Assignment 2 – Winter 2023
Please answer following seven questions from Hilton 12th Edition.
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Evaluation: This assignment has 7% of the final grade (1% per question).
Due date: 07:00 PM EST of the class day of week 6.
Format: Microsoft Word (showing calculation) or Excel are accepted.
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2. 6-38) 1 mark
3. 7-36) 1 mark
4. 12-41) 1 mark
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5. 13-36) 1 mark
6. 13-43) 1 mark
7. 14-46) 1 mark
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Managerial
Accounting
Creating Value in a Dynamic
Business Environment
Twelfth Edition
Ronald W. Hilton
Cornell University
David E. Platt
University of Texas at Austin
MANAGERIAL ACCOUNTING: CREATING VALUE IN A DYNAMIC BUSINESS ENVIRONMENT,
12TH EDITION
Published by McGraw-Hill Education, 2 Penn Plaza, New York, NY 10121. Copyright © 2020 by McGraw-Hill
Education. All rights reserved. Printed in the United States of America. Previous editions © 2017, 2014, and 2011.
No part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or
retrieval system, without the prior written consent of McGraw-Hill Education, including, but not limited to, in any
network or other electronic storage or transmission, or broadcast for distance learning.
Some ancillaries, including electronic and print components, may not be available to customers outside
the United States.
This book is printed on acid-free paper.
1 2 3 4 5 6 7 8 9 LWI 21 20 19
ISBN 978-1-259-96951-5
MHID 1-259-96951-7
Portfolio Manager: Elizabeth Eisenhart
Product Developers: Erin Quinones and Allie Kukla
Marketing Manager: Katherine Wheeler
Content Project Managers: Pat Frederickson and Brian Nacik
Buyer: Sandy Ludovissy
Design: Matt Diamond
Content Licensing Specialist: Ann Marie Jannette
Cover Image: ©IM_Photo/Shutterstock
Compositor: SPi Global
We are grateful to the American Institute of Certified Public Accountants for allowing the use of adapted material from the Uniform CPA Examination (1978–1984, 1987, 1990–1991) as well as to the Institute of Management
Accountants for allowing the use of adapted material from the Certificate in Management Accounting Examinations
(1977–1984, 1987, 1990–2000).
All credits appearing on page or at the end of the book are considered to be an extension of the copyright page.
Library of Congress Cataloging-in-Publication Data
Names: Hilton, Ronald W., author. | Platt, David E., author.
Title: Managerial accounting : creating value in a dynamic business
environment / Ronald W. Hilton, Cornell University, David E. Platt,
University of Texas at Austin.
Description: Twelfth Edition. | Dubuque : McGraw-Hill Education, [2019] |
Revised edition of the authors’ Managerial accounting, [2017]
Identifiers: LCCN 2019022188 | ISBN 9781259969515 (alk. paper)
Subjects: LCSH: Managerial accounting.
Classification: LCC HF5657.4 .H55 2019 | DDC 658.15/11—dc23
LC record available at https://lccn.loc.gov/2019022188
The Internet addresses listed in the text were accurate at the time of publication. The inclusion of a website does not
indicate an endorsement by the authors or McGraw-Hill Education, and McGraw-Hill Education does not guarantee
the accuracy of the information presented at these sites.
mheducation.com/highered
Ronald W. Hilton:
To Meg, Brad, Molly, Tim, Kerry, and Liliana.
David E. Platt:
To Nancy, for her love and patience.
Praise for MANAGERIAL ACCOUNTING
Hilton is a comprehensive managerial accounting text that incorporates a wide variety of applications and examples.
You are certain to find the examples and problems to fit your style. The emphasis of management of the firm and
depth of coverage makes this text worthy of consideration.”
—Todd Jensen, Sierra College
The Hilton 11e text is a fantastic resource for an Introductory Managerial Accounting course. It covers all of the necessary topics in a logical order and with an appropriate level of rigor.”
—Laura Zellers, Wichita State University
“Extremely comprehensive, easy to read managerial accounting textbook that provides well-designed integrated
examples along with coverage of service-based companies.”
—Angela Sandberg, Jacksonville State University
“I am loving the book, and I see the students learning the concepts a lot quicker than my previous experience.”
—Patti Brown, The University of Texas at Austin
“I would describe it as the Cadillac of core management accounting textbooks.”
—Bill Wempe, Texas Christian University
“This is an excellent text—well balanced, well organized, and up to date with current topics, including service
industries and state-of-the-art manufacturing environments. I highly recommend it also for the excellent examples
and illustrations through focus companies and contrasting companies.”
