Introduction to managerial accounting

Cover
introduction TO MANAGERIAL ACCOUNTING
DEDICATION
About the Authors
New in the Eighth Edition
Acknowledgments
BRIEF CONTENTS
CONTENTS
Prologue: Managerial Accounting: An Overview
	What Is Managerial Accounting?
		Planning
		Controlling
		Decision Making
	Why Does Managerial Accounting Matter to Your Career?
		Business Majors
		Accounting Majors
			Professional Certification—A Smart Investment
	Managerial Accounting: Beyond the Numbers
		An Ethics Perspective
			Code of Conduct for Management Accountants
		A Strategic Management Perspective
		An Enterprise Risk Management Perspective
		A Corporate Social Responsibility Perspective
		A Process Management Perspective
		A Leadership Perspective
			Intrinsic Motivation
			Extrinsic Incentives
			Cognitive Bias
	Summary
	Glossary
	Questions
	Exercises
chapter one: Managerial Accounting and  Cost Concepts
	Cost Classifications for Assigning Costs to Cost Objects
		Direct Cost
		Indirect Cost
	Cost Classifications for Manufacturing Companies
		Manufacturing Costs
			Direct Materials
			Direct Labor
			Manufacturing Overhead
		Nonmanufacturing Costs
	Cost Classifications for Preparing Financial Statements
		Product Costs
		Period Costs
	Cost Classifications for Predicting Cost Behavior
		Variable Cost
		Fixed Cost
		The Linearity Assumption and the Relevant Range
		Mixed Costs
		Cost Terminology—A Closer Look
	Cost Classifications for Decision Making
		Differential Cost and Revenue
		Sunk Cost and Opportunity Cost
	Using Different Cost Classifications for Different Purposes
		The Traditional Format Income Statement
		The Contribution Format Income Statement
	Summary
	Guidance Answers to Decision Point
	Guidance Answers to Concept Checks
	Review Problem 1: Cost Terms
	Review Problem 2: Income Statement Formats
	Glossary
	Questions
	Applying Excel
	The Foundational 15
	Exercises
	Problems
	Building Your Skills
chapter two: Job-Order Costing: Calculating Unit Product Costs
	Job-Order Costing—An Overview
	Job-Order Costing—An Example
		Measuring Direct Materials Cost
		Job Cost Sheet
		Measuring Direct Labor Cost
		Computing Predetermined Overhead Rates
		Applying Manufacturing Overhead
		Manufacturing Overhead—A Closer Look
		The Need for a Predetermined Rate
		Computation of Total Job Costs and Unit Product Costs
	Job-Order Costing—A Managerial Perspective
		Choosing an Allocation Base—A Key to Job Cost Accuracy
	Job-Order Costing Using Multiple Predetermined Overhead Rates
		Multiple Predetermined Overhead Rates—A Departmental Approach
		Multiple Predetermined Overhead Rates—An Activity-Based Approach
	Job-Order Costing—An External Reporting Perspective
		Overhead Application and the Income Statement
		Job Cost Sheets: A Subsidiary Ledger
	Job-Order Costing in Service Companies
	Summary
	Guidance Answer to Decision Point
	Guidance Answers to Concept Checks
	Review Problem: Calculating Unit Product Costs
	Glossary
	Questions
	Applying Excel
	The Foundational 15
	Exercises
	Problems
	Building Your Skills
chapter three: Job-Order Costing: Cost Flows and External Reporting
	Job-Order Costing—The Flow of Costs
		The Purchase and Issue of Materials
			Issue of Direct and Indirect Materials
		Labor Cost
		Manufacturing Overhead Costs
		Applying Manufacturing Overhead
			The Concept of a Clearing Account
		Nonmanufacturing Costs
		Cost of Goods Manufactured
		Cost of Goods Sold
