. He has published articles in The Accounting Review, Management Accounting, and other professional journals. Innovation in the classroom has earned Professor Garrison the Karl G. Maeser Distinguished Teaching Award from Brigham Young University. ■
To our families and to our many colleagues who use this book. —Eric W. Noreen, Peter C. Brewer, and Ray H. Garrison
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Focus on the Future Manager with Noreen/Brewer/Garrison In Managerial Accounting for Managers, the authors have crafted a streamlined managerial accounting book that is perfect for nonaccounting majors who intend to move into managerial positions. The traditional Process Costing, Statement of Cash Flows, and Financial Statement Analysis chapters have been dropped to enable instructors to focus their attention on the bedrocks of managerial accounting—planning, control, and decision making. Noreen/Brewer/Garrison focuses on the fundamentals, allowing students to develop the conceptual framework managers need to succeed. In its sixth edition, Managerial Accounting for Managers continues to adhere to three core standards:
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FOCUS. Noreen/Brewer/Garrison pinpoint the key managerial
concepts students will need in their future careers. With no journal entries or financial accounting topics to worry about, students can focus on the fundamental principles of managerial accounting. The manager approach in Noreen allows students to develop the conceptual framework needed to succeed, with a focus on decision making and analytical skills.
“This textbook is well written and is very suitable for an introductory managerial accounting course. This textbook provides many resources for instructors and students. The focus companies in the beginning of every chapter are very interesting; they help students appreciate the importance of managerial accounting in real companies. Connect is very useful and is well-integrated with the textbook.” Wan-Ting (Alexandra) Wu, University of Massachusetts Boston
“I was pleased with the content, depth, examples and problems presented in the text. I would definitely recommend using this book to a colleague. One of my favorite aspects of the books is the Real World example that each chapter starts with. Automatically students are able to bridge the gap between the concepts and the real world as they read through the chapter.” Jaclyn Boichat, Johnson & Wales University
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“Designed for accounting and non-accounting students alike, Noreen, Managerial Accounting for Managers is a textbook resource filled with opportunities for students to develop an understanding of how accounting information is used for managerial decision making and practice analyzing business decisions. Excel applications are integrated within the narrative for chapter objectives. Uniquely robust learning activities include the comprehensive Foundational 15 problems and integration exercises. Noreen, Managerial Accounting for Managers is a pedagogically solid and versatile educational resource for developing and applying analytical skills for business decision making.”
RELEVANCE. Building student interest with its insightful
Entrepreneur Spotlights opening each chapter, current In Business examples throughout the text, and tried-and-true end-of-chapter material, students will always see the real-world applicability of Noreen/Brewer/Garrison.
BALANCE. There is more than one type of business, and
so Noreen/Brewer/Garrison covers a variety of business models, including nonprofit, retail, service, wholesale, and manufacturing organizations. Service company examples are highlighted with icons in the margins of the text.
“It’s a practical, concise text that doesn’t waste time with extraneous material.” Karen B. McCarron, Georgia Gwinnett College
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Janet Dausey, Northeast Wisconsin Technical College
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New in the
Sixth Edition
Faculty feedback helps us continue to improve Managerial Accounting for Managers. In response to reviewer suggestions, the authors have made the following changes to the text: • New, auto-graded Excel Data Analytics Exercises help prepare students with career-ready skills and an analytical mindset. These exercises teach students how to analyze data using Excel-based tools such as Goal Seek, Solver, and Pivot Tables, while also teaching them how to communicate their resulting insights using a variety of Excel’s charting capabilities. • New, auto-graded Tableau Data Visualization Exercises that introduce students to this widely used data visualization software package, which they will likely encounter during their careers. • A Data Analytics Implementation Guide (in Connect) to help instructors integrate Data Analytics Exercises into their managerial accounting class, and a Data Analytics Exercise Tutorial to help students as they work through Excel exercises. • Over 1,200 new multiple-choice test bank questions are now included in Connect. These questions include a variety of conceptual and computational formats as well as static and algorithmic formats. • The chapter previously titled “Performance Measurement in Decentralized Organizations” has been split into two chapters. One of those two chapters, titled “Strategic Performance Measurement,” greatly expands our coverage of the balanced scorecard—a topic that is pervasive in practice. This chapter also provides more than 70 examples of scorecard measures that will enrich your students’ understanding
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of nonfinancial performance measurement within the learning and growth, internal business process, and customer perspectives of the scorecard. This chapter also extends our coverage of how companies measure their performance with respect to corporate social responsibility. The Integration Exercises, included in the back of the book, have been expanded from 8 to 12. These exercises help students see how the learning objectives across chapters integrate with one another. They are also suitable for both a flipped classroom model and an in-class active learning environment as they engage students and encourage critical thinking. Audio Hints have been added to certain problems in Connect and offer brief explanations of the key steps students need to solve a specific end-of-chapter problem. With callouts to individual chapter learning objectives, audio hints are both a helpful tool for completing an assignment as well as an additional opportunity for students to link their work back to the chapter content. Entrepreneur Spotlights are new chapter openers for the sixth edition of Managerial Accounting for Managers. With the majority of businesses being small businesses, we felt it important to emphasize a diverse group of entrepreneurs and their roles in the economy. In Business boxes are updated throughout to provide relevant and current real-world examples for use in classroom discussion and to support student understanding of key concepts as they read through a chapter.