—John C. Anderson, San Diego State University
“I’ve been using this text since its second edition, and it gets better each year with continuous improvement.”
—Steve G. Green, United States Air Force Academy
“Well written with good explanations of the ‘why’ and ‘how’.”
—Christa Morgan, Georgia Perimeter College
“Major strength is how it relates managerial accounting to the general management function and reveals the
managerial accountant as an important member of the management team.”
—Linda C. Bowen, University of North Carolina–Chapel Hill
“The book goes beyond covering the basics and organizes and integrates contemporary topics nicely.”
—Harrison McCraw, State University of West Georgia
“Well written, well organized and excellent end of chapter problems.”
—Kathleen Sevigny, Boston College
“The technology supplements and instructor resources are top-notch and very appropriate for our students.”
—Marilyn Okleshen, Minnesota State University–Mankato
“The book is very thorough, well written, and still remains student-friendly. The supplements are outstanding.”
—Ben Baker, Davidson College
“A solid, well-written, user-friendly book; can’t go wrong with it!”
—Rochelle Greenberg, Florida State University
iv
Preface
Hilton & Platt Managerial Accounting: After
12 editions, one of the most enduring and respected
managerial accounting books on the market.
Keeping pace with the speed of modern business, the authors combine their experience and expertise to make
sure Managerial Accounting is the most relevant, accurate, and up-to-date textbook in the field. Managerial
Accounting continues to focus and update content to bridge accounting and management practices.
V
VI
Preface
About the Authors
Ronald W. Hilton is a Professor Emeritus of Accounting at Cornell
University. With bachelor’s and master’s degrees in accounting from The
Pennsylvania State University, he received his PhD from The Ohio State University. A Cornell faculty member since 1977, Professor Hilton also has taught
accounting at Ohio State and the University of Florida, where he held the
position of Walter J. Matherly Professor of Accounting. Prior to pursuing his
doctoral studies, Hilton worked for Peat, Marwick, Mitchell and Company and
served as an officer in the United States Air Force.
Professor Hilton is a member of the Institute of Management Accountants
and has been active in the American Accounting Association. He has served
as associate editor of The Accounting Review and as a member of its editorial board. Hilton also has served on the editorial board of the Journal of
Management Accounting Research. He has been a member of the resident
©Jon Reis Photography
faculties of both the Doctoral Consortium and the New Faculty Consortium
sponsored by the American Accounting Association. With wide-ranging research interests, Hilton has published
articles in many journals, including the Journal of Accounting Research, The Accounting Review, Management
Science, Decision Sciences, the Journal of Economic Behavior and Organization, Contemporary Accounting
Research, and the Journal of Mathematical Psychology. He also has published a monograph in the AAA Studies
in Accounting Research series, and he is a co-author of Cost Management: Strategies for Business Decisions,
Budgeting: Profit Planning and Control, and Cost Accounting: Concepts and Managerial Applications. Professor
Hilton’s current research interests focus on contemporary cost management systems and international issues in
managerial accounting. In recent years, he has toured manufacturing facilities and consulted with practicing managerial accountants in North America, Europe, Asia, and Australia.
David E. Platt
Courtesy of University of Texas
is a member of the Accounting faculty and the Associate Dean for Undergraduate Programs at the McCombs School of Business,
University of Texas at Austin. He earned a BS Econ from the Wharton School
at the University of Pennsylvania, an MBA in Marketing from Syracuse University, and a PhD from Cornell University. After earning his CPA while working for Pricewaterhouse Coopers, he spent several years doing financial and
product management at a supply chain systems integrator. Dr. Platt currently
teaches a variety of managerial accounting courses at UT, including the
sophomore-level Fundamentals of Managerial Accounting, and has received
teaching awards at both the undergraduate and graduate levels. He directed
UT–Austin’s Center for International Business Education and Research
(CIBER) and has served as a chair of the Partnership in International Management, a consortium of leading graduate business schools worldwide. He has
been a visiting lecturer at the Sorbonne Graduate Business School in Paris,
and has delivered training for companies in the United States, Europe, Latin
America, and China.
What’s New in the 12th Edition?
