Foundations 1
Introduction to Management Accounting p. 2
Management Accounting Versus Financial Accounting p. 5
The Return on Investment (ROI) Technique p. 5
Management Accounting and Financial Accounting p. 6
The Management Process and Management Accounting Terminology p. 7
Planning p. 8
Controlling p. 9
Evaluating p. 9
Introduction to Teflon and Kevlar p. 10
The Interrelation of Planning, Controlling, and Evaluating p. 10
Cost-Volume-Profit Analysis at Dupont p. 11
Product and Period Costs p. 13
Types of Product Costs p. 14
Product Costing and Overhead Cost Allocation p. 15
How Low Can You Go? p. 16
Overhead Cost Allocation at DuPont p. 16
Segment Analysis p. 18
Direct and Indirect Costs p. 19
Differential Costs and Sunk Costs p. 19
Out-of-Pocket Costs and Opportunity Costs p. 20
Segment Analysis at DuPont p. 21
Expanding Management Accounting: Cost, Quality, and Time p. 23
In Conclusion--the Management Process p. 25
End-of-Chapter Materials p. 26
Competency Enhancement Opportunities p. 33
Analyzing Cost-Volume-Profit Relationships p. 38
Understanding Why C-V-P Analysis is Important p. 40
Basic Cost Behavior Patterns p. 40
Measuring Level of Activity p. 41
Variable Costs p. 41
Fixed Costs p. 44
Mixed Costs p. 47
Analysis of Mixed Costs p. 48
The Scattergraph, or Visual-Fit, Method p. 49
The High-Low Method p. 50
A Comparison of the Scattergraph and High-Low Methods p. 51
Methods of C-V-P Analysis p. 53
Contribution Margin p. 53
The C-V-P Equation p. 55
Measuring the Effect of Potential Changes in C-V-P Variables p. 60
Using Graphs to "See" C-V-P Relationships p. 63
The Profit Graph p. 64
A Comparison of C-V-P Graphs with C-V-P Equations p. 65
Limiting Assumptions of C-V-P Analysis p. 66
Issues of Quality and Time p. 67
Analysis of Mixed Costs--the Least Squares Method p. 68
Sales Mix p. 71
Cost Structure in Different Types of Organizations p. 72
End-of-Chapter Materials p. 75
Competency Enhancement Opportunities p. 98
Product Cost Flows and Business Organizations p. 104
Why Having Accurate Product Costs is so Difficult, Yet Important p. 106
Bad Product Cost Information Can "Hurt!" p. 106
Overhead: The Problem in Determining Accurate Product Costs p. 107
New Methods of Cost Accumulation p. 110
The Flow of Goods and Costs in a Manufacturing Firm p. 112
The Product Costing System p. 115
Accounting for Overhead p. 122
Estimated Manufacturing Overhead p. 122
Actual Manufacturing Overhead p. 123
Applied Manufacturing Overhead p. 123
Disposition of Over- and Underapplied Manufacturing Overhead p. 124
The Flow of Goods and Costs in a Merchandising Firm p. 127
The Distribution Channel p. 127
Inventory Flow in the Distribution Channel p. 129
Product Cost Accumulation in Merchandising Organizations p. 131
The Flow of Services and Costs in Service Companies p. 132
Effects of Deregulation p. 133
Comparing Service and Manufacturing Business Activities p. 134
Product Cost Accumulation in Service Organizations p. 136
The Effect of E-Business p. 140
The Process Costing System p. 142
Steps in Process Costing p. 143
End-of-Chapter Materials p. 149
Competency Enhancement Opportunities p. 176
Planning p. 181
Capital Investment Decisions p. 182
Conceptual Basis of Capital Budgeting p. 184
Importance of Capital Investment Decisions in Planning p. 184
Uses of Capital Budgeting: Screening and Ranking p. 185
The Time Value of Money p. 185
Discounting Cash Flows p. 186
Nondiscounted Capital Budgeting Techniques p. 188
Payback Method p. 188
Unadjusted Rate of Return Method p. 189
Discounted Capital Budgeting Techniques p. 190
Selecting a Discount Rate p. 190
Net Present Value Method p. 191
Internal Rate of Return Method p. 194
Comparative Example of Capital Budgeting Techniques p. 197
Qualitative Factors in Strategic and capital Investment Decisions p. 200
Dealing with Uncertainty in Strategic and Capital Investment Decisions p. 202
If Expected Cash Flows Are Uncertain p. 202
If Useful Life Is Uncertain p. 203
If Disposal Value Is Uncertain p. 203
Capital Rationing p. 203
Ranking by the Internal Rate of Return Method p. 204
Ranking by the Net Present Value Method p. 204
Income Tax Considerations in Capital Budgeting Decisions p. 205
The Time Value of Money p. 209
Present Value and Future Value Concepts p. 209
The Present Value of an Annuity p. 211
End-of-Chapter Materials p. 216
Competency Enhancement Opportunities p. 227
Comprehensive Problem 1-4 p. 231
Operating Budgets p. 232
Types and Purposes of Budgeting p. 234