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New in the Prologue
Sixth Edition
• The Prologue has a new discussion of Big Data and Data Analytics, added coverage of the CSCA exam, and an updated version of the IMA’s Statement of Ethical Professional Practice. It also includes a new In Business box that introduces students to the IMA’s Management Accounting Competency Framework.
Chapter 1 • Learning objective 1–5 was restated to focus on relevant and irrelevant costs. The terms controllable and uncontrollable costs as well as value-added and non-value-added costs were added to the chapter. Four new In Business boxes were added. The Cost of Quality appendix was deleted, and a subset of the deleted material was moved to Chapter 12 (Strategic Performance Measurement).
Chapter 2 • The operating leverage discussion was adjusted to better highlight its emphasis on analyzing changes in unit sales. Problems 2–19, 2–24, and 2–25 were revised, and three new In Business boxes were added.
Chapter 3 • We added a new learning objective related to calculating ending inventories for the balance sheet and cost of goods sold for the income statement. Also, Foundational 15, Exercise 3–17, and Problem 3–22 were revised, and three new In Business boxes were added.
of “sourcing decisions.” We created three new end-ofchapter exercises (6–11, 6–18, and 6–20) to illustrate (1) the decision to add a product line, (2) sourcing decisions in a nonmanufacturing context, and (3) the relevance of replacement costs in decision making. Also, three new In Business boxes were added.
Chapter 7 • The formula for the profitability index was revised to become “Present value of cash inflows ÷ Investment required.” A new footnote explains how to use Microsoft Excel’s IRR functionality to compute the internal rate of return. Also, we added four new In Business boxes.
Chapter 8 • The “Why and How Organizations Create Budgets” discussion was cut in half while retaining all of the key insights. This chapter added two new In Business boxes.
Chapter 9 • We replaced the learning objective related to “common errors” with a learning objective focusing on preparing a flexible budget performance report with more than one cost driver. We added two new In Business boxes.
Chapter 10 • This chapter added two new In Business boxes.
Chapter 11
Chapter 5
• We changed the chapter title to Responsibility Accounting Systems. Coverage of operating performance measures and the balanced scorecard was removed. The subject matter previously in Appendices 11A (Transfer Pricing) and 11B (Service Department Charges) was integrated into the main body of the chapter. We added two new In Business boxes.
• This chapter added two new In Business boxes
Chapter 12
Chapter 6
• This is a new chapter. It greatly expands our coverage of the balanced scorecard and corporate social responsibility. The chapter includes nine new end-ofchapter exercises and problems.
Chapter 4 • This chapter added three new In Business boxes
• We changed the language accompanying learning objective 6–3 from the manufacturing-centric “make or buy decisions” to the broader business language
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Noreen’s Powerful Pedagogy
Managerial Accounting for Managers includes pedagogical elements that engage and instruct students without cluttering the pages or interrupting student learning. Noreen’s key pedagogical tools enhance and support students’ understanding of the concepts rather than compete with the narrative for their attention.
