Cost Management: Accounting and Control

Front Cover......Page 1
Title Page......Page 2
Copyright......Page 3
Brief Contents......Page 18
Contents......Page 20
Part 1: Foundation Concepts......Page 31
Financial Accounting versus Cost Management......Page 34
Factors Affecting Cost Management......Page 35
A Systems Approach......Page 41
Cost Management: A Cross-Functional Perspective......Page 42
The Role of Today's Cost and Management Accountant......Page 43
Accounting and Ethical Conduct......Page 46
Certification......Page 47
CHAPTER 2 Basic Cost Management Concepts......Page 59
A Systems Framework......Page 60
Cost Assignment: Direct Tracing, Driver Tracing, and Allocation......Page 65
Product and Service Costs......Page 68
External Financial Statements......Page 72
Functional-Based and Activity-Based Cost Management Systems......Page 76
CHAPTER 3 Cost Behavior......Page 98
Basics of Cost Behavior......Page 99
Resources, Activities, and Cost Behavior......Page 105
Methods for Separating Mixed Costs into Fixed and Variable Components......Page 111
Reliability of Cost Formulas......Page 120
Multiple Regression......Page 124
The Learning Curve and
Nonlinear Cost Behavior......Page 126
Managerial Judgment......Page 129
CHAPTER 4 Activity-Based Costing......Page 152
Unit-Level Product Costing......Page 153
Limitations of Plantwide and Departmental Rates......Page 158
Activity-Based Costing System......Page 164
Reducing the Size and Complexity of an ABC System......Page 173
ABC System Concepts......Page 177
Part 2: Fundamental Costing and Control......Page 209
Characteristics of the Production Process......Page 211
Setting Up the Cost Accounting System......Page 216
The Job-Order Costing System: General Description......Page 222
Job-Order Costing: Specific Cost Flow Description......Page 226
Single versus Multiple Overhead Rates......Page 235
Appendix: Accounting for Spoilage in a Traditional Job-Order System......Page 237
Process-Costing Systems: Basic Operational and Cost Concepts......Page 257
Process Costing with No Work-in-Process Inventories......Page 262
Process Costing with Ending Work-in-Process Inventories......Page 264
FIFO Costing Method......Page 267
Weighted Average Costing Method......Page 272
Treatment of Transferred-In Goods......Page 276
Operation Costing......Page 280
Appendix: Spoiled Units......Page 283
An Overview of Cost Allocation......Page 307
Allocating One Department's Costs to Another Department......Page 313
Choosing a Support Department Cost Allocation Method......Page 319
Departmental Overhead Rates
and Product Costing......Page 326
Accounting for Joint Production Processes......Page 327
CHAPTER 8 Budgeting for Planning and Control......Page 356
The Role of Budgeting in Planning and Control......Page 357
Preparing the Operating Budget......Page 362
Preparing the Financial Budget......Page 369
Flexible Budgets for Planning and Control......Page 376
Activity-Based Budgets......Page 382
The Behavioral Dimension of Budgeting......Page 386
CHAPTER 9 Standard Costing: A Functional-Based Control Approach......Page 413
Developing Unit Input Standards......Page 414
Standard Cost Sheets......Page 416
Variance Analysis and Accounting: Direct Materials and Direct Labor......Page 418
Variance Analysis: Overhead Costs......Page 427
Mix and Yield Variances: Materials and Labor......Page 438
CHAPTER 10 Decentralization: Responsibility Accounting, Performance Evaluation, and Transfer Pricing......Page 461
Responsibility Accounting......Page 462
Decentralization......Page 463
Measuring the Performance of Investment Centers......Page 466
Measuring and Rewarding the Performance of Managers......Page 476
Transfer Pricing......Page 481
Setting Transfer Prices......Page 482
Part 3: Advanced Costing and Control......Page 515
CHAPTER 11 Strategic Cost Management......Page 517
Strategic Cost Management: Basic Concepts......Page 518
Value-Chain Analysis......Page 524
Life-Cycle Cost Management......Page 532
Just-In-Time (JIT) Manufacturing and Purchasing......Page 540
JIT and Its Effect on the Cost Management System......Page 544
CHAPTER 12 Activity-Based Management......Page 579
The Relationship of Activity-Based Costing
and Activity-Based Management......Page 580
Process Value Analysis......Page 581
Financial Measures of Activity Efficiency......Page 585
Implementing Activity-Based Management......Page 594
Financial-Based versus Activity-Based
Responsibility Accounting......Page 597
CHAPTER 13 The Balanced Scorecard: Strategic-Based Control......Page 621
Activity-Based versus Strategic-Based Responsibility Accounting......Page 622
Basic Concepts of the Balanced Scorecard......Page 626
Linking Measures to Strategy......Page 634
Strategic Alignment......Page 637
CHAPTER 14 Quality Cost Management......Page 652
Costs of Quality......Page 653
Reporting Quality Costs......Page 659
Quality Cost Information and Decision Making......Page 664
Controlling Quality Costs......Page 668
CHAPTER 15 Productivity Measurement and Control......Page 695
Partial Productivity Measurement......Page 696
Total Productivity Measurement......Page 699
Measuring Changes in Activity and Process Efficiency......Page 703
CHAPTER 16 Environmental Costs: Measurement and Control......Page 726
Defining, Measuring, and Controlling Environmental Costs......Page 727
Environmental Costing......Page 736
Life-Cycle Cost Assessment......Page 738
Strategic-Based Environmental Responsibility Accounting......Page 742
Part 4: Decision Making......Page 765
CHAPTER 17 Cost-Volume-Profit Analysis......Page 767
The Break-Even Point in Units......Page 768
Break-Even Point in Sales Dollars......Page 772
Multiple-Product Analysis......Page 776
Graphical Representation of CVP Relationships......Page 780
Changes in the CVP Variables......Page 784
CVP Analysis and Activity-Based Costing......Page 790
CHAPTER 18 Activity Resource Usage Model and Tactical Decision Making......Page 812
Tactical Decision Making......Page 813
Relevant Costs and Revenues......Page 816
Relevancy, Cost Behavior, and the
Activity Resource Usage Model......Page 819
Illustrative Examples of
Tactical Decision Making......Page 821
CHAPTER 19 Pricing and Profitability Analysis......Page 854
Basic Pricing Concepts......Page 855
Pricing Policies......Page 857
The Legal System and Pricing......Page 860
Measuring Profit......Page 863
Profitability of Segments......Page 870
Analysis of Profit-Related Variances......Page 877
The Product Life Cycle......Page 880
Limitations of Profit Measurement......Page 883
CHAPTER 20 Capital Investment......Page 909
Capital Investment Decisions......Page 910
Payback and Accounting Rate of Return: Nondiscounting Methods......Page 912
The Net Present Value Method......Page 914
Internal Rate of Return......Page 916
NPV versus IRR: Mutually Exclusive Projects......Page 918
Computing After-Tax Cash Flows......Page 921
Capital Investment: Advanced Technology and Environmental Considerations......Page 930
Appendix A: Present Value Concepts......Page 936
Appendix B: Present Value Tables......Page 939
CHAPTER 21 Inventory Management: Economic Order Quantity, JIT, and the Theory of Constraints......Page 960
Just-in-Case Inventory Management......Page 961
JIT Inventory Management......Page 966
Basic Concepts of Constrained Optimization......Page 974
Theory of Constraints......Page 978
Glossary......Page 998
Subject Index......Page 1012
Company Index......Page 1034