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• Management Accounting Solution Manual

Identify the given activities are primary function that the accountant is performing score keeping, attention directing, or problem solving: 1. Preparation of depreciation schedule of forklift trucks in the receiving department of a factory in Scotland is an example of the ‘ scorekeeping activity’. The purpose of this activity is to report the total amount of depreciation on forklifts in the receiving department. This is a routine activity where numerical data about the number of trucks, period that they have been in use and depreciation at rates applicable to the specific class of asset is compiled and presented together.

This information would then be used in the preparation of financial reporting statements. Analyzing for the production superintendent the impact on costs of purchasing new assembly equipment is an example of “problem solving activity’. The purpose of this activity is to help the superintendent decide whether to buy the equipment or not. Analysis of the new cost structure resulting from the purchase of the new equipment and comparison of the same against the existing cost structure would bring out both savings and increases under different cost-heads. These variances would be studied in the context of other business parameters such as increased sales, increase in efficiencies etc to determine whether the purchase of the equipment would be a financially viable decision. Preparing a scrap report for the finishing department of a factory is an example of ‘scorekeeping activity’. Note however, that if the report also includes comparison of the actual scrap generated with the budgeted numbers, it would represent ‘attention directing activity’.

In the first instance the report is merely a compilation of the actual scrap generated from the production process. Thus factual numerical data related to the production would be classified under various heads and reported to the management. However in the second case, the actual results are being compared with measures set by the factory in accordance with a target level of production and efficiency.

Thus, any variances need to be further analyzed to understand areas that need management attention. Preparing for the manager of production control of a plant, a cost comparison of two computerized manufacturing control systems is an example of ‘problem solving activity’. The purpose of this activity is to help decision making process for the manager. It presents data regarding the impact on various heads of cost resulting from the adoption of the respective computerized manufacturing control systems. This cost information would form one of the important factors to perform an overall evaluation of both the systems and decide which one the manager would finally decide to install. Interpreting variances on the University of M’s purchasing department’s performance report is an example of the ‘attention directing activity’.

Management Accounting Solution Manual

The purpose of this activity is to compare the actual performance of the purchasing department across various parameters (maybe operational, financial or otherwise) against budgeted / targeted values. This enables the management to focus on areas that need attention / further analysis due to underperformance, inefficiencies etc and also to review any savings or positive learning’s that can be continued. What are Chegg Study step-by-step Introduction To Management Accounting 15th Edition Solutions Manuals?

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