	Schedules of Cost of Goods Manufactured and Cost of Goods Sold
	Underapplied and Overapplied Overhead—A Closer Look
		Computing Underapplied and Overapplied Overhead
		Disposition of Underapplied or Overapplied Overhead Balances
			Closed to Cost of Goods Sold
			Closed Proportionally to Work in Process, Finished Goods, and Cost of Goods Sold
		Comparing the Two Methods for Disposing of Underapplied or Overapplied Overhead
		A General Model of Product Cost Flows
	Summary
	Guidance Answers to Decision Point
	Guidance Answers to Concept Checks
	Review Problem: The Flow of Costs in a Job-Order Costing System
	Glossary
	Questions
	Applying Excel
	The Foundational 15
	Exercises
	Problems
	Building Your Skills
	Appendix 3A: Job-Order Costing: A Microsoft Excel-Based Approach
	Appendix 3A: Exercises and Problems
chapter four: Activity-Based Costing
	Assigning Overhead Costs to Products
		Plantwide Overhead Rate
		Departmental Overhead Rates
		Activity-Based Costing (ABC)
	Designing an Activity-Based Costing System
		Hierarchy of Activities
		An Example of an Activity-Based Costing System Design
	Using Activity-Based Costing
		Comtek Inc.’s Basic Data
		Direct Labor-Hours as a Base
		Computing Activity Rates
		Computing Product Costs
		Shifting of Overhead Cost
	Targeting Process Improvements
	Evaluation of Activity-Based Costing
		The Benefits of Activity-Based Costing
		Limitations of Activity-Based Costing
			The Cost of Implementing Activity-Based Costing
			Limitations of the ABC Model
			Modifying the ABC Model
		Activity-Based Costing and Service Industries
	Summary
	Guidance Answers to Decision Point
	Guidance Answers to Concept Checks
	Review Problem: Activity-Based Costing
	Glossary
	Questions
	Applying Excel
	The Foundational 15
	Exercises
	Problems
	Building Your Skills
chapter five: Process Costing
	Comparison of Job-Order and Process Costing
		Similarities between Job-Order and Process Costing
		Differences between Job-Order and Process Costing
	Cost Flows in Process Costing
		Processing Departments
		The Flow of Materials, Labor, and Overhead Costs
		Materials, Labor, and Overhead Cost Entries
			Materials Costs
			Labor Costs
			Overhead Costs
			Completing the Cost Flows
	Process Costing Computations: Three Key Concepts
		Key Concept #1
		Key Concept #2
		Key Concept #3
	The Weighted-Average Method: An Example
		Step 1: Compute the Equivalent Units of Production
		Step 2: Compute the Cost per Equivalent Unit
		Step 3: Assign Costs to Units
		Step 4: Prepare a Cost Reconciliation Report
	Operation Costing
	Summary
	Guidance Answer to Decision Point
	Guidance Answers to Concept Checks
	Review Problem: Process Cost Flows and Costing Units
	Glossary
	Questions
	Applying Excel
	The Foundational 15
	Exercises
	Problems
	Building Your Skills
chapter six: Cost-Volume-Profit Relationships
	The Basics of Cost-Volume-Profit (CVP) Analysis
		Contribution Margin
		CVP Relationships in Equation Form
		CVP Relationships in Graphic Form
			Preparing the CVP Graph
		Contribution Margin Ratio (CM Ratio) and the Variable Expense Ratio
		Applications of the Contribution Margin Ratio
		Additional Applications of CVP Concepts
			Example 1: Change in Fixed Cost and Sales Volume
			Alternative Solution 1
			Alternative Solution 2
			Example 2: Change in Variable Costs and Sales Volume
			Solution
			Example 3: Change in Fixed Cost, Selling Price, and Sales Volume
			Solution
			Example 4: Change in Variable Cost, Fixed Cost, and Sales Volume
