Managerial accounting:
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| Main Author: | |
|---|---|
| Format: | Book |
| Language: | English |
| Published: |
Hoboken, NJ
Wiley
2007
|
| Edition: | 3. ed. |
| Subjects: | |
| Online Access: | Table of contents only Inhaltsverzeichnis |
| Item Description: | Includes index. |
| Physical Description: | XXX, 594 S. Ill. |
| ISBN: | 9780470038154 0470038152 |
Staff View
MARC
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| 250 | |a 3. ed. | ||
| 264 | 1 | |a Hoboken, NJ |b Wiley |c 2007 | |
| 300 | |a XXX, 594 S. |b Ill. | ||
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| _version_ | 1804136630453272576 |
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| adam_text | CONTENTS
Chapter 1
MANAGERIAL ACCOUNTING IN THE
GOAL OF MANAGERIAL ACCOUNTING A
Planning 4
Budgets for Planning, 4
Control 4
Performance Reports for Control, 5
Decision Making 7
A Comparison of Managerial and Financial
Accounting 7
Internal versus External Users, 8 Need to Use
GAAP, 8 Detail of Information, 8 Emphasis on
Nonmonetary Information, 8 Emphasis on the
Future, 8
Similarities between Financial and Managerial
Accounting 8
COST TERMS USED IN DISCUSSING
PLANNING, CONTROL, AND DECISION MAKING 9
Variable and Fixed Costs 9
Variable Costs, 9 Fixed Costs, 10
Sunk Costs 10
Opportunity Costs 10
Direct and Indirect Costs 10
Controllable and Noncontrollable Costs 11
TWO KEY IDEAS IN MANAGERIAL ACCOUNTING 11
Decision Making Relies on Incremental Analysis 12
You Get What You Measure! 13
THE INFORMATION AGE
AND MANAGERIAL ACCOUNTING 14
Competition and Information Technology 14
The Impact of Information Technology on Management
of the Value Chain 14
Information Flows between Milano and
Customers, 15 Information Flows between Milano
and Suppliers, 15 Using Information Technology to
Gain Internal Efficiencies, 15
Chapter 2
JOB ORDER COSTING FOR MANUFAC
COST CLASSIFICATIONS
FOR MANUFACTURING FIRMS 38
Manufacturing Costs 39
INFORMATION AGE 3
I Software Systems That Impact Value Chain
Management 16
Enterprise Resource Planning Systems, 16 Supply
Chain Management Systems, 16 Customer
Relationship Management Systems, 16
ETHICAL CONSIDERATIONS
IN MANAGERIAL DECISION MAKING 17
Ethical and Unethical Behavior 17
Sarbanes Oxley Act, 18
A Framework for Ethical Decision Making 19
IMA Statement of Ethical Professional Practice 20
THE CONTROLLER AS THE TOP MANAGEMENT
ACCOUNTANT 20
MAKING BUSINESS DECISIONS 22
SUMMARY OF LEARNING OBJECTIVES 23
APPENDLX IMA STATEMENT OF ETHICAL
PROFESSIONAL PRACTICE 24
Principles 24
Standards 24
Resolution of Ethical Conflict 25
• LINKS TO PRACTICE:
Examples of the Impact of SCM, 17
Japanese Companies Creating a New Executive
Position—The CFOI, 22
Key Terms 25
Self Assessment 26
Interactive Learning 27
Questions 27
Exercises 27
Problems 30
Cases 34
TURING AND SERVICE COMPANIES 37
Direct Material, 39 Direct Labor, 40
Manufacturing Overhead, 40
Nonmanufacturing Costs 40
xxii CONTENTS
Selling Costs, 40 General and Administrative
Costs, 41
Product and Period Costs 41
Product Costs, 41 Period Costs, 41
PRODUCT COST INFORMATION IN FINANCIAL
REPORTING AND DECISION MAKING 42
BALANCE SHEET PRESENTATION
OF PRODUCT COSTS 43
FLOW OF PRODUCT COSTS IN ACCOUNTS 44
INCOME STATEMENT PRESENTATION
OF PRODUCT COSTS 45
Cost of Goods Manufactured, 45 Cost of Goods
Sold, 46
TYPES OF COSTING SYSTEMS 47
OVERVIEW OF JOB COSTS AND FINANCIAL
STATEMENT ACCOUNTS 48
JOB ORDER COSTING SYSTEM 49
Direct Material Cost 50
Direct Labor Cost 52
Manufacturing Overhead 53
Assigning Costs to Jobs: A Summary 54
EASTLIKE REVISITED: USING JOB COST
INFORMATION 55
RELATION BETWEEN THE COSTS OF JOBS AND
THE FLOW OF COSTS IN WORK IN PROCESS,
FINISHED GOODS, AND COST OF GOODS SOLD 57
ALLOCATING OVERHEAD TO JOBS:
A CLOSER LOOK 57
Chapter 3
PROCESS COSTING
DIFFERENCE BETWEEN JOB ORDER
AND PROCESS COSTING SYSTEMS 88
PRODUCT AND COST FLOWS 90
Product Flows Through Departments 90
Cost Flows Through Accounts 91
Direct Material, 92 Direct Labor, 92
Manufacturing Overhead, 92 Transferred in
Cost, 92
CALCULATING UNIT COST 93
Equivalent Units 93
Cost Per Equivalent Unit 94
CALCULATING AND APPLYING COST PER
EQUIVALENT UNIT: MLXING DEPARTMENT
EXAMPLE 94
Cost Transferred Out 95
Overhead Allocation Rates 58
The Overhead Allocation Base 58
Activity Based Costing (ABC) and Multiple
Overhead Rates 59
Predetermined Overhead Rates 59
Eliminating Overapplied or Underapplied
Overhead 60
JOB ORDER COSTING FOR SERVICE COMPANIES 61
MODERN MANUFACTURING PRACTICES AND
PRODUCT COSTING SYSTEMS 62
Just In Time (JIT) Production 63
Computer Controlled Manufacturing 63
Total Quality Management 65
MAKING BUSINESS DECISIONS 67
SUMMARY OF LEARNING OBJECTIVES 67
• LINKS TO PRACTICE:
Product and Period Costs at Dell, 43
Examples of Companies Using Job Order and Process
Costing Systems, 47
Just in Time or Just in Case ?, 64
Computerized Manufacturing of Aircraft Parts, 65
Can There Be Too Much Emphasis on Quality?, 66
Review Problem 68
Key Terms 70
Self Assessment 71
Interactive Learning 72
Questions 72
Exercises 72
Problems 76
Cases 84
87
Ending Work in Process 96
PRODUCTION COST REPORT 96
Reconciliation of Units 96
Reconciliation of Costs 98
BASIC STEPS IN PROCESS COSTING: A SUMMARY 98
KENT CHEMICAL REVISITED:
ANSWERING STACY S QUESTION 99
DEALING WITH TRANSFERRED IN COST:
PACKAGING DEPARTMENT EXAMPLE 99
PROCESS COSTING AND INCREMENTAL
ANALYSIS 101
MAKING BUSINESS DECISIONS 103
SUMMARY OF LEARNING OBJECTIVES 103
• LINKS TO PRACTICE:
What Type of Costing System Is Used by Kimberly Clark
Corporation?, 88
Virtual Plant Tours for Companies that Use Process
Costing, 91
Review Problem 104
Chapter 4
COST VOLUME PROFIT ANALYSIS
COMMON COST BEHAVIOR PATTERNS 126
Variable Costs 126
Fixed Costs 126
Discretionary Versus Committed Fixed Costs, 128
Mixed Costs 128
Step Costs 129
COST ESTIMATION METHODS 130
Account Analysis 130
Scattergraphs 132
High Low Method 134
Regression Analysis 136
The Relevant Range 137
COST VOLUME PROFIT ANALYSIS 138
The Profit Equation 138
Break Even Point 138
Margin of Safety, 139
Contribution Margin 140
Contribution Margin Ratio 140
What tf Analysis 141
Change in Fixed and Variable Costs, 141 Change in
Setting Price, 141
Taxes in CVP Analysis 142
MULTIPRODUCT ANALYSIS 142
Contribution Margin Approach 142
Contribution Margin Ratio Approach 143
ASSUMPTIONS IN CVP ANALYSIS 146
CODECONNECT EXAMPLE REVISITED:
ANSWERING MARY S QUESTION 147
Chapter 5
VARIABLE COSTING
FULL (ABSORPTION) AND VARIABLE COSTING 180
Variable Costing Income Statement 180
EFFECTS OF PRODUCTION ON INCOME
