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Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

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BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

Using managerial accounting Information

The following situations describe decision scenarios that could use managerial accounting information:

1. The manager of High Times Restaurant wants to determine the price to charge for various lunch plates.

2. By evaluating the cost of leftover materials, the plant manager of a precision tool facility wants to determine how effectively the plant is being run.

3. The division controller of West Coast Supplies needs to determine the cost of products left in inventory.

4. The manager of the Maintenance Department of a large manufacturing company wants to plan next year’s anticipated expenditures.

For each, situation, discuss how managerial accounting information could be used.

To determine

Describe the way in which the managerial accounting could be used for each situation.

Explanation

Managerial accounting: Managerial accounting is the process of identifying, measuring, analyzing, interpreting, and communicating the information, which is designed to meet the goals of the organization.

The manner in which the managerial accounting could be used for each situation is as follows:

  1. 1. The managerial accounting information helps the manager of the Restaurant HT to accumulate the costs associated with the various lunch plates. Thus, the accumulated costs of direct cost, and indirect cost associated with the various lunch plates helps the manager in determining the price to be charged for various lunch plates.
  2. 2. The managerial accounting information helps the plant manager of a precision tool facility in the following ways:
    • To use the scrap’s cost information, and rework on it in order to identify the amount of wastes occurring in the plant.
    • This measure of waste can help the plant manager to locate the products where significant waste is occurring.
    • The plant manager can use such scrap, and rework measures in guiding the operational improvement towards the locations, and products where the greatest level of scrap or rework is experienced.
    • These measures can monitor the improvements in the scrap or rework, and can also control the number of network hours charged by floor personnel.
  3. 3. The managerial accounting information helps the division controller of Supplies WC to determine the cost of products left in the inventory as follows:
    • The cost of the products left in the inventory, that is, the cost of ending inventory must be determined by preparing the financial statements...

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