			Solution
			Example 5: Change in Selling Price
			Solution
	Break-Even and Target Profit Analysis
		Break-Even Analysis
			The Equation Method
			The Formula Method
			Break-Even in Dollar Sales
		Target Profit Analysis
			The Equation Method
			The Formula Method
			Target Profit Analysis in Terms of Dollar Sales
		The Margin of Safety
	CVP Considerations in Choosing a Cost Structure
		Cost Structure and Profit Stability
		Operating Leverage
	Structuring Sales Commissions
	Sales Mix
		The Definition of Sales Mix
		Sales Mix and Break-Even Analysis
	Summary
	Guidance Answers to Decision Point
	Guidance Answers to Concept Checks
	Review Problem: CVP Relationships
	Glossary
	Questions
	CHAPTER 6: Applying Excel
	The Foundational 15
	Exercises
	Problems
	Building Your Skills
	Appendix 6A: Analyzing Mixed Costs
	Glossary (Appendix 6A)
	Appendix 6A: Exercises and Problems
chapter seven: Variable Costing and Segment Reporting: Tools for Management
	Overview of Variable and Absorption Costing
		Variable Costing
		Absorption Costing
		Selling and Administrative Expenses
			Summary of Differences
	Variable and Absorption Costing—An Example
		Variable Costing Contribution Format Income Statement
		Absorption Costing Income Statement
	Reconciliation of Variable Costing with Absorption Costing Income
	Advantages of Variable Costing and the Contribution Approach
		Enabling CVP Analysis
		Explaining Changes in Net Operating Income
		Supporting Decision Making
	Segmented Income Statements and the Contribution Approach
		Traceable and Common Fixed Costs and the Segment Margin
		Identifying Traceable Fixed Costs
		Traceable Fixed Costs Can Become Common Fixed Costs
	Segmented Income Statements—An Example
		Levels of Segmented Income Statements
	Segmented Income Statements—Decision Making and Break-Even Analysis
		Decision Making
		Break-Even Analysis
	Segmented Income Statements—Common Mistakes
		Omission of Costs
		Inappropriate Methods for Assigning Traceable Costs among Segments
			Failure to Trace Costs Directly
			Inappropriate Allocation Base
		Arbitrarily Dividing Common Costs among Segments
	Income Statements—An External Reporting Perspective
		Companywide Income Statements
		Segmented Financial Information
	Summary
	Guidance Answers to Decision Point
	Guidance Answers to Concept Checks
	Review Problem 1: Contrasting Variable and Absorption Costing
	Review Problem 2: Segmented Income Statements
	Glossary
	Questions
	Chapter 7: Applying Excel
	The Foundational 15
	Exercises
	Problems
	Building Your Skills
chapter Eight: Master Budgeting
	Why and How Do Organizations Create Budgets?
		Advantages of Budgeting
		Responsibility Accounting
		Choosing a Budget Period
		The Self-Imposed Budget
		Human Factors in Budgeting
	The Master Budget: An Overview
		Seeing the Big Picture
	Preparing the Master Budget
		The Beginning Balance Sheet
		The Budgeting Assumptions
		The Sales Budget
		The Production Budget
		Inventory Purchases—Merchandising Company
		The Direct Materials Budget
		The Direct Labor Budget
		The Manufacturing Overhead Budget
		The Ending Finished Goods Inventory Budget
		The Selling and Administrative Expense Budget
		The Cash Budget
		The Budgeted Income Statement
		The Budgeted Balance Sheet
	Summary
	Guidance Answer to Decision Point
	Guidance Answers to Concept Checks
	Review Problem: Budget Schedules
	Glossary
	Questions
	Applying Excel