FOR FULL VERSUS VARIABLE COSTING:
THE Clausentube EXAMPLE 182
Quantity Produced Equals Quantity Sold 183
Quantity Produced is Greater Than Quantity Sold 185
CONTENTS xxiii
Key Terms 106
Self Assessment 106
Interactive Learning 107
Questions 107
Exercises 107
Problems 111
Cases 119
125
OPERATING LEVERAGE 148
CONSTRAINTS 149
MAKING BUSINESS DECISIONS 150
SUMMARY OF LEARNING OBJECTIVES 150
• LINKS TO PRACTICE:
Because of Fixed Costs, Utility Wants Rate Increase
to Compensate for a Warmer than Average Winter, 128
How to Reach Break Even, 139
Deciding to Use the Contribution Margin per Unit
or the Contribution Margin Ratio, 145
Which Firm Has the Higher Contribution Margin
Ratio?, 146
Governmental Organizations Outsource HR
to Turn Fixed Costs into Variable Costs, 149
Review Problem 155
Key Terms 156
Self Assessment 157
Interactive Learning 158
Questions 158
Exercises 158
Problems 164
Cases 174
APPENDIX
USING REGRESSION IN EXCEL® TO
ESTIMATE FDCED AND VARIABLE COSTS 151
Setting Up the Spreadsheet 151
Interpreting the Output of the Regression Program 152
The Plot, 152 R Square, 152 Intercept and Slope
of the Regression Line, 154 P Value, 154
179
Quantity Produced is Less Than Quantity Sold 187
Explaining What Happened at ClausenTube 188
Impact of JIT on the Income Effects
of Full versus Variable Costing 188
BENEFITS OF VARIABLE COSTING
FOR INTERNAL REPORTING 189
Variable Costing Facilitates C V P Analysis 189
xxlv CONTENTS
Variable Costing Limits Management of Earnings
with Production Volume 189
MAKING BUSINESS DECISIONS 189
SUMMARY OF LEARNING OBJECTIVES 190
• LINKS TO PRACTICE:
GM s Profit per SUV Hurt by Reduced Production, 188
Chapter 6
COST ALLOCATION AND ACnVTTY B;
PURPOSES OF COST ALLOCATION 210
To Provide Information for Decision Making 210
To Reduce Frivolous Use of Common Resources 211
To Encourage Evaluation of Services 212
To Provide Full Cost Information 213
PROCESS OF COST ALLOCATION 214
Determining the Cost Objective 214
Forming Cost Pools 214
Selecting an Allocation Base 215
ALLOCATING SERVICE DEPARTMENT COSTS 216
Direct Method of Allocating Service
Department Costs 217
Allocating Budgeted and Actual Service
Department Costs 218
PROBLEMS WITH COST ALLOCATION 218
Responsibility Accounting and Controllable Costs 219
Arbitrary Allocations 219
Unitized Fixed Costs and Lump Sum Allocations 220
The Problem of Too Few Cost Pools 222
Using Only Volume Related Allocation Bases 223
ACTIVITY BASED COSTING 223
The Problem of Using Only Measures of Production
Volume to Allocate Overhead 223
The ABC Approach 224
Relating Cost Pools to Products Using Cost
Drivers 226
The ABC Approach at Gardenrite Manufacturing:
A Comprehensive Example 226
Gardenrite s Costs under the Traditional
Approach, 226 Gardenrite s Costs under
the ABC Approach, 227
Chapter 7
THE USE OF COST INFORMATION IN N
INCREMENTAL ANALYSIS 262
When Your Boss Asks What Does This Product
(Service) Cost? You Should Say Why Do You Want To
Know? 264
Review Problem 190
Key Terms 192
Self Assessment 192
Interactive Learning 193
Questions 193
Exercises 194
Problems 196
Cases 205
SED COSTING 209
Pros and Cons of ABC 229
Benefits, 229 Limitations, 231
ACTIVITY BASED MANAGEMENT (ABM) 231
REMEMBER—YOU GET WHAT YOU MEASURE! 232
MAKING BUSINESS DECISIONS 233
SUMMARY OF LEARNING OBJECTIVES 233
APPENDIX ACTIVITY BASED MANAGEMENT 234
Step 1: Determine Major Activities 234
Step 2: Identify Resources Used by Each Activity 235
Return Merchandise to Stock if Not Acceptable to
Customer or Customer Not Home to Receive
Delivery, 235 Wash Delivery Trucks, 235
Step 3: Evaluate the Performance
of the Activities 236
Step 4: Identify Ways to Improve the Efficiency
and/or Effectiveness of the Activities 236
CONCLUSION 236
• LINKS TO PRACTICE:
Lack of Oversight for Cost Pius Contracts, 213
The Activity Based Costing Portal, 224
Avoiding Disastrous Decision by Using ABC, 230
Review Problem 237
Key Terms 239
Self Assessment 239
Interactive Learning 240
Questions 240
Exercises 240
Problems 245
Cases 256
1ANAGEMENT DECISION MAKING 261
ANALYSIS OF DECISIONS FACED BY MANAGERS 265
Additional Processing Decision 265
Make or Buy Decision: the General Refrigeration
Example 267
Dropping A Product Line 270
Beware of the Cost Allocation Death Spiral! 272
Summary of Incremental, Avoidable, Sunk,
and Opportunity Costs 272
DECISIONS INVOLVING JOINT COSTS 273
Allocation of Joint Costs 274
Additional Processing Decisions and Joint Costs 276
QUALITATIVE CONSIDERATIONS
IN DECISION ANALYSIS 277
MAKING BUSINESS DECISIONS 278
SUMMARY OF LEARNING OBJECTIVES 279
APPENDK THE THEORY
OF CONSTRAINTS (TOC) 279
THE FIVE STEP PROCESS OF TOC 279
Step 1: Identify the Binding Constraint 280
Step 2: Optimize Use of the Constraint 280
Step 3: Subordinate Everything Else
to the Constraint 281
Chapter 8
PRICING DECISIONS, ANALYZING CUS
AND ACTIVITY BASED PRICING
THE PROFIT MAXIMIZING PRICE 302
PRICING SPECIAL ORDERS 303
COST PLUS PRICING 304
TARGET COSTING 306
ANALYZING CUSTOMER PROFITABILITY: REVISITING
THE WHOLESALE OFFICE SUPPLY CASE 308
ACTIVITY BASED PRICING 311
• LINKS TO PRACTICE:
Insult s Most Radical Innovation Wasn t Technology
It Was Pricing!, 306
Target Costing Seminars Help Companies Join
the Target Costing Bandwagon, 307
Customers Requiring Display Ready Pallets
Can Hurt Profitability, 311
Chapter 9
CAPITAL BUDGETING AND OTHER LO
CAPITAL BUDGETING DECISIONS 330
EVALUATING INVESTMENT OPPORTUNITIES:
TIME VALUE OF MONEY APPROACHES 331
Basic Time Value of Money Calculations 332
The Net Present Value Method 333
CONTENTS xxv
Step 4: Break the Constraint 281
Step 5: Identify a New Binding Constraint 281
IMPLICATIONS OF TOC FOR INSPECTIONS,
BATCH SIZES, AND ACROSS THE BOARD CUTS 281
Inspections, 282 Batch Sizes, 282 Across the
Board Cuts, 282
YOU GET WHAT YOU MEASURE AND TOC 282
• LINKS TO PRACTICE:
Alaska Airlines Outsources Baggage Handling, 269
The Sunk Cost Effect, 275
Qualitative Considerations in Outsourcing to China, 277
Review Problem 282
Key Terms 283
Self Assessment 283
Interactive Learning 284
Questions 285
Exercises 285
Problems 290
Cases 298
TOMER PROFITABILITY,
301
MAKING BUSINESS DECISIONS 312
SUMMARY OF LEARNING OBJECTIVES 312
Review Problem 313
Key Terms 315
Self Assessment 315
Interactive Learning 316
Questions 316
Exercises 317
Problems 321
Cases 326
NG RUN DECISIONS 329
Steps in the NPV Method, 334 An Example
of the NVP Approach, 334
The Internal Rate of Return Method 336
The Internal Rate of Return Method With Unequal
Cash Flows 337
xxvi CONTENTS
Summary of Net Present Value and Internal Rate
of Return Methods 339
CONSIDERING SOFT BENEFITS
