Managerial accounting

Cover......Page 1
Brief Contents......Page 4
Contents......Page 5
Chapter 1: Introduction to Managerial Accounting......Page 20
  Managers' Three Primary Responsibilities......Page 21
  A Road Map: How Managerial Accounting Fits In......Page 22
  Differences Between Managerial Accounting and Financial Accounting......Page 23
  Organizational Structure......Page 25
  The Changing Roles of Management Accountants......Page 26
  The Skills Required of Management Accountants......Page 27
  Professional Associations......Page 28
  Average Salaries of Management Accountants......Page 29
  Ethics......Page 30
  Examples of Ethical Dilemmas......Page 31
  Sarbanes-Oxley Act of 2002......Page 36
  Extensible Business Reporting Language (XBRL)......Page 37
  Sustainability, Social Responsibility, and the Triple Bottom Line......Page 38
  Integrated Reporting......Page 39
  Global Marketplace......Page 40
  Advanced Information Systems......Page 41
  Total Quality Management......Page 42
  Accounting Vocabulary......Page 46
  Quick Check......Page 47
  Exercises: Group A......Page 52
  Exercises: Group B......Page 54
  Problems: Group A......Page 56
  Problems: Group B......Page 58
  Application & Analysis......Page 61
  Try It Solutions......Page 64
Chapter 2: Building Blocks of Managerial Accounting......Page 65
  Service, Merchandising, and Manufacturing Companies......Page 66
  Which Business Activities Make up the Value Chain?......Page 68
  Coordinating Activities Across the Value Chain......Page 69
  Cost Objects, Direct Costs, and Indirect Costs......Page 71
  Costs for Internal Decision Making and External Reporting......Page 73
  Merchandising Companies' Inventoriable Product Costs......Page 75
  Manufacturing Companies’ Inventoriable Product Costs......Page 76
  Additional Labor Compensation Costs......Page 78
  Recap: Inventoriable Product Costs Versus Period Costs......Page 79
  Merchandising Companies......Page 82
  Manufacturing Companies......Page 84
  Sustainability and Corporate Reporting......Page 87
  Relevant and Irrelevant Costs......Page 88
  Fixed and Variable Costs......Page 89
  How Manufacturing Costs Behave......Page 90
  Calculating Total and Average Costs......Page 91
  Accounting Vocabulary......Page 95
  Quick Check......Page 96
  Exercises: Group A......Page 102
  Exercises: Group B......Page 107
  Problems: Group A......Page 111
  Problems: Group B......Page 114
  Application & Analysis......Page 118
Chapter 3: Job Costing......Page 121
  Process Costing......Page 122
  Job Costing......Page 123
  Overview: Flow of Inventory Through a Manufacturing System......Page 124
  Scheduling Production......Page 125
  Purchasing Raw Materials......Page 126
  Using a Job Cost Record to Accumulate Job Costs......Page 127
  Tracing Direct Materials Cost to a Job......Page 129
  Tracing Direct Labor Cost to a Job......Page 131
  Allocating Manufacturing Overhead to a Job......Page 133
  Completing the Job Cost Record and Using it to Make Business Decisions......Page 136
 How Can Job Costing Information be Enhanced for Decision Making?......Page 138
  Direct or Variable Costing......Page 140
 How do Managers Deal with Underallocated or Overallocated Manufacturing Overhead?......Page 144
 What Journal Entries are Needed in a Manufacturer's Job Costing System?......Page 146
  What Costs are Considered Direct Costs of Serving the Client?......Page 160
  What Costs are Considered Indirect Costs of Serving the Client?......Page 161
  Invoicing the Client Using a Professional Billing Rate......Page 162
  What Journal Entries are Needed in a Service Firm's Job Costing System?......Page 163
  Accounting Vocabulary......Page 164
  Quick Check......Page 165
  Exercises: Group A......Page 169
  Exercises: Group B......Page 176
  Problems: Group A......Page 183
  Problems: Group B......Page 187
  Application & Analysis......Page 191
