"S1-2 Contrast managerial and financial accounting (Learning Objective 2)

Managerial accounting differs from financial accounting in several areas. Specify whether each of the following characteristics relates to managerial accounting or financial accounting.

A.Reports are usually prepared quarterly and annually.

B.Information is verified by external auditors.

C.Focus is on the past.

D.Main characteristic of information is that it must be relevant.

E.Reports tend to be prepared for the parts of the organization rather than the whole organization.

F.Primary users are internal (i.e., company managers).

G.It is governed by Generally Accepted Accounting Principles (GAAP) or International Financial Reporting Standards (IFRS).

H.The primary characteristics of information are that it must be reliable and objective.

I.Reports are prepared as needed.

J.It is not governed by legal requirements.

K.Primary users are external (i.e., creditors, investors).

L.Focus is on the future.

M.Reporting is based mainly on the company as a whole.

"E1-13A Identify users of accounting information (Learning Objective 3)

For each of the following users of financial accounting information and managerial accounting information, specify whether the user would primarily use financial accounting information or managerial accounting information, or both.

1.Reporter from The Wall Street Journal

2.Regional division managers

3.Potential investors

4.Bookkeeping Department

5.Manager of the Service Department

6.Wall Street analyst

7.Division controller

8.State tax agency auditor

9.External auditor (public accounting firm)

10.Loan officer at the companys bank

11.Board of directors

12.Internal auditor

13.SEC examiner

14.Current stockholders

"Which of these suggested strategies are inconsistent with IMA standards? What should Perot do if Cattrall insists that she follow all of these suggestions?

P1-27A ERP cost-benefit analysis (Learning Objective 5)

As CEO of Aqua Marine, Carrie Easton knows it is important to control costs and to respond quickly to changes in the highly competitive boat-building industry. When Rose Consulting proposes that Aqua Marine invests in an ERP system, she forms a team to evaluate the proposal: the plant engineer, the plant foreman, the systems specialist, the human resources director, the marketing director, and the management accountant.

A month later, management accountant Mark Cole reports that the team and Rose estimate that if Aqua Marine implements the ERP system, it will incur the following costs:

A.$435,000 in software costs

B.$95,000 to customize the ERP software and load Aqua Marines data into the new ERP system

C.$105,000 for employee training

The team estimates that the ERP system should provide several benefits:

A.More efficient order processing should lead to savings of $105,000.

B.Streamlining the manufacturing process so that it maps into the ERP system will create savings of $125,000.

C.Integrating purchasing, production, marketing, and distribution into a single system will allow Aqua Marine to reduce inventories, saving $225,000.

D.Higher customer satisfaction should increase sales, which, in turn, should increase profits by $155,000.

Requirements

1.If the ERP installation succeeds, what is the dollar amount of the benefits?

2.Should Aqua Marine install the ERP system? Why or why not? Show your calculations.

3.Why did Easton create a team to evaluate Roses proposal? Consider each piece of cost-benefit information that management accountant Cole reported. Which person on the team is most likely to have contributed to each item? (Hint: Which team member is likely to have the most information about each cost or benefit?)