IN INVESTMENT DECISIONS 339
Calculating the Value of Soft Benefits Required
to Make an Investment Acceptable 340
ESTIMATING THE REQUIRED RATE OF RETURN 341
ADDITIONAL CASH FLOW CONSIDERATIONS 342
Cash Flows, Taxes, and the Depreciation
Tax Shield 342
Adjusting Cash Flows for Inflation 345
OTHER LONG RUN DECISIONS 345
SIMPLIFIED APPROACHES TO CAPITAL
BUDGETING 347
Payback Period Method 347
Accounting Rate of Return 348
CONFLICT BETWEEN PERFORMANCE EVALUATION
AND CAPITAL BUDGETING 350
WILSON AIR EXAMPLE REVISITED 351
Chapter 1O
BUDGETARY PLANNING AND CONTRC
USE OF BUDGETS IN PLANNING AND CONTROL 374
Planning 374
Control 374
DEVELOPING THE BUDGET 376
Budget Time Period 377
Zero Base Budgeting 377
THE MASTER BUDGET 378
Sales Budget 378
Production Budget 379
Direct Material Purchase Budget 381
Direct Labor Budget 381
Manufacturing Overhead Budget 382
Selling and Administrative Expense Budget 382
Budgeted Income Statement 384
Capital Acquisitions Budget 384
Cash Receipts and Disbursement Budget 385
Budgeted Balance Sheet 387
USE OF COMPUTERS IN THE BUDGET PLANNING
PROCESS 388
BUDGETARY CONTROL 388
Budgets as a Standard for Evaluation 389
Static and Flexible Budgets 389
INVESTIGATING BUDGET VARIANCES 391
MAKING BUSINESS DECISIONS 352
SUMMARY OF LEARNING OBJECTIVES 353
APPENDIX A: USING EXCEL®
TO CALCULATE NPV AND IRR 354
APPENDIX B: PRESENT VALUE TABLES 357
• LINK TO PRACTICE:
Starbucks Plans Major Investment in Asia Pacific
Region, 331
Investment in Energy Efficient Equipment
Can Yield High Returns, 337
Use of NPV and IRR by CFOs, 339
Cost of Capital for Various Business Sectors, 341
Depreciation Tax Shield at United Airlines, 344
Review Problem 358
Key Terms 359
Self Assessment 359
Interactive Learning 360
Questions 361
Exercises 361
Problems 363
Cases 370
)L 373
CONFLICT IN PLANNING AND CONTROL
USES OF BUDGETS 392
Why Budget Based Compensation Can Lead to Budget
Padding and Income Shifting 392
EVALUATION, MEASUREMENT,
AND MANAGEMENT BEHAVIOR 394
THE PRESTON JOYSTICK CASE REVISITED 394
MAKING BUSINESS DECISIONS 394
SUMMARY OF LEARNING OBJECTIVES 395
• LINKS TO PRACTICE:
Problems with Five Year Budgets, 376
Budgets Getting Better?, 377
Budget Process in Great Britain, 379
Spreadsheets for Budgeting, 388
Review Problem 395
Key Terms 397
Self Assessment 398
Interactive Learning 398
Questions 399
Exercises 399
Problems 403
Cases 415
Chapter 11
STANDARD COSTS AND VARIANCE A
STANDARD COSTS 420
Standard Costs and Budgets 420
Development of Standard Costs 421
Ideal Versus Attainable Standards 422
A GENERAL APPROACH TO VARIANCE
ANALYSIS 422
MATERIAL VARIANCES 423
Material Price Variance 424
Material Quantity Variance 424
DIRECT LABOR VAIANCES 425
Labor Rate Variance 426
Labor Efficiency Variance 426
OVERHEAD VARIANCES 426
Controllable Overhead Variance 427
Overhead Volume Variance 427
Computing the Overhead Volume Variance, 428
Interpreting the Overhead Volume Variance, 428
CALCULATING THE FINANCIAL
IMPACT OF OPERATING AT MORE
OR LESS THAN PLANNED CAPACITY 429
COMPREHENSIVE EXAMPLE:
DARRINGTON ICE CREAM 430
Material Variances 432
Labor Variances 432
Overhead Variances 432
INVESTIGATION OF STANDARD
COST VARIANCES 433
Management by Exception 434
Chapter 12
DECENTRALIZATION AND PERFORM/
WHY FIRMS DECENTRALIZE 458
Advantages of Decentralization 458
Disadvantages of Decentralization 459
WHY COMPANIES EVALUATE THE PERFORMANCE
OF SUBUNITS AND SUBUNIT MANAGERS 460
Responsibility Accounting and Performance
Evaluation 461
COST CENTERS, PROFIT CENTERS,
AND INVESTMENT CENTERS 462
Cost Centers 462
Profit Centers 463
Investment Centers 463
EVALUATING INVESTMENT CENTERS WITH ROI 464
Measuring Income and Invested Capital When
Calculating ROI 466
CONTENTS xxvii
NALYSIS 419
Favorable Variances May be Unfavorable 434
Can Process Improvements Lead to Unfavorable
Variances? 434
Beware—Evaluation in Terms of Variances Can Lead
to Excess Production 435
RESPONSIBILITY ACCOUNTING
AND VARIANCES 436
MAKING BUSINESS DECISIONS 436
SUMMARY OF LEARNING OBJECTIVES 436
APPENDIX: RECORDING STANDARD
COSTS IN ACCOUNTS 437
Recording Material Costs 437
Recording Labor Cost 438
Recording Manufacturing Overhead 438
Recording Finished Goods 439
Recording Cost of Goods Sold 439
Closing Variance Accounts 440
• LINKS TO PRACTICE:
Starbucks Uses Standard Costs, 421
You Get What You Measure!, 425
Review Problem 440
Key Terms 442
Self Assessment 442
Interactive Learning 443
Questions 443
Exercises 444
Problems 448
Cases 454
LNCE EVALUATION 457
Problems With Using ROI 467
Problems of Overinvestment and Underinvestment:
You Get What You Measure! 468
Evaluation in Terms of Profit Can Lead to
Overinvestment, 469 Evaluation in Terms of ROI
Can Lead to Underinvestment, 469
EVALUATION USING ECONOMIC VALUE ADDED
(EVA) 470
Residual Income (RI) 470
Revisiting the Situation at Action Industries, 471
Solving the Overinvestment and Underinvestment
Problems 471
Economic Value Added (EVA) 471
EVA Example 472
USING A BALANCED SCORECARD
TO EVALUATE PERFORMANCE 476
xxviii CONTENTS
Tying the Balanced Scorecard Measures to the Strategy
for Success 476
Scenario 1. Learning and Growth Dimension, 477
Scenario 2. Internal Process Dimension, 477
Scenario 3. Customer Dimension, 477
Scenario 4. Financial Dimension, 478
How Balance is Achieved in a Balanced Scorecard 478
DEVELOPING A STRATEGY MAP
FOR A BALANCED SCORECARD 479
KEYS TO A SUCCESSFUL BALANCED SCORECARD:
TARGETS, INITIATIVES, RESPONSBILITY, FUNDING,
TOP MANAGEMENT SUPPORT 480
MAKING BUSINESS DECISIONS 481
SUMMARY OF LEARNING OBJECTIVES 482
APPENDIX TRANSFER PRICING 483
Market Price as the Transfer Price 483
Market Price and Opportunity Cost 484
Variable Cost as the Transfer Price 486
Full Cost Plus Profit as the Transfer Price 486
Negotiated Transfer Prices 487
Chapter 13
ANALYZING FINANCIAL STATEMENTS
WHY MANAGERS ANALYZE FINANCIAL
STATEMENTS 508
Control of Operations 508
Assessment of Vendors, Customers, and Other
Business Partners 509
Assessment of Appearance to Investors and
Creditors 509
REVIEW OF THE THREE BASIC FINANCIAL
STATEMENTS 509
The Balance Sheet 510
Current and Noncurrent Assets and Liabilities, 511
The Income Statement 511
The Statement of Cash Flows 512
Operating Activities, 512 Investing Activities, 512
Financing Activities, 512
HORIZONTAL AND VERTICAL ANALYSIS 513
Analysis of the Balance Sheet 513
Analyzing the Income Statement 515
EARNINGS MANAGEMENT AND THE NEED
TO COMPARE EARNINGS AND CASH FLOW
INFORMATION 516
OTHER SOURCES OF INFORMATION
ON FINANCIAL PERFORMANCE 517
Management Discussion and Analysis 517
Credit Reports 517
News Articles 517
