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Communication Todd Johnson is the Vice President of Finance for Boz Zeppelin Industries Inc. At a recent finance meeting, Todd made the following statement: “The managers of a company should use the same information as the shareholders of the firm. When managers use the same information to guide their internal operations as shareholders use in evaluating their investments, the managers will be aligned with the stockholders’ profit objectives.” Prepare a one-half page memo to Todd discussing any concerns you might have with his statement.

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Managerial Accounting

15th Edition
Carl Warren + 1 other
Publisher: South-Western College Pub
ISBN: 9781337912020

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BuyFindarrow_forward

Managerial Accounting

15th Edition
Carl Warren + 1 other
Publisher: South-Western College Pub
ISBN: 9781337912020
Chapter 1, Problem 3TIF
Textbook Problem
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Communication

Todd Johnson is the Vice President of Finance for Boz Zeppelin Industries Inc. At a recent finance meeting, Todd made the following statement: “The managers of a company should use the same information as the shareholders of the firm. When managers use the same information to guide their internal operations as shareholders use in evaluating their investments, the managers will be aligned with the stockholders’ profit objectives.”

Prepare a one-half page memo to Todd discussing any concerns you might have with his statement.

To determine

Prepare a memorandum, and discuss whether there is any concern with his statements.

Explanation of Solution

Prepare a memo to Person T for the discussion of any concern with his statements.

Memo

From,

ABC

To,

Person T

Re:  Financial Vs managerial accounting information.

Dear Sir,

The financial accounting and managerial accounting objectives are quite different. Hence your statement does not consider these objectives. In one sense, at high levels in the organization your statement may be appropriate. For example: it is appropriate to evaluate division manager of a company using the same financial information measures that the shareholders of the company use to evaluate. But evaluating managerial decision making cannot be appropriate below the division level. In the financial performance, the relevant information needed to direct and control the operations of the company cannot be measured at this level. In the operational performance measures, it need to focus on costs like measuring cost, equipment availability, scrap, quality delivery time, inventory levels, waste, and efficiency...

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Chapter 1 Solutions

Managerial Accounting
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