New and Enhanced Themes
In the 12th edition of Hilton & Platt Managerial
Accounting, the authors have significantly
increased their coverage of data analytics and socalled big data in the context of managerial
accounting. The topic is first introduced in Chapter 1,
where it is discussed in the context of the Whole
Foods Market contrast company. It then gets
deeper coverage in Chapter 6, which includes an
illustration of data visualization using both Excel
and Tableau. And discussions of big data and its
impact in managerial decision making are sprinkled throughout the book, such as the new
Management Accounting Practice (MAP) inset
“Big Data ‘Use Cases’ in Managing Costs and
Profits” in Chapter 3, other new MAPs in Chapters
5, 9, and 10, and in general discussion.
Hilton & Platt Managerial
Accounting has long been a
leader in integrating discussion of business ethics into
the managerial accounting context through the
use of the Institute of Management Accountants’
Statement of Ethical Professional Practice and the
Focus on Ethics feature that appears at the end of
most chapters. In the 12th edition, the authors take
a major step forward in business ethics coverage by updating a number of the Focus on Ethics
scenarios and linking all of them to the thoughtful
and entertaining ethics concepts videos produced
by the business educators at Ethics Unwrapped.
Indicated by the logo that appears at the front of
this paragraph, the videos offer instructors the
opportunity to expand the discussion of ethical
concepts in business while providing students
some conceptual underpinnings for the ethical
dilemmas presented and their solutions.
New and Updated Content and Examples
Chapter 1 introduces managerial accounting to
students and motivates them by demonstrating its relevance in managing different types
of organizations. Based on user feedback, the
authors now focus less on managerial accountants per se and more on managerial accounting as a widely applicable toolset used by all
managers. Consistent with this change in focus,
the authors have streamlined the presentation
of where managerial accountants are found in
organizations. As mentioned above, they also
add an introductory discussion of data analytics and big data, while updating thumbnail views
of a few other key topics in management, such
as the value chain, capacity, and the balanced
scorecard. In addition, the discussions involving
the contrast company Whole Foods Market have
been updated to reflect the revised context of the
company’s acquisition by Amazon.
Chapter 2 sees the introduction of a new
contrast company, Gold’s Gym. Continuing their
commitment to including plentiful service industry examples, the authors build their discussion
of costs in the service industry around a fitness
business, a context that will be familiar to many
students, making the discussion more relevant to
them and therefore more memorable.
After adding time-driven ABC (TDABC) in a
health-care setting to Chapter 5 in the last edition,
the 12th edition further revises the presentation
of traditional activity-based costing (ABC) in that
chapter by introducing a new focus company,
Dronze, Inc. This company produces recreational
drones and, while staying close to the pedagogical approach to teaching ABC used in previous
editions, the update continues the authors’ commitment to keeping the example companies fresh
and relevant for students.
Chapter 6, which covers cost behavior and
cost estimation, continues the authors’ thematic
development of data analytics and big data in the
12th edition with a separate section addressing
these topics. The challenges and opportunities of
big data, though in large part beyond the scope of
this text, are developed here to provide students
vii
with a greater perspective on the origins and analysis of the data that is used in decision making,
and to alert them to the relevance of a topic they
likely will encounter in subsequent courses.
Data analytics, the process of examining data
sets in order to draw conclusions about the information they contain, is increasingly important in
managing many organizations. Data visualization,
which is the presentation of data in a graphical or
pictorial format to help managers discern patterns,
trends, and complex scenarios embedded in the
data, goes hand in hand with data analytics. To
cover these emerging topics, the authors extend
their discussion of the Chapter 6 focus company,
Donut Desire (a chain of five donut shops in
Toronto). The example analyzes a data set consisting of ten years of monthly data about the utility
costs and activity levels in the company’s various
shops. To augment the discussion of data visualization in the Donut Desire example, traditional
Excel visualizations are supplemented by outputs
from Tableau, which is a rapidly growing data
visualization software package now used in many
businesses.
Chapter 7, which covers cost-volume-profit
analysis, addresses the role of income taxes in
the chapter’s appendix. In this edition, the authors
have updated this coverage to reflect the lower
overall U.S. corporate tax rate resulting from the
Tax Cuts and Jobs Act (TCJA) that became effective in 2018.
During 2018, when the authors were beginning work on the 12th edition, there was increased
focus on corporate social responsibility and conversations about the role of companies in society,
exemplified by the “Letter to CEOs” published in
January by Blackrock CEO Larry Fink. Believing
that managerial accounting needs to be responsive to such concerns, the authors have rewritten
and expanded the section of Chapter 8 previously
called “Costs of Environmental Sustainability”
to broaden its coverage into corporate social
responsibility generally, often characterized
viii
currently as “Environmental, Social, and
Governance (ESG) Initiatives.” The chapter provides a discussion of ways in which managerial
accounting measurement concepts apply to the
ESG initiatives undertaken by companies and the
ways in which ESG investors might use such data.