Transfer Pricing and Income Taxes in an International
Context 488
• LINKS TO PRACTICE:
Subunits at Nordstrom, 464
The Focus on ROI and Shareholder Value is NOT
the Same in France, Germany, and Japan as It
is in the United States and Even Great Britain, 466
Companies that Use EVA, 472
Focus on EVA Affects Key Decisions Across the
Organization, 475
Bringham and Women s Hospital Receives Award
for Its Balanced Scorecard, 481
Undervalued Intellectual Property Transferred Offshore
to Cut U.S. Taxes, 488
Review Problem 488
Key Terms 491
Self Assessment 492
Interactive Learning 492
Questions 493
Exercises 493
Problems 496
Cases 503
: A MANAGERIAL PERSPECTIVE 507
RATIO ANALSYSIS 518
Profitability Ratios 518
Financial Leverage, 519 Summary of
Profitability Ratios, 520
Turnover Ratios 520
Summary of Turnover Ratios, 521
Debt Related Ratios 522
Summary of Debt Related Ratios, 523
A MANAGERIAL PERSPECTIVE ON THE ANALYSIS
OF HGW S FINANCIAL STATEMENTS 523
Control of Operations 523
Stability of Vendors, Customers, and Other Business
Partners 523
Returning to the Situation Facing Valley
Home Loan, 524
Appearance to Investors and Creditors 524
SUMMARY OF ANALYSES 524
MAKING BUSINESS DECISIONS 525
SUMMARY OF LEARNING OBJECTIVES 526
• LINKS TO PRACTICE:
Watching Cash Flow Versus Earnings, 516
Comparative Ratio Data, 524
Review Problem 526
Key Terms 528
Self Assessment 528
Interactive Learning 529
Questions 530
Exercises 530
Chapter 14
STATEMENT OF CASH FLOWS
NEED FOR A STATEMENT OF CASH FLOWS 551
TYPES OF BUSINESS ACTIVITIES AND THE
CLASSIFICATION OF CASH FLOWS 552
Operating Activities 552
Investing Activities 554
Financing Activities 555
THE STATEMENT OF CASH FLOWS PREPARED
USING THE DIRECT METHOD 555
PREPARING THE STATEMENT OF CASH FLOWS
USING THE INDIRECT METHOD 559
Statement of Cash Flows for Ravira Restaurant
Supply—Indirect Method 560
INTERPRETING INFORMATION IN THE STATEMENT
OF CASH FLOWS—THE SITUATION AT RAVIRA
RESTAURANT SUPPLY 563
MAKING BUSINESS DECISIONS 563
SUMMARY OF LEARNING OBJECTIVES 564
LIST OF CASES xxix
Problems 535
Cases 546
551
• LINKS TO PRACTICE:
Spotting a Cash Cow, 562
Review Problem 564
Key Terms 566
Self Assessment 566
Questions 567
Exercises 568
Problems 573
Cases 582
Glossary 583
Photo Credits 589
Index 591
LIST OF CASES
Each chapter of Managerial Accounting includes one of more cases that:
• Promote critical thinking and decision making skills.
• Provide an opportunity for group work and/or written communication work.
• Integrate information from other business disciplines.
Chapter 1
1 1: LOCAL 635
A union is disputing cost of meal charges to hotel employees.
1 2: BOSWELL PLUMBING PRODUCTS A senior manager wants to know a
product s cost. But the cost information needed depends on the decision the
senior manager is facing.
xxx LIST OF CASES
Chapter 2
2 1: Ethics Case: BRIXTON SURGICAL DEVICES
To meet an aggressive earnings target, two senior executives are planning to in¬
crease production to bury fixed overhead costs in inventory.
2 2: YSL MARKETING RESEARCH
A marketing research firm is considering various costs when bidding on a job.
2 3: DUPAGE POWDER COATING
A company s product costs are being distorted by its approach to overhead allocation.
Chapter 3
3 1: Tech Tonic Sports Drink
A producer of a sports drink is considering alternative treatments for the cost of
lost units.
3 2: JENSEN PVC, INC.
A company is considering lowering prices to increase sales and reduce unit costs
by making better use of excess capacity.
Chapter 4
4 1: ROTHMUELLER MUSEUM
A curator at a museum is trying to estimate the financial impact of a planned
exhibit.
4 2: MAYFIELD SOFTWARE, CUSTOMER TRAINING
The customer training facility of a software company is showing a loss. The man¬
ager needs to determine the number of classes that must be offered to break even.
4 3: KROG METALFAB, INC.
A company is estimating the lost profit related to fire damage so it can submit an
insurance claim.
Chapter 5
5 1: Microimage Technology, INC.
A start up company has a negative gross margin and it appears that the more it
sells, the more it loses. Use of variable costing reveals that this is not the case.
5 2: RainRuler Stains
A variable costing income statement is used to show the financial impact of sales
related to a new customer category.
Chapter 6
6 1: EASTSIDE MEDICAL TESTING
This case presents a service company example of ABC.
6 2: QuantumTM
This case shows how ABC affects product costs and considers the use of ABC in¬
formation in decision making.
Chapter 7
7 1: PRIMUS CONSULTING GROUP
A consulting firm is considering a client offer of a fee that is less than standard rates.
7 2: FIVE STAR TOOLS
A tool manufacturer is faced with a production constraint, and needs to consider
the financial impact of a plan to deal with the situation.
LIST OF CASES
Chapter 8
8 1: PRESTON CONCRETE
The company is considering moving away from its cost plus pricing approach
when an increase in interest rates reduces housing starts and the demand for
concrete.
8 2: GALLOWAY UNIVERSITY MEDICAL CENTER PHARMACY
A university hospital pharmacy is considering the profit implications of alterna¬
tive approaches to encouraging prescription renewals from out of area patients.
Chapter 9
9 1: Ethics Case: JUNIPER PACKAGING SOLUTIONS, INC.
A plant manager is considering a plan to circumvent a freeze on capital expendi¬
tures.
9 2: SERGO GAMES
A game company is considering outsourcing manufacturing of CDs.
Chapter 10
10 1: Ethics Case: COLUMBUS PARK—WASTE TREATMENT FACILITY
The manager of a waste treatment facility is planning to pad costs in her budget
because the city controller is likely to cut whatever budget is submitted.
10 2: ABRUZZI OLIVE OIL COMPANY
A small producer of olive oil is preparing production budgets to consider the
impact of various sales levels. (Note that this case is best solved using a spread¬
sheet.)
Chapter 11
11 1: JACKSON SOUND
Work in process inventory is building up at Jackson Sound even though the com¬
pany has a JIT system.
11 2: CHAMPION INDUSTRIES
A purchasing manager is considering a material that has a price higher than stan¬
dard, but also a number of desirable properties.
Chapter 12
12 1: HOME VALUE STORES
A company that operates membership warehouse stores is evaluating using EVA.
12 2: WinTech Motors
Owners of a sports and luxury auto dealership are faced with negative EVA and
must cut their investment in inventory.
Chapter 13
13 1: JORDAN WILLIAMS, INCORPORATED
A publisher of college textbooks is evaluating the financial condition of a potential
business partner.