Chapter 4: Activity-Based Costing, Lean Operations, and the Costs of Quality......Page 195
  Simple Cost Allocation Systems Can Lead to Cost Distortion......Page 196
  Review: Using a Plantwide Overhead Rate to Allocate Indirect Costs......Page 197
  Using Departmental Overhead Rates to Allocate Indirect Costs......Page 199
  Using Activity-Based Costing to Allocate Indirect Costs......Page 204
  Activity-Based Management (ABM)......Page 211
  Passing the Cost-Benefit Test......Page 213
  The Eight Wastes of Traditional Operations......Page 219
  Characteristics of Lean Operations......Page 221
 How do Managers Improve Quality?......Page 226
  Costs of Quality (COQ)......Page 227
  Relationship Among Costs......Page 228
  Using Costs of Quality Reports to Aid Decisions......Page 229
  Accounting Vocabulary......Page 234
  Quick Check......Page 235
  Exercises: Group A......Page 242
  Exercises: Group B......Page 248
  Problems: Group A......Page 255
  Problems: Group B......Page 258
  Critical Thinking......Page 262
  Application & Analysis......Page 263
Chapter 5: Process Costing......Page 266
  Two Basic Costing Systems: Job Costing and Process Costing......Page 267
  How does the Flow of Costs Differ Between Job and Process Costing?......Page 268
  Equivalent Units......Page 271
  Inventory Flow Assumptions......Page 272
 How Does Process Costing Work in the First Processing Department?......Page 273
  Step 2: Compute Output in Terms of Equivalent Units......Page 275
  Step 4: Compute the Cost per Equivalent Unit......Page 277
  Average Unit Costs......Page 278
 What Journal Entries are Needed in a Process Costing System?......Page 280
  Process Costing in SeaView's Insertion Department......Page 286
  Steps 1 and 2: Summarize the Flow of Physical Units and Compute Output in Terms of Equivalent Units......Page 288
  Steps 3 and 4: Summarize Total Costs to Account for and Compute the Cost per Equivalent Unit......Page 289
  Unit Costs and Gross Profit......Page 290
  Production Cost Reports......Page 291
  Journal Entries in a Second Processing Department......Page 292
  Quick Check......Page 299
  Exercises: Group A......Page 306
  Exercises: Group B......Page 312
  Problems: Group A......Page 317
  Problems: Group B......Page 321
  Application & Analysis......Page 325
Chapter 6: Cost Behavior......Page 328
  Variable Costs......Page 329
  Fixed Costs......Page 332
  Mixed Costs......Page 335
  Relevant Range......Page 337
  Other Cost Behaviors......Page 338
  Scatter Plots......Page 343
  High-Low Method......Page 345
  Regression Analysis......Page 347
  Data Concerns......Page 351
  Comparing Absorption Costing and Variable Costing......Page 352
  The Contribution Margin Income Statement......Page 354
  Comparing Operating Income: Variable Versus Absorption Costing......Page 357
  Reconciling Operating Income Between the Two Costing Systems......Page 359
  Quick Check......Page 366
  Exercises Group A......Page 373
  Exercises: Group B......Page 381
  Problems: Group A......Page 388
  Problems: Group B......Page 391
  Application & Analysis......Page 396
  Try It Solutions......Page 399
Chapter 7: Cost-Volume-Profit Analysis......Page 401
  Data and Assumptions Required for CVP Analysis......Page 402
  The Unit Contribution Margin......Page 403
  The Contribution Margin Ratio......Page 404
 How do Managers Find the Breakeven Point?......Page 406
  The Income Statement Approach......Page 407
  The Shortcut Approach Using the Unit Contribution Margin......Page 408
  The Shortcut Approach Using the Contribution Margin Ratio......Page 409
  How Much Must we Sell to Earn a Target Profit?......Page 410
  Graphing CVP Relationships......Page 412
  Changing the Sales Price......Page 417
  Changing Variable Costs......Page 418
  Changing More Than One Factor......Page 419
  Changing Fixed Costs......Page 420
  Changing the Mix of Products Offered for Sale......Page 422
  Margin of Safety......Page 426
  Operating Leverage......Page 427