Chapter 12 has been formally split into two
sections that can be covered independently:
Responsibility Accounting and the Balanced
Scorecard. While the responsibility accounting
section is largely unchanged from the prior edition, based on user input the authors have significantly expanded the text’s balanced scorecard
coverage. In addition to expanding the discussion
of the balanced scorecard technique, they have
created a new contrast company example that
places the balanced scorecard discussion in the
context of a high-tech startup that is attempting
to target Millennials and Gen Z consumers. This
new example company will be more relevant and
memorable for students, most of whom will fall
into these generations, enhancing their understanding of this important performance management technique. They have also included a
number of startup performance metrics in the
example that students will find interesting (e.g.,
cash burn rate and runway) and added an exercise that reinforces these metrics. (Operational
performance measures have been moved to a
new appendix to Chapter 12.)
Chapter 15, on target costing and pricing
decisions, has an updated discussion of dynamic
pricing on the Internet by e-tailers, as well as a
new Focus on Ethics inset.
Chapter 16, which covers capital expenditure
decisions, addresses the role of income taxes in
discounted-cash-flow analysis in Section 2 of the
chapter. For the 12th edition, the authors have
updated this coverage to reflect the lower overall U.S. corporate tax rate resulting from the Tax
Cuts and Jobs Act (TCJA) that became effective
in 2018. Also, while recognizing that this is not a
tax textbook, they provide a brief discussion of
the depreciation rules (including the Modified
Accelerated Cost Recovery System, or MACRS)
under the TCJA. Moreover, the lower tax rates
under the TCJA extend to Chapter 16’s end-ofchapter assignment material.
Updated Pedagogy
In addition to the specific examples above, many
chapters include streamlined and condensed
explanations, and the addition of more current
examples and references from the popular business press.
Service Industry Examples
The service industry continues to play a
dominant role in the U.S. economy, despite
continuing emphasis on the importance of manufacturing. The authors have continued their track
record of finding and integrating examples from
service industry organizations, while making
service industry examples featured in focus and
contrast companies increasingly relevant for
students. Widely acknowledged as having the
most service industry focus of any managerial
accounting text, the 12th edition widens the margin even further.
In Their Own Words
The authors continually work to update many of
the quotations in this popular feature, keeping
them fresh and relevant for today’s students.
Many of the quotations are new in this edition.
These quotes from practicing managers and
managerial accountants portray the important role
managerial accounting plays in today’s dynamic
business environment.
Management Accounting Practice (MAPs)
Many of these real-world examples have been
revised and updated to make them more current,
and several new examples have been added.
While some of the MAPs are completely new,
to address the data analytics theme mentioned
above, many of the existing MAPs have been
updated as well to keep them relevant and accurate. For example, in the Chapter 1 MAP “Using
Managerial Accounting to Monetize the Internet,”
the authors have added a discussion of various
efforts to return journalism to profitability. And
in Chapter 2, the MAP “Managing Health Care
Costs Through Cost Behavior” has been updated
for the current state of the debate over the
Affordable Care Act.
Your feedback is crucial in improving each
new edition of Managerial Accounting and has
been the motivation for many changes in this 12th
edition, including new themes, revised coverage
of key topical areas, and new pedagogy for the
most challenging topics.
ix
X
Preface
How Does Hilton & Platt 12e Prepare Students
for the Businesses of Today and Tomorrow?
Managerial Accounting.
Business is always changing: new technologies, new models, new global competitors.
And students, despite being more technologically adept every year, need a framework
for all of that change so that they can hit the ground running in their careers. To keep
up, managers must be able to interpret the rapid flow of information and make the right
decisions. Assisted by the tools of managerial accounting, and by managerial accounting
professionals, managers will work side by side in global, cross-functional teams to make
the complex decisions that today’s dynamic business environment requires of them. The
goal of Managerial Accounting is to acquaint students of business with the fundamental
tools of managerial decision making and to provide a context for understanding and reacting to the dramatic ways in which business is changing. The emphasis throughout the text
is on using accounting information to help manage an organization, while explaining concepts in
a way that students can relate to.
They should not only be able to
produce accounting information,
but also understand how managers are likely to use and react
to the information in a range of
businesses.