Chapter 14
14 1: WELLCOMP COMPUTERS
A computer company is considering the impact of a price reduction on cash flow.
|
| adam_txt |
CONTENTS
Chapter 1
MANAGERIAL ACCOUNTING IN THE
GOAL OF MANAGERIAL ACCOUNTING A
Planning 4
Budgets for Planning, 4
Control 4
Performance Reports for Control, 5
Decision Making 7
A Comparison of Managerial and Financial
Accounting 7
Internal versus External Users, 8 Need to Use
GAAP, 8 Detail of Information, 8 Emphasis on
Nonmonetary Information, 8 Emphasis on the
Future, 8
Similarities between Financial and Managerial
Accounting 8
COST TERMS USED IN DISCUSSING
PLANNING, CONTROL, AND DECISION MAKING 9
Variable and Fixed Costs 9
Variable Costs, 9 Fixed Costs, 10
Sunk Costs 10
Opportunity Costs 10
Direct and Indirect Costs 10
Controllable and Noncontrollable Costs 11
TWO KEY IDEAS IN MANAGERIAL ACCOUNTING 11
Decision Making Relies on Incremental Analysis 12
You Get What You Measure! 13
THE INFORMATION AGE
AND MANAGERIAL ACCOUNTING 14
Competition and Information Technology 14
The Impact of Information Technology on Management
of the Value Chain 14
Information Flows between Milano and
Customers, 15 Information Flows between Milano
and Suppliers, 15 Using Information Technology to
Gain Internal Efficiencies, 15
Chapter 2
JOB ORDER COSTING FOR MANUFAC
COST CLASSIFICATIONS
FOR MANUFACTURING FIRMS 38
Manufacturing Costs 39
INFORMATION AGE 3
I Software Systems That Impact Value Chain
Management 16
Enterprise Resource Planning Systems, 16 Supply
Chain Management Systems, 16 Customer
Relationship Management Systems, 16
ETHICAL CONSIDERATIONS
IN MANAGERIAL DECISION MAKING 17
Ethical and Unethical Behavior 17
Sarbanes Oxley Act, 18
A Framework for Ethical Decision Making 19
IMA Statement of Ethical Professional Practice 20
THE CONTROLLER AS THE TOP MANAGEMENT
ACCOUNTANT 20
MAKING BUSINESS DECISIONS 22
SUMMARY OF LEARNING OBJECTIVES 23
APPENDLX IMA STATEMENT OF ETHICAL
PROFESSIONAL PRACTICE 24
Principles 24
Standards 24
Resolution of Ethical Conflict 25
• LINKS TO PRACTICE:
Examples of the Impact of SCM, 17
Japanese Companies Creating a New Executive
Position—The CFOI, 22
Key Terms 25
Self Assessment 26
Interactive Learning 27
Questions 27
Exercises 27
Problems 30
Cases 34
TURING AND SERVICE COMPANIES 37
Direct Material, 39 Direct Labor, 40
Manufacturing Overhead, 40
Nonmanufacturing Costs 40
xxii CONTENTS
Selling Costs, 40 General and Administrative
Costs, 41
Product and Period Costs 41
Product Costs, 41 Period Costs, 41
PRODUCT COST INFORMATION IN FINANCIAL
REPORTING AND DECISION MAKING 42
BALANCE SHEET PRESENTATION
OF PRODUCT COSTS 43
FLOW OF PRODUCT COSTS IN ACCOUNTS 44
INCOME STATEMENT PRESENTATION
OF PRODUCT COSTS 45
Cost of Goods Manufactured, 45 Cost of Goods
Sold, 46
TYPES OF COSTING SYSTEMS 47
OVERVIEW OF JOB COSTS AND FINANCIAL
STATEMENT ACCOUNTS 48
JOB ORDER COSTING SYSTEM 49
Direct Material Cost 50
Direct Labor Cost 52
Manufacturing Overhead 53
Assigning Costs to Jobs: A Summary 54
EASTLIKE REVISITED: USING JOB COST
INFORMATION 55
RELATION BETWEEN THE COSTS OF JOBS AND
THE FLOW OF COSTS IN WORK IN PROCESS,
FINISHED GOODS, AND COST OF GOODS SOLD 57
ALLOCATING OVERHEAD TO JOBS:
A CLOSER LOOK 57
Chapter 3
PROCESS COSTING
DIFFERENCE BETWEEN JOB ORDER
AND PROCESS COSTING SYSTEMS 88
PRODUCT AND COST FLOWS 90
Product Flows Through Departments 90
Cost Flows Through Accounts 91
Direct Material, 92 Direct Labor, 92
Manufacturing Overhead, 92 Transferred in
Cost, 92
CALCULATING UNIT COST 93
Equivalent Units 93
Cost Per Equivalent Unit 94
CALCULATING AND APPLYING COST PER
EQUIVALENT UNIT: MLXING DEPARTMENT
EXAMPLE 94
Cost Transferred Out 95
Overhead Allocation Rates 58
The Overhead Allocation Base 58
Activity Based Costing (ABC) and Multiple
Overhead Rates 59
Predetermined Overhead Rates 59
Eliminating Overapplied or Underapplied
Overhead 60
JOB ORDER COSTING FOR SERVICE COMPANIES 61
MODERN MANUFACTURING PRACTICES AND
PRODUCT COSTING SYSTEMS 62
Just In Time (JIT) Production 63
Computer Controlled Manufacturing 63
Total Quality Management 65
MAKING BUSINESS DECISIONS 67
SUMMARY OF LEARNING OBJECTIVES 67
• LINKS TO PRACTICE:
Product and Period Costs at Dell, 43
Examples of Companies Using Job Order and Process
Costing Systems, 47
Just in Time or Just in Case ?, 64
Computerized Manufacturing of Aircraft Parts, 65
Can There Be Too Much Emphasis on Quality?, 66
Review Problem 68
Key Terms 70
Self Assessment 71
Interactive Learning 72
Questions 72
Exercises 72
Problems 76
Cases 84
87
Ending Work in Process 96
PRODUCTION COST REPORT 96
Reconciliation of Units 96
Reconciliation of Costs 98
BASIC STEPS IN PROCESS COSTING: A SUMMARY 98
KENT CHEMICAL REVISITED:
ANSWERING STACY'S QUESTION 99
DEALING WITH TRANSFERRED IN COST:
PACKAGING DEPARTMENT EXAMPLE 99
PROCESS COSTING AND INCREMENTAL
ANALYSIS 101
MAKING BUSINESS DECISIONS 103
SUMMARY OF LEARNING OBJECTIVES 103
• LINKS TO PRACTICE:
What Type of Costing System Is Used by Kimberly Clark
Corporation?, 88
Virtual Plant Tours for Companies that Use Process
Costing, 91
Review Problem 104
Chapter 4
COST VOLUME PROFIT ANALYSIS
COMMON COST BEHAVIOR PATTERNS 126
Variable Costs 126
Fixed Costs 126
Discretionary Versus Committed Fixed Costs, 128
Mixed Costs 128
Step Costs 129
COST ESTIMATION METHODS 130
Account Analysis 130
Scattergraphs 132
High Low Method 134
Regression Analysis 136
The Relevant Range 137
COST VOLUME PROFIT ANALYSIS 138
The Profit Equation 138
Break Even Point 138
Margin of Safety, 139
Contribution Margin 140
Contribution Margin Ratio 140
"What tf" Analysis 141
Change in Fixed and Variable Costs, 141 Change in
Setting Price, 141
Taxes in CVP Analysis 142
MULTIPRODUCT ANALYSIS 142
Contribution Margin Approach 142
Contribution Margin Ratio Approach 143
ASSUMPTIONS IN CVP ANALYSIS 146
CODECONNECT EXAMPLE REVISITED:
ANSWERING MARY'S QUESTION 147
Chapter 5
VARIABLE COSTING
FULL (ABSORPTION) AND VARIABLE COSTING 180
Variable Costing Income Statement 180
EFFECTS OF PRODUCTION ON INCOME
FOR FULL VERSUS VARIABLE COSTING:
THE Clausentube EXAMPLE 182
Quantity Produced Equals Quantity Sold 183
Quantity Produced is Greater Than Quantity Sold 185
CONTENTS xxiii
Key Terms 106
Self Assessment 106
Interactive Learning 107
Questions 107
Exercises 107
Problems 111
Cases 119
125
OPERATING LEVERAGE 148
CONSTRAINTS 149
MAKING BUSINESS DECISIONS 150
SUMMARY OF LEARNING OBJECTIVES 150
• LINKS TO PRACTICE:
Because of Fixed Costs, Utility Wants Rate Increase
to Compensate for a Warmer than Average Winter, 128
How to Reach Break Even, 139
Deciding to Use the Contribution Margin per Unit
or the Contribution Margin Ratio, 145
Which Firm Has the Higher Contribution Margin
Ratio?, 146
Governmental Organizations Outsource HR
to Turn Fixed Costs into Variable Costs, 149
Review Problem 155
Key Terms 156
Self Assessment 157
Interactive Learning 158
Questions 158
Exercises 158
Problems 164
Cases 174
APPENDIX
USING REGRESSION IN EXCEL® TO
ESTIMATE FDCED AND VARIABLE COSTS 151
Setting Up the Spreadsheet 151
Interpreting the Output of the Regression Program 152
The Plot, 152 R Square, 152 Intercept and Slope
of the Regression Line, 154 P Value, 154
179
Quantity Produced is Less Than Quantity Sold 187