Purposes of Budgeting p. 235
The Budgeting Process p. 239
Behavioral Considerations p. 240
Who Prepares the Budget: Top-Down versus Bottom-Up p. 241
The Master Budget p. 242
Budgeting for Operations in a Manufacturing Firm p. 243
Budgeting for Operations in a Merchandising Firm p. 254
Budgeting for Operations in a Service Firm p. 256
Pro-Forma Financial Statements p. 262
Static Versus Flexible Budgeting p. 265
Weaknesses in Static Budgeting p. 265
Using the Flexible Budget p. 266
End-of-Chapter Materials p. 268
Competency Enhancement Opportunities p. 290
Control p. 297
Traditional Cost Management p. 298
Cost Flows in Organizations p. 300
Cost of Goods Manufactured Schedule p. 303
Analyzing Production Costs and Inventory Levels p. 304
Managing Cost Information p. 307
Carrying Too Much Inventory p. 307
Carrying Too Little Inventory p. 308
Example of Inventory Management Costs p. 308
Cost Management in Service Organizations p. 314
Characteristics of a Service Organization p. 314
Cost Management in a Service Organization p. 316
Illustration: Cost Management in an Audit Firm p. 316
Opportunity Costs in Managing Inventory and Work-in-Process Services p. 319
Holding Costs and Economic Profit in Merchandising Organizations p. 320
Service Organizations and Holding Costs p. 322
Quantitative Inventory Management Methods p. 323
Economic Order Quantity p. 323
Reorder Point and Safety Stock p. 325
End-of-Chapter Materials p. 327
Competency Enhancement Opportunities p. 341
Management Accounting Information in the New Business Environment p. 344
Activity-Based Costing p. 346
Product Costing Review p. 347
SeatJoy, Inc. Is in Trouble! p. 348
The ABC Hierarchical Product Cost Model p. 351
Resolving Cost Distortions p. 357
Activity-Based Management (ABM) p. 362
Total Quality Management p. 367
TQM Comes to the United States p. 367
TQM and Management Accounting p. 367
Costs of Quality (COQ) p. 368
COQ Example p. 371
Locating COQ in the Accounting Records p. 372
Just-in-Time p. 373
JIT Inventory Systems p. 374
JIT and Value-Added Activities p. 375
JIT and Time p. 377
How JIT Works with ABC and COQ in the New Business Environment p. 377
Measuring Costs of Lost Sales p. 378
Robust Quality p. 379
Taguchi's Quality Loss Function p. 380
Is Quality Free? p. 382
End-of-Chapter Materials p. 383
Competency Enhancement Opportunities p. 400
Evaluation p. 405
Evaluating Products and Processes p. 406
Evaluating Products and Processes p. 407
Why Evaluation Is So Important p. 409
Quality and Time Standards p. 410
Benchmarking p. 413
Internal versus External Comparisons p. 413
Differential Costs and Revenues p. 415
Total Costs versus Differential Costs p. 418
Qualitative Considerations p. 419
Examples of Product and Process Evaluation Decisions p. 420
Special Orders p. 420
Exiting or Entering a Market p. 427
Selecting the Best Use of a Scarce Resource p. 432
Setting Selling Prices p. 434
Theory of Constraints p. 436
End-of-Chapter Materials p. 437
Competency Enhancement Opportunities p. 451
Evaluating Personnel and Divisions p. 456
Evaluating Personnel and Divisions p. 458
Evaluation of Divisions and Personnel in Different Types of Operating Units p. 460
Benefits and Problems of Decentralization p. 462
Responsibility Accounting p. 463
Evaluating Performance in Cost Centers p. 466
Standard Cost System p. 466
Target Costing p. 476
Evaluating Performance in Profit Centers p. 478
The Segment-Margin Income Statement p. 478
Managing Costs and Revenues in Profit Centers p. 479
Interpreting Profit Center Performance Results p. 484
Evaluating Performance in Investment Centers p. 485
Return on Investment (ROI) p. 485
Residual Income p. 487
Variable Manufacturing Overhead Variances in Cost Centers p. 489
Measuring and Controlling Variable Manufacturing Overhead Costs p. 489
End-of-Chapter Materials p. 492
Competency Enhancement Opportunities p. 515
Comprehensive Problem 8-9 p. 520
Continuous Improvement in Management Accounting p. 522
Let's Take a Flight! p. 524
The Balanced Scorecard p. 525
Adding Value with Performance Measures p. 526
Customers p. 527
Internal Processes p. 530
Learning and Growth p. 534
Linking It All Together p. 536
An Example Scorecard p. 539
There Is No "Quick Approach" p. 540
Accounting for Tomorrow p. 543
End-of-Chapter Materials p. 545
Competency Enhancement Opportunities p. 551
Appendices
Microsoft Annual Report p. 1
Glossary p. 1
Check Figures p. 1
Management Accounting Indexes
Subject p. 1
Real World Company p. 1
Internet p. 1