Managerial Accounting 12th Canadian Edition by Ray Garrison Solution manual

decision-making activity. It could also be argued that this is a planning activity since it will affect which speaker design the company decides to offer to its customers in future periods.

Reviewing the monthly performance report is a controlling activity. Determining the production schedule in the coming months is both a planning and directing and motivating activity since it involves the future scheduling of day-to-day activities related to manufacturing the televisions. Evaluating how to motivate retailers to improve sales is also a directing and motivating activity and has an element of planning as well assuming changes are going to be made to the current incentive system. The evaluation also involves decision-making with respect to continuing or discontinuing the OLED television line, and planning activities such as setting budgets for future sales of televisions.

Exercise 1-2 (15 minutes)
 

1. Primarily financial accounting since it involves the preparation of an income statement for use by the tax authorities (Canada Revenue Agency), an outside body.

 

2. Primarily managerial accounting since it involves the use of information for specific internal purposes related to resource allocations, marketing and production scheduling.

 

3. Primarily financial accounting since the information is being used to develop an account balance (allowance for doubtful accounts) for use in the year-end financial statements.

 

4. Primarily management accounting since the information is being used to evaluate customer satisfaction. Preparing this information is not a financial reporting requirement but it could be useful for internal decision-making purposes regarding pricing of products, product enhancements, etc.

 

5. Primarily management accounting since the information will be used to determine possible changes to credit terms offered to major customers. Note that essentially the same information is being used in item iii above but in this case the use is entirely for internal decision-making purposes, not for purposes of preparing the financial statements.  

Exercise 1-3 (15 minutes)

Industry	Type of Risk	Control
Light rail transit	A train might have a mechanical failure.	Implement a preventive maintenance program.
Beer and alcohol	Customers may respond negatively to ad campaigns perceived to promote irresponsible drinking.	Use focus groups to gauge reaction to proposed new ads.
Newspaper	Articles may include inaccurate information.	Implement a review process to fact-check article content.
Sports and entertainment	Fake tickets may be used to attempt entry to events.	Implement a barcode system to use on tickets for all events.
Solar energy	A shortage of inventory at a key supplier of components could interrupt production.	Identify more than one supplier for key components.
Software as a service	The company’s website might be hacked resulting in unauthorized access to customer data.	Develop firewalls and other security protocols to reduce the threat of hacking.
Motorcycles	A failure of technological enhancements such as traction control could cause injuries to customers.	Develop an intensive testing program for all new enhancements that could have safety implications.