Explaining What Happened at ClausenTube 188
Impact of JIT on the Income Effects
of Full versus Variable Costing 188
BENEFITS OF VARIABLE COSTING
FOR INTERNAL REPORTING 189
Variable Costing Facilitates C V P Analysis 189
xxlv CONTENTS
Variable Costing Limits Management of Earnings
with Production Volume 189
MAKING BUSINESS DECISIONS 189
SUMMARY OF LEARNING OBJECTIVES 190
• LINKS TO PRACTICE:
GM's Profit per SUV Hurt by Reduced Production, 188
Chapter 6
COST ALLOCATION AND ACnVTTY B;
PURPOSES OF COST ALLOCATION 210
To Provide Information for Decision Making 210
To Reduce Frivolous Use of Common Resources 211
To Encourage Evaluation of Services 212
To Provide "Full Cost" Information 213
PROCESS OF COST ALLOCATION 214
Determining the Cost Objective 214
Forming Cost Pools 214
Selecting an Allocation Base 215
ALLOCATING SERVICE DEPARTMENT COSTS 216
Direct Method of Allocating Service
Department Costs 217
Allocating Budgeted and Actual Service
Department Costs 218
PROBLEMS WITH COST ALLOCATION 218
Responsibility Accounting and Controllable Costs 219
Arbitrary Allocations 219
Unitized Fixed Costs and Lump Sum Allocations 220
The Problem of Too Few Cost Pools 222
Using Only Volume Related Allocation Bases 223
ACTIVITY BASED COSTING 223
The Problem of Using Only Measures of Production
Volume to Allocate Overhead 223
The ABC Approach 224
Relating Cost Pools to Products Using Cost
Drivers 226
The ABC Approach at Gardenrite Manufacturing:
A Comprehensive Example 226
Gardenrite's Costs under the Traditional
Approach, 226 Gardenrite's Costs under
the ABC Approach, 227
Chapter 7
THE USE OF COST INFORMATION IN N
INCREMENTAL ANALYSIS 262
When Your Boss Asks "What Does This Product
(Service) Cost?" You Should Say "Why Do You Want To
Know?" 264
Review Problem 190
Key Terms 192
Self Assessment 192
Interactive Learning 193
Questions 193
Exercises 194
Problems 196
Cases 205
\SED COSTING 209
Pros and Cons of ABC 229
Benefits, 229 Limitations, 231
ACTIVITY BASED MANAGEMENT (ABM) 231
REMEMBER—YOU GET WHAT YOU MEASURE! 232
MAKING BUSINESS DECISIONS 233
SUMMARY OF LEARNING OBJECTIVES 233
APPENDIX ACTIVITY BASED MANAGEMENT 234
Step 1: Determine Major Activities 234
Step 2: Identify Resources Used by Each Activity 235
Return Merchandise to Stock if Not Acceptable to
Customer or Customer Not Home to Receive
Delivery, 235 Wash Delivery Trucks, 235
Step 3: Evaluate the Performance
of the Activities 236
Step 4: Identify Ways to Improve the Efficiency
and/or Effectiveness of the Activities 236
CONCLUSION 236
• LINKS TO PRACTICE:
Lack of Oversight for Cost Pius Contracts, 213
The Activity Based Costing Portal, 224
Avoiding Disastrous Decision by Using ABC, 230
Review Problem 237
Key Terms 239
Self Assessment 239
Interactive Learning 240
Questions 240
Exercises 240
Problems 245
Cases 256
1ANAGEMENT DECISION MAKING 261
ANALYSIS OF DECISIONS FACED BY MANAGERS 265
Additional Processing Decision 265
Make or Buy Decision: the General Refrigeration
Example 267
Dropping A Product Line 270
Beware of the Cost Allocation Death Spiral! 272
Summary of Incremental, Avoidable, Sunk,
and Opportunity Costs 272
DECISIONS INVOLVING JOINT COSTS 273
Allocation of Joint Costs 274
Additional Processing Decisions and Joint Costs 276
QUALITATIVE CONSIDERATIONS
IN DECISION ANALYSIS 277
MAKING BUSINESS DECISIONS 278
SUMMARY OF LEARNING OBJECTIVES 279
APPENDK THE THEORY
OF CONSTRAINTS (TOC) 279
THE FIVE STEP PROCESS OF TOC 279
Step 1: Identify the Binding Constraint 280
Step 2: Optimize Use of the Constraint 280
Step 3: Subordinate Everything Else
to the Constraint 281
Chapter 8
PRICING DECISIONS, ANALYZING CUS
AND ACTIVITY BASED PRICING
THE PROFIT MAXIMIZING PRICE 302
PRICING SPECIAL ORDERS 303
COST PLUS PRICING 304
TARGET COSTING 306
ANALYZING CUSTOMER PROFITABILITY: REVISITING
THE WHOLESALE OFFICE SUPPLY CASE 308
ACTIVITY BASED PRICING 311
• LINKS TO PRACTICE:
Insult's Most Radical Innovation Wasn't Technology
It Was Pricing!, 306
Target Costing Seminars Help Companies Join
the Target Costing Bandwagon, 307
Customers Requiring "Display Ready" Pallets
Can Hurt Profitability, 311
Chapter 9
CAPITAL BUDGETING AND OTHER LO
CAPITAL BUDGETING DECISIONS 330
EVALUATING INVESTMENT OPPORTUNITIES:
TIME VALUE OF MONEY APPROACHES 331
Basic Time Value of Money Calculations 332
The Net Present Value Method 333
CONTENTS xxv
Step 4: Break the Constraint 281
Step 5: Identify a New Binding Constraint 281
IMPLICATIONS OF TOC FOR INSPECTIONS,
BATCH SIZES, AND ACROSS THE BOARD CUTS 281
Inspections, 282 Batch Sizes, 282 Across the
Board Cuts, 282
YOU GET WHAT YOU MEASURE AND TOC 282
• LINKS TO PRACTICE:
Alaska Airlines Outsources Baggage Handling, 269
The Sunk Cost Effect, 275
Qualitative Considerations in Outsourcing to China, 277
Review Problem 282
Key Terms 283
Self Assessment 283
Interactive Learning 284
Questions 285
Exercises 285
Problems 290
Cases 298
TOMER PROFITABILITY,
301
MAKING BUSINESS DECISIONS 312
SUMMARY OF LEARNING OBJECTIVES 312
Review Problem 313
Key Terms 315
Self Assessment 315
Interactive Learning 316
Questions 316
Exercises 317
Problems 321
Cases 326
NG RUN DECISIONS 329
Steps in the NPV Method, 334 An Example
of the NVP Approach, 334
The Internal Rate of Return Method 336
The Internal Rate of Return Method With Unequal
Cash Flows 337
xxvi CONTENTS
Summary of Net Present Value and Internal Rate
of Return Methods 339
CONSIDERING "SOFT" BENEFITS
IN INVESTMENT DECISIONS 339
Calculating the Value of Soft Benefits Required
to Make an Investment Acceptable 340
ESTIMATING THE REQUIRED RATE OF RETURN 341
ADDITIONAL CASH FLOW CONSIDERATIONS 342
Cash Flows, Taxes, and the Depreciation
Tax Shield 342
Adjusting Cash Flows for Inflation 345
OTHER LONG RUN DECISIONS 345
SIMPLIFIED APPROACHES TO CAPITAL
BUDGETING 347
Payback Period Method 347
Accounting Rate of Return 348
CONFLICT BETWEEN PERFORMANCE EVALUATION
AND CAPITAL BUDGETING 350
WILSON AIR EXAMPLE REVISITED 351
Chapter 1O
BUDGETARY PLANNING AND CONTRC
USE OF BUDGETS IN PLANNING AND CONTROL 374
Planning 374
Control 374
DEVELOPING THE BUDGET 376
Budget Time Period 377
Zero Base Budgeting 377
THE MASTER BUDGET 378
Sales Budget 378
Production Budget 379
Direct Material Purchase Budget 381
Direct Labor Budget 381
Manufacturing Overhead Budget 382
Selling and Administrative Expense Budget 382
Budgeted Income Statement 384
Capital Acquisitions Budget 384
Cash Receipts and Disbursement Budget 385
Budgeted Balance Sheet 387
USE OF COMPUTERS IN THE BUDGET PLANNING
PROCESS 388
BUDGETARY CONTROL 388
Budgets as a Standard for Evaluation 389
Static and Flexible Budgets 389
INVESTIGATING BUDGET VARIANCES 391
MAKING BUSINESS DECISIONS 352
SUMMARY OF LEARNING OBJECTIVES 353
APPENDIX A: USING EXCEL®
TO CALCULATE NPV AND IRR 354
APPENDIX B: PRESENT VALUE TABLES 357
• LINK TO PRACTICE:
Starbucks Plans Major Investment in Asia Pacific
Region, 331
Investment in Energy Efficient Equipment
Can Yield High Returns, 337
Use of NPV and IRR by CFOs, 339
Cost of Capital for Various Business Sectors, 341
Depreciation Tax Shield at United Airlines, 344
Review Problem 358
Key Terms 359
Self Assessment 359
Interactive Learning 360
Questions 361
Exercises 361
Problems 363
Cases 370
)L 373