	The Foundational 15
	Exercises
	Problems
	Cases
chapter nine: Flexible Budgets, Standard Costs,  and Variance Analysis
	The Variance Analysis Cycle
	Flexible Budgets
		Characteristics of a Flexible Budget
		Deficiencies of the Static Planning Budget
		How a Flexible Budget Works
	Flexible Budget Variances
		Revenue Variances
		Spending Variances
	Flexible Budgets with Multiple Cost Drivers
	Standard Costs—Setting The Stage
		Setting Direct Materials Standards
		Setting Direct Labor Standards
		Setting Variable Manufacturing Overhead Standards
		Using Standards in Flexible Budgets
	A General Model for Standard Cost Variance Analysis
	Using Standard Costs—Direct Materials Variances
		The Materials Price Variance
		The Materials Quantity Variance
	Using Standard Costs—Direct Labor Variances
		The Labor Rate Variance
		The Labor Efficiency Variance
	Using Standard Costs—Variable Manufacturing Overhead Variances
		The Variable Manufacturing Overhead Rate and Efficiency Variances
	An Important Subtlety in the Materials Variances
	Summary
	Guidance Answers to Decision Point
	Guidance Answers to Concept Checks
	Review Problem 1: Variance Analysis Using a Flexible Budget
	Review Problem 2: Standard Costs
	Glossary
	Questions
	Chapter 9: Applying Excel
	The Foundational 15
	Exercises
	Problems
	Building Your Skills
	Appendix 9A: Predetermined Overhead Rates and Overhead Analysis in a Standard Costing System
	Glossary
	Appendix 9A: Exercises and Problems
	Appendix 9B: Standard Cost Systems: A Financial Reporting Perspective Using Microsoft Excel
	Appendix 9B: Exercises and Problems
chapter ten: Performance Measurement in Decentralized Organizations
	Decentralization in Organizations
		Advantages and Disadvantages of Decentralization
	Responsibility Accounting
		Cost, Profit, and Investment Centers
			Cost Center
			Profit Center
			Investment Center
	Evaluating Investment Center Performance—Return on Investment
		The Return on Investment (ROI) Formula
		Net Operating Income and Operating Assets Defined
		Understanding ROI
		Criticisms of ROI
	Residual Income
		Motivation and Residual Income
		Divisional Comparison and Residual Income
	Operating Performance Measures
		Throughput (Manufacturing Cycle) Time
		Delivery Cycle Time
		Manufacturing Cycle Efficiency (MCE)
			Example
			Solution
	Balanced Scorecard
		Common Characteristics of Balanced Scorecards
		A Company’s Strategy and the Balanced Scorecard
		Tying Compensation to the Balanced Scorecard
	Summary
	Guidance Answer to Decision Point
	Guidance Answers to Concept Checks
	Review Problem: Return on Investment (ROI) And Residual Income
	Glossary
	Questions
	Chapter 10: Applying Excel
	The Foundational 15
	Exercises
	Problems
	Building Your Skills
chapter eleven: Differential Analysis: The Key to Decision Making
	Decision Making: Six Key Concepts
		Key Concept #1
		Key Concept #2
		Key Concept #3
		Key Concept #4
		Key Concept #5
		Key Concept #6
	Identifying Relevant Costs and Benefits: An Example
	Decision Analysis: The Total Cost and Differential Cost Approaches
		Why Isolate Relevant Costs?
	Adding and Dropping Product Lines and Other Segments
		An Illustration of Cost Analysis
		A Comparative Format
		Beware of Allocated Fixed Costs
	Make or Buy Decisions
		Strategic Aspects of the Make or Buy Decision
		An Example of a Make or Buy Decision
		Opportunity Cost
	Special Order Decisions
	Volume Trade-Off Decisions
		What Is a Constraint?