  Choosing a Cost Structure......Page 430
  Quick Check......Page 436
  Exercises: Group A......Page 441
  Exercises: Group B......Page 447
  Problems: Group A......Page 453
  Problems: Group B......Page 455
  Application & Analysis......Page 457
  Try It Solutions......Page 460
Chapter 8: Relevant Costs for Short-Term Decisions......Page 462
  Relevant Information......Page 463
  Relevant Nonfinancial Information......Page 464
  Keys to Making Short-Term Special Decisions......Page 465
  Special Order Decisions......Page 467
  Regular Pricing Decisions......Page 471
  Decisions to Discontinue Products, Departments, or Stores......Page 479
  Product Mix Decisions when Resources are Constrained......Page 483
  Outsourcing Decisions (Make or Buy)......Page 485
  Decisions to Sell As Is or Process Further......Page 489
  Quick Check......Page 495
  Exercises: Group A......Page 500
  Exercises: Group B......Page 506
  Problems: Group A......Page 511
  Problems: Group B......Page 514
  Application & Analysis......Page 517
  Try It Solutions......Page 520
Chapter 9: The Master Budget......Page 521
  How are Budgets Developed?......Page 522
  What are the Benefits of Budgeting?......Page 524
  What is the Master Budget?......Page 525
  Sales Budget......Page 526
  Production Budget......Page 527
  Direct Materials Budget......Page 529
  Direct Labor Budget......Page 530
  Manufacturing Overhead Budget......Page 531
  Operating Expenses Budget......Page 532
  Budgeted Income Statement......Page 533
  Cash Collections Budget......Page 538
  Cash Payments Budget......Page 539
  Combined Cash Budget......Page 541
  Budgeted Balance Sheet......Page 542
  Sensitivity Analysis and Flexible Budgeting......Page 544
  Merchandising Companies......Page 546
  Impact of Credit and Debit Card Sales on Budgeting......Page 548
  Quick Check......Page 553
  Exercises: Group A......Page 558
  Exercises: Group B......Page 565
  Problems: Group A......Page 574
  Problems: Group B......Page 580
  Application & Analysis......Page 588
Chapter 10: Performance Evaluation......Page 591
  Advantages and Disadvantages of Decentralization......Page 592
 What is Responsibility Accounting?......Page 593
  Types of Responsibility Centers......Page 594
  Responsibility Center Performance Reports......Page 596
  Evaluation of Investment Centers......Page 598
 What is Transfer Pricing?......Page 605
  Strategies and Mechanisms for Determining a Transfer Price......Page 606
 How do Managers Use Flexible Budgets to Evaluate Performance?......Page 612
  Creating a Flexible Budget Performance Report......Page 613
  Underlying Causes of the Variances......Page 615
  The Balanced Scorecard......Page 617
  Accounting Vocabulary......Page 626
  Quick Check......Page 627
  Exercises: Group A......Page 633
  Exercises: Group B......Page 640
  Problems: Group A......Page 646
  Problems: Group B......Page 651
  Application & Analysis......Page 656
  Try It Solutions......Page 659
Chapter 11: Standard Costs and Variances......Page 661
  Types of Standards......Page 662
  Computing Standard Costs......Page 663
  Direct Materials Variances......Page 666
  Direct Labor Variances......Page 672
  Advantages and Disadvantages of Using Standard Costs and Variances......Page 674
  Variable Manufacturing Overhead Variances......Page 679
  Fixed Manufacturing Overhead Variances......Page 681
  Standard Costing Systems......Page 683
 Standard Costing......Page 687
  Standard Costing Income Statement......Page 690
  Accounting Vocabulary......Page 691
  Quick Check......Page 692
  Exercises: Group A......Page 696
  Exercises: Group B......Page 701
  Problems: Group A......Page 706
  Problems: Group B......Page 709
  Critical Thinking......Page 712
  Application & Analysis......Page 713
Chapter 12: Capital Investment Decisions and the Time Value of Money......Page 717
  Four Popular Methods of Capital Budgeting Analysis......Page 718