CONFLICT IN PLANNING AND CONTROL
USES OF BUDGETS 392
Why Budget Based Compensation Can Lead to Budget
Padding and Income Shifting 392
EVALUATION, MEASUREMENT,
AND MANAGEMENT BEHAVIOR 394
THE PRESTON JOYSTICK CASE REVISITED 394
MAKING BUSINESS DECISIONS 394
SUMMARY OF LEARNING OBJECTIVES 395
• LINKS TO PRACTICE:
Problems with Five Year Budgets, 376
Budgets Getting Better?, 377
Budget Process in Great Britain, 379
Spreadsheets for Budgeting, 388
Review Problem 395
Key Terms 397
Self Assessment 398
Interactive Learning 398
Questions 399
Exercises 399
Problems 403
Cases 415
Chapter 11
STANDARD COSTS AND VARIANCE A
STANDARD COSTS 420
Standard Costs and Budgets 420
Development of Standard Costs 421
Ideal Versus Attainable Standards 422
A GENERAL APPROACH TO VARIANCE
ANALYSIS 422
MATERIAL VARIANCES 423
Material Price Variance 424
Material Quantity Variance 424
DIRECT LABOR VAIANCES 425
Labor Rate Variance 426
Labor Efficiency Variance 426
OVERHEAD VARIANCES 426
Controllable Overhead Variance 427
Overhead Volume Variance 427
Computing the Overhead Volume Variance, 428
Interpreting the Overhead Volume Variance, 428
CALCULATING THE FINANCIAL
IMPACT OF OPERATING AT MORE
OR LESS THAN PLANNED CAPACITY 429
COMPREHENSIVE EXAMPLE:
DARRINGTON ICE CREAM 430
Material Variances 432
Labor Variances 432
Overhead Variances 432
INVESTIGATION OF STANDARD
COST VARIANCES 433
Management by Exception 434
Chapter 12
DECENTRALIZATION AND PERFORM/
WHY FIRMS DECENTRALIZE 458
Advantages of Decentralization 458
Disadvantages of Decentralization 459
WHY COMPANIES EVALUATE THE PERFORMANCE
OF SUBUNITS AND SUBUNIT MANAGERS 460
Responsibility Accounting and Performance
Evaluation 461
COST CENTERS, PROFIT CENTERS,
AND INVESTMENT CENTERS 462
Cost Centers 462
Profit Centers 463
Investment Centers 463
EVALUATING INVESTMENT CENTERS WITH ROI 464
Measuring Income and Invested Capital When
Calculating ROI 466
CONTENTS xxvii
NALYSIS 419
"Favorable" Variances May be Unfavorable 434
Can Process Improvements Lead to "Unfavorable"
Variances? 434
Beware—Evaluation in Terms of Variances Can Lead
to Excess Production 435
RESPONSIBILITY ACCOUNTING
AND VARIANCES 436
MAKING BUSINESS DECISIONS 436
SUMMARY OF LEARNING OBJECTIVES 436
APPENDIX: RECORDING STANDARD
COSTS IN ACCOUNTS 437
Recording Material Costs 437
Recording Labor Cost 438
Recording Manufacturing Overhead 438
Recording Finished Goods 439
Recording Cost of Goods Sold 439
Closing Variance Accounts 440
• LINKS TO PRACTICE:
Starbucks Uses Standard Costs, 421
You Get What You Measure!, 425
Review Problem 440
Key Terms 442
Self Assessment 442
Interactive Learning 443
Questions 443
Exercises 444
Problems 448
Cases 454
LNCE EVALUATION 457
Problems With Using ROI 467
Problems of Overinvestment and Underinvestment:
You Get What You Measure! 468
Evaluation in Terms of Profit Can Lead to
Overinvestment, 469 Evaluation in Terms of ROI
Can Lead to Underinvestment, 469
EVALUATION USING ECONOMIC VALUE ADDED
(EVA) 470
Residual Income (RI) 470
Revisiting the Situation at Action Industries, 471
Solving the Overinvestment and Underinvestment
Problems 471
Economic Value Added (EVA) 471
EVA Example 472
USING A BALANCED SCORECARD
TO EVALUATE PERFORMANCE 476
xxviii CONTENTS
Tying the Balanced Scorecard Measures to the Strategy
for Success 476
Scenario 1. Learning and Growth Dimension, 477
Scenario 2. Internal Process Dimension, 477
Scenario 3. Customer Dimension, 477
Scenario 4. Financial Dimension, 478
How Balance is Achieved in a Balanced Scorecard 478
DEVELOPING A STRATEGY MAP
FOR A BALANCED SCORECARD 479
KEYS TO A SUCCESSFUL BALANCED SCORECARD:
TARGETS, INITIATIVES, RESPONSBILITY, FUNDING,
TOP MANAGEMENT SUPPORT 480
MAKING BUSINESS DECISIONS 481
SUMMARY OF LEARNING OBJECTIVES 482
APPENDIX TRANSFER PRICING 483
Market Price as the Transfer Price 483
Market Price and Opportunity Cost 484
Variable Cost as the Transfer Price 486
Full Cost Plus Profit as the Transfer Price 486
Negotiated Transfer Prices 487
Chapter 13
ANALYZING FINANCIAL STATEMENTS
WHY MANAGERS ANALYZE FINANCIAL
STATEMENTS 508
Control of Operations 508
Assessment of Vendors, Customers, and Other
Business Partners 509
Assessment of Appearance to Investors and
Creditors 509
REVIEW OF THE THREE BASIC FINANCIAL
STATEMENTS 509
The Balance Sheet 510
Current and Noncurrent Assets and Liabilities, 511
The Income Statement 511
The Statement of Cash Flows 512
Operating Activities, 512 Investing Activities, 512
Financing Activities, 512
HORIZONTAL AND VERTICAL ANALYSIS 513
Analysis of the Balance Sheet 513
Analyzing the Income Statement 515
EARNINGS MANAGEMENT AND THE NEED
TO COMPARE EARNINGS AND CASH FLOW
INFORMATION 516
OTHER SOURCES OF INFORMATION
ON FINANCIAL PERFORMANCE 517
Management Discussion and Analysis 517
Credit Reports 517
News Articles 517
Transfer Pricing and Income Taxes in an International
Context 488
• LINKS TO PRACTICE:
Subunits at Nordstrom, 464
The Focus on ROI and Shareholder Value is NOT
the Same in France, Germany, and Japan as It
is in the United States and Even Great Britain, 466
Companies that Use EVA, 472
Focus on EVA Affects Key Decisions Across the
Organization, 475
Bringham and Women's Hospital Receives Award
for Its Balanced Scorecard, 481
Undervalued Intellectual Property Transferred Offshore
to Cut U.S. Taxes, 488
Review Problem 488
Key Terms 491
Self Assessment 492
Interactive Learning 492
Questions 493
Exercises 493
Problems 496
Cases 503
: A MANAGERIAL PERSPECTIVE 507
RATIO ANALSYSIS 518
Profitability Ratios 518
Financial Leverage, 519 Summary of
Profitability Ratios, 520
Turnover Ratios 520
Summary of Turnover Ratios, 521
Debt Related Ratios 522
Summary of Debt Related Ratios, 523
A MANAGERIAL PERSPECTIVE ON THE ANALYSIS
OF HGW'S FINANCIAL STATEMENTS 523
Control of Operations 523
Stability of Vendors, Customers, and Other Business
Partners 523
Returning to the Situation Facing Valley
Home Loan, 524
Appearance to Investors and Creditors 524
SUMMARY OF ANALYSES 524
MAKING BUSINESS DECISIONS 525
SUMMARY OF LEARNING OBJECTIVES 526
• LINKS TO PRACTICE:
Watching Cash Flow Versus Earnings, 516
Comparative Ratio Data, 524
Review Problem 526
Key Terms 528
Self Assessment 528
Interactive Learning 529
Questions 530
Exercises 530
Chapter 14
STATEMENT OF CASH FLOWS
NEED FOR A STATEMENT OF CASH FLOWS 551
TYPES OF BUSINESS ACTIVITIES AND THE
CLASSIFICATION OF CASH FLOWS 552
Operating Activities 552
Investing Activities 554
Financing Activities 555
THE STATEMENT OF CASH FLOWS PREPARED
USING THE DIRECT METHOD 555
PREPARING THE STATEMENT OF CASH FLOWS
USING THE INDIRECT METHOD 559
Statement of Cash Flows for Ravira Restaurant
Supply—Indirect Method 560
INTERPRETING INFORMATION IN THE STATEMENT
OF CASH FLOWS—THE SITUATION AT RAVIRA
RESTAURANT SUPPLY 563
MAKING BUSINESS DECISIONS 563
SUMMARY OF LEARNING OBJECTIVES 564
LIST OF CASES xxix
Problems 535
Cases 546
551
• LINKS TO PRACTICE:
Spotting a Cash Cow, 562
Review Problem 564
Key Terms 566
Self Assessment 566
Questions 567
Exercises 568
Problems 573
Cases 582
Glossary 583
Photo Credits 589
Index 591
LIST OF CASES
Each chapter of Managerial Accounting includes one of more cases that:
• Promote critical thinking and decision making skills.