“Hilton is a comprehensive managerial
accounting text that incorporates a wide
variety of applications and examples.
You are certain to find the examples and
problems to fit your style. The emphasis
on management of the firm and depth
of coverage makes this text worthy of
consideration”
—Todd Jensen, CPA, Sierra College
Preface
Relevant.
Focus Companies provide a powerful strategy for
fostering learning, and the integration of Focus
“The company story acts as a hook to get
students interested in the chapter material.”
—Michele Matherly, University of North
Carolina at Charlotte
Companies throughout the Hilton & Platt text is
unmatched by other managerial accounting books.
Each
chapter
introduces
important
managerial
accounting topics within the context of a realistic
company. Students see the immediate impact of
“I think it’s an excellent book for advanced
and Masters-level studying management
accounting.”
—Michael Thomas Paz, Cornell UnivsersitySC College of Business
managerial accounting decisions on companies and
gain exposure to different types of organizations.
Balanced.
“Balanced, time-proven approach to managerial accounting.”
—Michael Flores, Wichita State University
Hilton & Platt Managerial Accounting offers the most
balanced coverage of service and manufacturing
be working in a great variety of business environ-
“A nice intro textbook, with multiple
perspectives on the behavioral aspects of
managerial accounting. Touches many
modern issues facing the field.”
ments and will benefit from exposure to diverse types
Theodore Rodgers, Emory University
companies. The authors recognize that students will
of companies. A wide variety of examples from retail,
service, manufacturing, and nonprofit organizations
Hilton & Platt continues to be the leader in present-
“Perhaps what sets Hilton & Platt apart
from the competition is its recognition that
the world consists of more than manufacturing firms and that managerial accounting plays a significant role in service and
not-for-profit organizations.”
ing the most contemporary coverage of managerial
—Lanny Solomon, University of Missouri–
Kansas City
are included.
Contemporary.
accounting topics. The traditional tools of managerial accounting such as budgeting and product costing have been updated with current
approaches. Emerging topics such as data visualization, environmental cost management,
monetizing the Internet, and time-driven activity-based costing are also discussed.
Flexible.
Managerial Accounting is written in a modular format allowing topics to be covered in
the order you want. For example, some instructors prefer to cover contribution-margin
approaches to decision making and/or relevant costs early in the course. So Chapter 6
(cost behavior and estimation), Chapter 7 (CVP), and Chapter 14 (relevant costs) are written
so they can be covered immediately after Chapter 2, which introduces basic cost concepts.
A table showing the text’s flexibility is in the Introduction to the Instructor’s Manual.
XI
Preface
How Does Hilton & Platt 12e Help Students
Learn Managerial Accounting in the Context
of Business?
FOCUSCOMPANIES
Students need to see the relevance of
managerial accounting information in order
to actively engage in learning the material.
1
The Crucial Role of
Managerial Accounting in a
Dynamic Business Environment
FOCUSCOMPANY>>>
THIS
Ron Hilton and Dave Platt use their years
CHAPTER’S
FOCUS
COMPANY is The Walt Disney
Company. This entertainment services company is
a giant in the industry with theme parks, feature film
working as managers and consultants to
studios, animation studios, television broadcasting,
hotels and resorts, and retail
stores. Using The Walt Disney
create Focus Companies that illustrate
Company as an illustration, we
will introduce the field of mana-
key concepts, and students immediately
gerial accounting and its major
themes. Some of you are excited
about studying accounting. But
see the significance of the material and
©Eye Ubiquitous/Superstock
even more of you are asking, “Why do I need to
study managerial accounting? I’m not going to be an
become excited about the content.
accountant!” That is a good
question. Our primary focus
in this book is the ways in
Whenever the Focus Company is pre-
which managers use managerial accounting concepts
sented in the chapter, its logo is shown so
and tools to make their deci©Parinya Suwanitch/123RF
sions. Along the way, we will
the student sees its application to the text
topic.
also explore how managerial
accountants work in partnership with managers to add
value to the organization.
Each chapter is built
around a focus company,
in which the chapter’s
key points are illustrated.
This chapter’s focus is
on The Walt Disney
Company. The focus
companies in subsequent chapters are not
real companies, but they
are realistic scenarios
built on actual company
practices. Whenever
the focus company is
discussed in the chapter,
the company logo
appears in the margin.
“I like the ‘Focus on the Company’ at the beginning of each chapter and this type of boxed info
throughout each chapter.”
—Anna Cianci, Drexel University
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