NEW* Data Analytics Exercises
NEW Data Analytics Exercises are created to foster creating career-ready students by teaching them how to use software tools to derive managerial insights and communicate them to stakeholders. These new exercises, which appear in Connect, are linked to a diverse range of learning objectives that span numerous chapters, are auto-graded, and offer a scaffolded approach to introducing data analytics to students. ∙ NEW Tableau Dashboard Activities allow students to explore live Tableau dashboards directly integrated into Connect and include auto-graded questions focused on both calculations and analysis. Students can check their understanding and apply what they are learning within the framework of analytics and critical thinking. ∙ NEW Applying Tableau Exercises featuring Tableau at the end of each chapter. These exercises are auto-gradable in Connect and help students develop in-demand skills in analyzing and interpreting data and effectively communicating findings. Students will be provided datasets as well as numerous training and video tutorials and step-by-step instructions to build dashboards that visualize data using Tableau software. Over the course of these exercises, students will gain both managerial insights as well as confidence in telling the story of data through visualization software.
Microsoft Excel
∙ NEW Power BI Exercises will introduce and teach students to drive better business decisions by analyzing data for insights via Microsoft’s Power BI software. Power BI aims to provide interactive visualizations, business intelligence capabilities, and supports users’ ability to gain deeper data insight. Users create their own reports and dashboards, harnessing data to tell a compelling business story. As with Applying Tableau, students will be provided datasets, numerous training and video tutorials, and step-by-step instructions to learn how to visualize data using Power BI software. ∙ NEW Excel Analytics were created to allow students to work with complex datasets in Excel. Created to support student Career Readiness, students need to use Excel-based tools to analyze datasets and derive solutions using a variety of data management, data analysis, and data visualization techniques. Students are provided datasets via Connect, video training embedded in Connect, and step-by-step tutorials. These go beyond basic data manipulations with Excel skills.
NEW* Integrated Excel Assignments Microsoft Excel
Integrated Excel assignments pair the power of Microsoft Excel with the power of Connect. A seamless integration of Excel within Connect, Integrated Excel questions allow students to work in live, auto-graded Excel
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C
Differential Analysis: The Key to Decision Making
s preadsheets—no additional logins, no need to upload or download files. Instructors can choose to grade by formula or solution value, and students receive instant cell-level feedback via integrated Check My Work functionality.
All chapters begin with a new Entrepreneur Spotlight that serves four purposes. First, this new feature acknowledges the importance of small business owners and the instrumental role they play in supporting a thriving economy. Second, each spotlight links the principles of managerial accounting to a real-world small business context. Third, each spotlight describes the company’s commitments to its corporate social responsibilities, thereby exposing our students to a stakeholder-based philosophy of organizational management. Finally, the collective body of Entrepreneurial Spotlights depicts the diverse backgrounds of our world’s entrepreneurs, thereby helping all of our students understand that starting a new business is an opportunity available to them.
NEW* Connect-Only Test Bank
LEARNING OB
After studying Chap should be able to:
E N T R E P R E N E UR SP O TL I GH T Neil Blumenthal and Dave Gilboa co-founded Warby Parker to solve what they saw as a simple problem—the price of eyeglasses was too high. By designing their own glasses and interacting directly with customers, they were able “to provide high quality, betterlooking prescription eyewear at a fraction of the going price.” Today the company is valued at $3 billion with more than 130 retail locations across the United States accompanied by a market-leading online sales portal. In 2015, Fast Company named Warby Parker the most innovative company in the world.
Corporate Social Responsibility: Serving all Stakeholders Warby Parker says that 1 billion people across the globe lack access to glasses. To help fix this problem, the company “partners with non-profits like VisionSpring to ensure that for every pair of glasses sold, a pair is distributed to someone in need.” The company also prepares an annual Impact Report that measures its corporate social responsibility performance along four dimensions: (1) customers, (2) employees, (3) community, and (4) sustainability. In addition, Warby Parker has also published a Racial Equity Strategy supported by 10 goals, such as increasing “Black representation in the field of optometry and in the technology sector.” ■
NEW* Author-Created Learning Objective Videos
Author Pete Brewer created narrated PowerPoint videos for each chapter. There is one video for every learning objective plus chapter overview videos. Each video is three to eight minutes in duration and includes a brief explanation of the learning objective’s key concepts accompanied by a numerical Sources: www.warbyparker.com/history, https://www.axios.com/warby-parker-3-billion-valuation03f53fcc-f18c-4f20-8bf3-1a6fc4f378fb.html, www.warbyparker.com/dave-gilboa, www.warbyparker.com example.