  Capital Budgeting Process......Page 719
  Payback Period......Page 721
  Accounting Rate of Return (ARR)......Page 724
  Factors Affecting the Time Value of Money......Page 730
  Future Values and Present Values: Points Along the Time Continuum......Page 731
  Future Value and Present Value Factors......Page 732
  Calculating Future Values of Single Sums and Annuities Using FV Factors......Page 733
  Calculating Present Values of Single Sums and Annuities Using PV Factors......Page 734
 How do Managers Calculate the Net Present Value and Internal Rate of Return?......Page 737
  Net Present Value (NPV)......Page 738
  Internal Rate of Return (IRR)......Page 743
 How do the Capital Budgeting Methods Compare?......Page 746
  Table A Present Value of $1......Page 750
  Table B Present Value of Annuity of $1......Page 751
  Table C Future Value of $1......Page 752
  Table D Future Value of Annuity of $1......Page 753
  Solutions to Chapter Examples Using Microsoft Excel......Page 754
 Using a TI-83, TI-83 Plus, TI-84, or TI-84 Plus Calculator to Perform Time Value of Money Calculations......Page 758
  Accounting Vocabulary......Page 764
  Quick Check......Page 765
  Exercises: Group A......Page 769
  Exercises: Group B......Page 773
  Problems: Group A......Page 777
  Problems: Group B......Page 778
  Application & Analysis......Page 780
  Try It Solutions......Page 782
Chapter 13: Statement of Cash Flows......Page 784
 What is the Statement of Cash Flows?......Page 785
  Three Types of Activities That Generate and Use Cash......Page 786
  Two Methods of Presenting Operating Activities......Page 788
  Preparing the Cash Flows from Operating Activities......Page 793
  Preparing the Cash Flows from Investing Activities......Page 799
  Preparing the Cash Flows from Financing Activities......Page 801
  Recap: Steps to Preparing the Statement of Cash Flows Using the Indirect Method......Page 803
  Overview......Page 804
  Determining Cash Payments and Receipts......Page 805
  Quick Check......Page 813
  Exercises: Group A......Page 820
  Exercises: Group B......Page 824
  Problems: Group A......Page 827
  Problems: Group B......Page 832
  Application & Analysis......Page 837
  Try It Solutions......Page 841
Chapter 14: Financial Statement Analysis......Page 842
 Horizontal Analysis......Page 843
  Trend Percentages......Page 845
 Vertical Analysis......Page 847
  How do we Compare One Company with Another?......Page 849
  Measuring Ability to Pay Current Liabilities......Page 854
  Measuring Ability to Sell Inventory and Collect Receivables......Page 855
  Measuring Ability to Pay Long-Term Debt......Page 857
  Measuring Profitability......Page 858
  Analyzing Stock Investments......Page 860
 Red Flags in Financial Statement Analysis......Page 862
  Accounting Vocabulary......Page 869
  Quick Check......Page 870
  Exercises: Group A......Page 873
  Exercises: Group B......Page 878
  Problems: Group A......Page 883
  Problems: Group B......Page 887
  Application & Analysis......Page 891
  Try It Solutions......Page 894
Chapter 15: Sustainability......Page 895
 What is Sustainability and How Does it Create Business Value?......Page 896
  Historical Overview......Page 897
  The Business Case for Sustainability......Page 898
  Current State of Sustainability Reporting......Page 902
  Framework for Sustainability Reporting......Page 903
  EMA Systems......Page 907
  Uses of Environmental Management Accounting Information......Page 909
  Challenges to Implementing EMA Systems......Page 910
  Future of Environmental Management Accounting......Page 912
  Accounting Vocabulary......Page 914
  Quick Checks......Page 915
  Exercises: Group A......Page 919
  Exercises: Group B......Page 927
  Problems: Group A......Page 935
  Problems: Group B......Page 937
  Critical Thinking......Page 940
  Application & Analysis......Page 941
  Try It Solutions......Page 944
Company Names Index......Page 946
Glossary/Index......Page 950