Horngren's financial & managerial accounting: the managerial chapters

Cover......Page 1
Title Page......Page 2
Copyright Page......Page 3
About the Authors......Page 4
Contents......Page 6
Chapter 16 Introduction to Managerial Accounting......Page 26
 Why Is Managerial Accounting Important?......Page 27
  Financial Versus Managerial Accounting......Page 28
  Management Accountability......Page 29
  Today’s Business Environment......Page 30
  Ethical Standards......Page 31
  Service Companies......Page 32
  Merchandising Companies......Page 33
  Manufacturing Companies......Page 34
  Direct and Indirect Costs......Page 35
  Prime and Conversion Costs......Page 36
  Calculating Cost of Goods Manufactured......Page 38
  Flow of Costs Through the Inventory Accounts......Page 41
  Calculating Unit Product Cost......Page 42
 How Is Managerial Accounting Used in Service and Merchandising Companies?......Page 43
  Calculating Cost per Item......Page 44
 Review......Page 45
 Assess Your Progress......Page 49
 Critical Thinking......Page 68
Chapter 17 Job Order Costing......Page 70
 How Do Manufacturing Companies Use Job Order and Process Costing Systems?......Page 71
 How Do Materials and Labor Costs Flow Through the Job Order Costing System?......Page 72
  Materials......Page 73
  Labor......Page 77
 How Do Overhead Costs Flow Through the Job Order Costing System?......Page 79
  Before the Period—Calculating the Predetermined Overhead Allocation Rate......Page 80
  During the Period—Allocating Overhead......Page 81
  At the End of the Period—Adjusting for Overallocated and Underallocated Overhead......Page 83
  Transferring Costs to Cost of Goods Sold......Page 84
 How Is the Manufacturing Overhead Account Adjusted?......Page 86
  Summary......Page 87
 How Do Service Companies Use a Job Order Costing System?......Page 91
 Review......Page 93
 Assess Your Progress......Page 99
 Critical Thinking......Page 120
Chapter 18 Process Costing......Page 122
  Job Order Costing Versus Process Costing......Page 123
  Flow of Costs Through a Process Costing System......Page 124
 What Are Equivalent Units of Production, and How are They Calculated?......Page 126
  Conversion Costs......Page 127
 How Is a Production Cost Report Prepared?......Page 128
  Production Cost Report—First Process—Assembly Department......Page 129
  Production Cost Report—Second Process—Cutting Department......Page 135
  Transaction 1—Raw Materials Purchased......Page 143
  Transaction 4—Additional Manufacturing Costs Incurred......Page 144
  Transaction 8—Puzzles Sold......Page 145
  Transaction 9—Adjust Manufacturing Overhead......Page 146
 How Can the Production Cost Report Be Used to Make Decisions?......Page 147
 APPENDIX 18A: Process Costing: First-In, First-Out Method......Page 148
 How Is a Production Cost Report Prepared Using the FIFO Method?......Page 149
  Comparison of Weighted-Average and FIFO Methods......Page 158
 Review......Page 159
 Assess Your Progress......Page 166
 Critical Thinking......Page 186
Chapter 19 Cost Management Systems: Activity-Based, Just-In-Time, and Quality Management Systems......Page 188
 How Do Companies Assign And Allocate Costs?......Page 189
  Single Plantwide Rate......Page 190
  Multiple Department Rates......Page 192
 How Is an Activity-Based Costing System Developed?......Page 195
  Step 1: Identify Activities and Estimate Their Total Costs......Page 196
  Step 2: Identify the Allocation Base for Each Activity and Estimate the Total Quantity of Each Allocation Base......Page 197
  Step 3: Compute the Predetermined Overhead Allocation Rate for Each Activity......Page 198
  Step 4: Allocate Indirect Costs to the Cost Object......Page 199
  Traditional Costing Systems Compared with ABC Systems......Page 200
  Pricing and Product Mix Decisions......Page 201
  Cost Management Decisions......Page 202
 Can Activity-Based Management Be Used in Service Companies?......Page 204
 How Do Just-In-Time Management Systems Work?......Page 205
  Just-In-Time Costing......Page 207
  Recording Transactions in JIT......Page 208
  Quality Management Systems......Page 211
  Quality Improvement Programs......Page 212
 Review......Page 214
 Assess Your Progress......Page 220
 Critical Thinking......Page 241
Chapter 20 Cost-Volume-Profit Analysis......Page 244
  Variable Costs......Page 245
  Fixed Costs......Page 246
  Mixed Costs......Page 248
  Contribution Margin......Page 252
  Contribution Margin Income Statement......Page 253
  Assumptions......Page 254
  Target Profit—Three Approaches......Page 255
  Breakeven Point—A Variation of Target Profit......Page 257
  CVP Graph—A Graphic Portrayal......Page 258
  Changes in Variable Costs......Page 260
  Changes in Fixed Costs......Page 261
  Margin of Safety......Page 262
  Operating Leverage......Page 263
  Sales Mix......Page 265
 Review......Page 268
 Assess Your Progress......Page 275
 Comprehensive Problem for Chapters 16–20......Page 290
 Critical Thinking......Page 292
Chapter 21 Variable Costing......Page 294
  Variable Costing......Page 295
  Comparison of Unit Product Costs......Page 296
 How Does Operating Income Differ Between Variable Costing and Absorption Costing?......Page 297
  Production Equals Sales......Page 298
