1. (a) "Managerial accounting is a field of accounting that provides economic information for all interested parties." Do you agree? Explain.
(b) Joe Delong believes that managerial accounting serves only manufacturing firms. Is Joe correct? Explain.
2. Distinguish between managerial and financial accounting as to (a) primary users of reports, (b) types and frequency of reports, and (c) purpose of reports. Linda Olsen is studying for the next accounting midterm examination. Summarize for Linda what she should know about management functions.
3. "Decision-making is management's most important function." Do you agree? Why or why not?
4. Jerry Lang is unclear as to the difference between the balance sheets of a merchandising company and a manufacturing company. Explain the difference to Jerry.
5. Listed below are the three functions of the management of an organization.
1. Planning 2. Directing 3. Controlling
Identify which of the following statements best describes each of the above functions.
(a) ______ requires management to look ahead and to establish objectives. A key objective of management is to add value to the business.
(b) ______ involves coordinating the diverse activities and human resources of a company to produce a smooth-running operation. This function relates to the implementation of planned objectives.
(c) ______ is the process of keeping the activities on track. Management determines whether goals are being met and what changes are necessary when there are deviations.
6. Determine whether each of the following costs should be classified as direct materials (DM), direct labor (DL), or manufacturing overhead (MO).
(a) ______ Frames and tires used in manufacturing bicycles.
(b) ______ Wages paid to production workers.
(c) ______ Insurance on factory equipment and machinery.
(d) ______ Depreciation on factory equipment.
7. Indicate whether each of the following costs of an automobile manufacturer would be classified as direct materials, direct labor, or manufacturing overhead.
(a) ______ Windshield. lubricants.
(b) ______ Engine.
(c) ______ Wages of assembly line worker.
(d) ______ Depreciation of factory machinery.
(e) ______ Factory machinery
(f) ______ Tires.
(g) ______ Steering wheel.
(h) ______ Salary of painting supervisor.
8. Identify whether each of the following costs should be classified as product costs or period costs.
(a) ______ Manufacturing overhead.
(b) ______ Selling expenses.
(c) ______ Administrative expenses.
(d) ______ Advertising expenses.
(e) ______ Direct labor.
(f) ______ Direct materials.