		Utilizing a Constrained Resource to Maximize Profits
		Managing Constraints
	Joint Product Costs and Sell or Process Further Decisions
		Santa Maria Wool Cooperative: An Example
	Activity-Based Costing and Relevant Costs
	Summary
	Guidance Answers to Decision Point
	Guidance Answers to Concept Checks
	Review Problem: Differential Analysis
	Glossary
	Questions
	Chapter 11: Applying Excel
	The Foundational 15
	Exercises
	Problems
	Building Your Skills
chapter twelve: Capital Budgeting Decisions
	Capital Budgeting—An Overview
		Typical Capital Budgeting Decisions
		Cash Flows Versus Net Operating Income
			Typical Cash Outflows
			Typical Cash Inflows
		The Time Value of Money
	The Payback Method
		Evaluation of the Payback Method
		An Extended Example of Payback
		Payback and Uneven Cash Flows
	The Net Present Value Method
		The Net Present Value Method Illustrated
		Recovery of the Original Investment
		An Extended Example of the Net Present Value Method
	The Internal Rate of Return Method
		The Internal Rate of Return Method Illustrated
		Comparison of the Net Present Value and Internal Rate of Return Methods
	Expanding the Net Present Value Method
		Least-Cost Decisions
	Uncertain Cash Flows
		An Example
	Preference Decisions—The Ranking of Investment Projects
		Internal Rate of Return Method
		Net Present Value Method
	The Simple Rate of Return Method
	Postaudit of Investment Projects
	Summary
	Guidance Answer to Decision Point
	Guidance Answers to Concept Checks
	Review Problem: Comparison of Capital Budgeting Methods
	Glossary
	Questions
	Applying Excel
	The Foundational 15
	Exercises
	Problems
	Cases
	Appendix 12: The Concept of Present Value
	Appendix 12: Review Problem: Basic Present Value Computations
	Appendix 12B: Present Value Tables
chapter thirteen: Statement of Cash Flows
	The Statement of Cash Flows: Key Concepts
		Organizing the Statement of Cash Flows
		Operating Activities: Direct or Indirect Method?
		The Indirect Method: A Three-Step Process
			Step 1
			Step 2
			Step 3
		Investing and Financing Activities: Gross Cash Flows
			Property, Plant, and Equipment
			Retained Earnings
		Summary of Key Concepts
	An Example of a Statement of Cash Flows
		Operating Activities
			Step 1
			Step 2
			Step 3
		Investing Activities
		Financing Activities
		Seeing the Big Picture
	Interpreting the Statement of Cash Flows
		Consider a Company’s Specific Circumstances
		Consider the Relationships among Numbers
			Free Cash Flow
			Earnings Quality
	Summary
	Guidance Answers to Decision Point
	Guidance Answers to Concept Checks
	Review Problem
	Glossary
	Questions
	The Foundational 15
	Exercises
	Problems
	Building Your Skills
	Appendix 13A: The Direct Method of Determining the Net Cash Provided by Operating Activities
	Appendix 13A: Exercises and Problems
chapter fourteen: Financial Statement Analysis
	Limitations of Financial Statement Analysis
		Comparing Financial Data across Companies
		Looking beyond Ratios
	Statements in Comparative and Common-Size Form
		Dollar and Percentage Changes on Statements
		Common-Size Statements
	Ratio Analysis—Liquidity
		Working Capital
		Current Ratio
		Acid-Test (Quick) Ratio
	Ratio Analysis—Asset Management
		Accounts Receivable Turnover
		Inventory Turnover
		Operating Cycle
		Total Asset Turnover
	Ratio Analysis—Debt Management
		Times Interest Earned Ratio
		Debt-to-Equity Ratio
		Equity Multiplier
	Ratio Analysis—Profitability
		Gross Margin Percentage
		Net Profit Margin Percentage
		Return on Total Assets
		Return on Equity
	Ratio Analysis—Market Performance
		Earnings per Share
		Price-Earnings Ratio
		Dividend Payout and Yield Ratios
			The Dividend Payout Ratio
			The Dividend Yield Ratio
		Book Value per Share
	Summary of Ratios and Sources of Comparative Ratio Data
	Summary
	Guidance Answer to Decision Point
	Guidance Answers to Concept Checks
	Review Problem: Selected Ratios and Financial Leverage
	Glossary
	Questions
	The Foundational 15
	Exercises
	Problems
	Building Your Skills
Integration Exercises: An Overview
	Integration Exercises
Index