  Production Exceeds Sales......Page 299
  Production Is Less Than Sales......Page 301
  Summary......Page 304
  Controlling Costs......Page 305
  Analyzing Profitability......Page 306
  Analyzing Contribution Margin......Page 308
  Summary......Page 310
  Operating Income......Page 311
  Profitability Analysis......Page 312
  Contribution Margin Analysis......Page 313
 Review......Page 315
 Assess Your Progress......Page 319
 Critical Thinking......Page 333
Chapter 22 Master Budgets......Page 335
  Budgeting Benefits......Page 336
  Budgeting and Human Behavior......Page 339
  Static and Flexible Budgets......Page 340
  Master Budgets......Page 341
 How Are Operating Budgets Prepared for a Manufacturing Company?......Page 342
  Sales Budget......Page 343
  Production Budget......Page 344
  Direct Materials Budget......Page 345
  Direct Labor Budget......Page 346
  Manufacturing Overhead Budget......Page 347
  Cost of Goods Sold Budget......Page 348
  Selling and Administrative Expense Budget......Page 349
  Cash Budget......Page 350
  Budgeted Income Statement......Page 358
  Budgeted Balance Sheet......Page 359
  Budgeted Statement of Cash Flows......Page 360
  Budgeting Software......Page 362
 APPENDIX 22A: Budgeting for Merchandising Companies......Page 363
  Sales Budget......Page 364
  Inventory, Purchases, and Cost of Goods Sold Budget......Page 366
  Selling and Administration Expense Budget......Page 367
  Cash Budget......Page 368
  Budgeted Income Statement......Page 371
  Budgeted Balance Sheet......Page 372
  Budgeted Statement of Cash Flows......Page 373
 Review......Page 375
 Assess Your Progress......Page 382
 Critical Thinking......Page 417
Chapter 23 Flexible Budgets and Standard Cost Systems......Page 420
  Performance Reports Using Flexible Budgets......Page 422
  Setting Standards......Page 427
  Standard Cost System Benefits......Page 429
  Variance Analysis for Product Costs......Page 430
 How Are Standard Costs Used to Determine Direct Materials and Direct Labor Variances?......Page 432
  Direct Materials Variances......Page 433
  Direct Labor Variances......Page 435
  Allocating Overhead in a Standard Cost System......Page 437
  Variable Overhead Variances......Page 438
  Fixed Overhead Variances......Page 440
 What Is the Relationship Among the Product Cost Variances, and Who Is Responsible for Them?......Page 443
  Variance Relationships......Page 444
  Variance Responsibilities......Page 445
  Journal Entries......Page 446
  Standard Cost Income Statement......Page 450
 Review......Page 452
 Assess Your Progress......Page 460
 Critical Thinking......Page 475
Chapter 24 Responsibility Accounting and Performance Evaluation......Page 478
  Advantages of Decentralization......Page 479
  Responsibility Accounting......Page 480
  Goals of Performance Evaluation Systems......Page 484
  The Balanced Scorecard......Page 485
 How Do Companies Use Responsibility Accounting to Evaluate Performance in Cost, Revenue, and Profit Centers?......Page 488
  Responsibility Reports......Page 489
 How Does Performance Evaluation in Investment Centers Differ From Other Centers?......Page 494
  Return on Investment (ROI)......Page 495
  Residual Income (RI)......Page 497
  Limitations of Financial Performance Measures......Page 499
  Objectives in Setting Transfer Prices......Page 501
  Setting Transfer Prices......Page 502
 Review......Page 504
 Assess Your Progress......Page 510
 Comprehensive Problem for Chapters 22–24......Page 522
 Critical Thinking......Page 526
Chapter 25 Short-Term Business Decisions......Page 528
  Relevant Information......Page 529
  Differential Analysis......Page 530
  Setting Regular Prices......Page 532
  Special Pricing......Page 536
  Dropping Unprofitable Products and Segments......Page 540
  Product Mix......Page 544
  Sales Mix......Page 547
  Outsourcing......Page 548
  Sell or Process Further......Page 553
 Review......Page 555
 Assess Your Progress......Page 563
 Critical Thinking......Page 580
Chapter 26 Capital Investment Decisions......Page 582
  The Capital Budgeting Process......Page 583
  Focus on Cash Flows......Page 585
  Payback......Page 587
  Accounting Rate of Return (ARR)......Page 590
  Time Value of Money Concepts......Page 594
  Present Value of a Lump Sum......Page 596
  Summary......Page 597
 How Do Discounted Cash Flow Methods Work?......Page 599
  Net Present Value (NPV)......Page 600
  Internal Rate of Return (IRR)......Page 605
  Sensitivity Analysis......Page 608
  Capital Rationing......Page 612
 Review......Page 613
 Assess Your Progress......Page 620
 Comprehensive Problem for Chapters 25–26......Page 633
 Critical Thinking......Page 635
APPENDIX A—2013 Green Mountain Coffee Roasters, Inc. Annual Report......Page 638
APPENDIX B—Present Value Tables......Page 686
APPENDIX C— Accounting Information Systems......Page 688
APPENDIX D—The Statement of Cash Flows......Page 745
APPENDIX E— Financial Statement Analysis......Page 811
 C......Page 874
 F......Page 876
 I......Page 877
 N......Page 878
 P......Page 879
 S......Page 880
 W......Page 881
 C......Page 882
 F......Page 883
 J......Page 884
 M......Page 885
 R......Page 886
 V......Page 887
 W......Page 888
PHOTO CREDITS......Page 892