Identify rele costs and b
LO 6–2
Prepare an whether a business s added or d
LO 6–3
Identify the and benefi sourcing d
LO 6–4
Prepare an whether a be accepte
LO 6–5
Determine use of a co
LO 6–6
Determine obtaining m constraine
LO 6–7
Prepare an whether jo be sold at processed
LO 6–8
(Appendix selling pric using the a approach t
LO 6–9
(Appendix how custom to changes influence p
LO 6–10 (Appendix
decisions u pricing.
LO 6–11 (Appendix
target cost or service.
Data Ana available complem
/impact-report-racial-equity-strategy
Writing Assignment
Available within McGraw Hill Connect and McGraw Hill Connect Master, the Writing Assignment tool nor00590_ch06_277-348 277 delivers a learning experience to help students improve their written communication skills and conceptual understanding. As an instructor, you can assign, monitor, grade, and provide feedback on writing more efficiently and effectively.
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Interim Archives/Contributor/Getty Images
A new online-only test bank is now available in Connect, containing more than 1,200 new multiple-choice test bank questions. These new, author-created Connect-Only Test Managerial Bank questions were written in such a way to prevent students from finding answers on Accounting: external The Practical Application With more than 130 retail locations throughout the United States, Warby Parker can use sites. The questions are presented in a combination of static and algorithmic (both quantitative and differential analysis when deciding to add a new store or to discontinue an existing location. ForThe example, when contemplating closing a store, the company would compare the qualitative algo) modes and they cover all learning objectives in all of the chapters. questions lost revenue with the avoidable costs. If the avoidable costs exceeded the forgone revare qualitative and quantitative in nature, and they span the entire “degree-of-difficulty” continuum, enue, it would suggest closing the store. The financial analysis would purposely exclude any costs that would remain unchanged whether the store remains open or closes. including easy, medium, and hard.
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NEW* Entrepreneur Spotlight
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Remote Proctoring & Browser-Locking Capabilities
New remote proctoring and browser-locking capabilities, hosted by Proctorio within Connect, provide control of the assessment environment by enabling security options and verifying the identity of the student. Seamlessly integrated within Connect, these services allow instructors to control students’ assessment experience by restricting browser activity, recording students’ activity, and verifying students are doing their own work. Instant and detailed reporting gives instructors an at-a-glance view of potential academic integrity concerns, thereby avoiding personal bias and supporting evidencebased claims.
Tegrity: Lectures 24/7
Tegrity in Connect is a tool that makes class time available 24/7 by automatically capturing every lecture. With a simple one-click start-and-stop process, you capture all computer screens and corresponding audio in a format that is easy to search, frame by frame. Students can replay any part of any class with easy-to-use, browser-based viewing on a PC, Mac, iPod, or other mobile device. Educators know that the more students can see, hear, and experience class resources, the better they learn. In fact, studies prove it. Tegrity’s unique search feature helps students efficiently find what they need, when they need it, across an entire semester of class recordings. Help turn your students’ study time into learning moments immediately supported by your lecture. With Tegrity, you also increase intent listening and class participation by easing students’ concerns about notetaking. Using Tegrity in Connect will make it more likely you will see students’ faces, not the tops of their heads.
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Custom Publishing through Create
McGraw Hill Create is a new, self-service website that allows instructors to create custom course materials by drawing upon McGraw Hill’s comprehensive, cross-disciplinary content. Instructors can add their own content quickly and easily and tap into other rights-secured third-party sources as well, then arrange the content in a way that makes the most sense for their course. Instructors can even personalize their book with the course name and information and choose the best format for their students: color print, black-and-white print, or an eBook. Through Create, instructors can • • • •
Select and arrange the content in a way that makes the most sense for their course. Combine material from different sources and even upload their own content. Choose the best format for their students: print or eBook. Edit and update their course materials as often as they like. Begin creating now at www.mcgrawhillcreate.com.
McGraw Hill Customer Experience Group Contact Information
At McGraw Hill, we understand that getting the most from new technology can be challenging. That’s why our services don’t stop after you purchase our products. You can contact our Product Specialists 24 hours a day to get product training online. Or you can search the knowledge bank of Frequently Asked Questions on our support website. For Customer Support, call 800-331-5094, or visit www.mhhe.com/support. One of our Technical Support Analysts will be able to assist you in a timely fashion.
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