• Provide an opportunity for group work and/or written communication work.
• Integrate information from other business disciplines.
Chapter 1
1 1: LOCAL 635
A union is disputing "cost of meal" charges to hotel employees.
1 2: BOSWELL PLUMBING PRODUCTS A senior manager wants to know a
product's cost. But the "cost" information needed depends on the decision the
senior manager is facing.
xxx LIST OF CASES
Chapter 2
2 1: Ethics Case: BRIXTON SURGICAL DEVICES
To meet an aggressive earnings target, two senior executives are planning to in¬
crease production to "bury" fixed overhead costs in inventory.
2 2: YSL MARKETING RESEARCH
A marketing research firm is considering various costs when bidding on a job.
2 3: DUPAGE POWDER COATING
A company's product costs are being distorted by its approach to overhead allocation.
Chapter 3
3 1: Tech Tonic Sports Drink
A producer of a sports drink is considering alternative treatments for the cost of
lost units.
3 2: JENSEN PVC, INC.
A company is considering lowering prices to increase sales and reduce unit costs
by making better use of excess capacity.
Chapter 4
4 1: ROTHMUELLER MUSEUM
A curator at a museum is trying to estimate the financial impact of a planned
exhibit.
4 2: MAYFIELD SOFTWARE, CUSTOMER TRAINING
The customer training facility of a software company is showing a loss. The man¬
ager needs to determine the number of classes that must be offered to break even.
4 3: KROG METALFAB, INC.
A company is estimating the lost profit related to fire damage so it can submit an
insurance claim.
Chapter 5
5 1: Microimage Technology, INC.
A start up company has a negative gross margin and it appears that "the more it
sells, the more it loses." Use of variable costing reveals that this is not the case.
5 2: RainRuler Stains
A variable costing income statement is used to show the financial impact of sales
related to a new customer category.
Chapter 6
6 1: EASTSIDE MEDICAL TESTING
This case presents a service company example of ABC.
6 2: QuantumTM
This case shows how ABC affects product costs and considers the use of ABC in¬
formation in decision making.
Chapter 7
7 1: PRIMUS CONSULTING GROUP
A consulting firm is considering a client offer of a fee that is less than standard rates.
7 2: FIVE STAR TOOLS
A tool manufacturer is faced with a production constraint, and needs to consider
the financial impact of a plan to deal with the situation.
LIST OF CASES
Chapter 8
8 1: PRESTON CONCRETE
The company is considering moving away from its cost plus pricing approach
when an increase in interest rates reduces housing starts and the demand for
concrete.
8 2: GALLOWAY UNIVERSITY MEDICAL CENTER PHARMACY
A university hospital pharmacy is considering the profit implications of alterna¬
tive approaches to encouraging prescription renewals from "out of area" patients.
Chapter 9
9 1: Ethics Case: JUNIPER PACKAGING SOLUTIONS, INC.
A plant manager is considering a plan to circumvent a freeze on capital expendi¬
tures.
9 2: SERGO GAMES
A game company is considering outsourcing manufacturing of CDs.
Chapter 10
10 1: Ethics Case: COLUMBUS PARK—WASTE TREATMENT FACILITY
The manager of a waste treatment facility is planning to pad costs in her budget
because the city controller is likely to cut whatever budget is submitted.
10 2: ABRUZZI OLIVE OIL COMPANY
A small producer of olive oil is preparing production budgets to consider the
impact of various sales levels. (Note that this case is best "solved" using a spread¬
sheet.)
Chapter 11
11 1: JACKSON SOUND
Work in process inventory is building up at Jackson Sound even though the com¬
pany has a JIT system.
11 2: CHAMPION INDUSTRIES
A purchasing manager is considering a material that has a price higher than stan¬
dard, but also a number of desirable properties.
Chapter 12
12 1: HOME VALUE STORES
A company that operates membership warehouse stores is evaluating using EVA.
12 2: WinTech Motors
Owners of a sports and luxury auto dealership are faced with negative EVA and
must cut their investment in inventory.
Chapter 13
13 1: JORDAN WILLIAMS, INCORPORATED
A publisher of college textbooks is evaluating the financial condition of a potential
business partner.
Chapter 14
14 1: WELLCOMP COMPUTERS
A computer company is considering the impact of a price reduction on cash flow. |
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| dewey-full | 658.15/11 |
| dewey-hundreds | 600 - Technology (Applied sciences) |
| dewey-ones | 658 - General management |
| dewey-raw | 658.15/11 |
| dewey-search | 658.15/11 |
| dewey-sort | 3658.15 211 |
| dewey-tens | 650 - Management and auxiliary services |
| discipline | Wirtschaftswissenschaften |
| discipline_str_mv | Wirtschaftswissenschaften |
| edition | 3. ed. |
| format | Book |
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| illustrated | Illustrated |
| index_date | 2024-07-02T18:04:01Z |
| indexdate | 2024-07-09T20:59:27Z |
| institution | BVB |
| isbn | 9780470038154 0470038152 |
| language | English |
| lccn | 2006032782 |
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| spelling | Jiambalvo, James Verfasser aut Managerial accounting James Jiambalvo 3. ed. Hoboken, NJ Wiley 2007 XXX, 594 S. Ill. txt rdacontent n rdamedia nc rdacarrier Includes index. Managerial accounting Kostenrechnung (DE-588)4032592-1 gnd rswk-swf Kostenrechnung (DE-588)4032592-1 s DE-604 http://www.loc.gov/catdir/toc/ecip072/2006032782.html Table of contents only HBZ Datenaustausch application/pdf http://bvbr.bib-bvb.de:8991/F?func=service&doc_library=BVB01&local_base=BVB01&doc_number=015730035&sequence=000002&line_number=0001&func_code=DB_RECORDS&service_type=MEDIA Inhaltsverzeichnis |
| spellingShingle | Jiambalvo, James Managerial accounting Managerial accounting Kostenrechnung (DE-588)4032592-1 gnd |
| subject_GND | (DE-588)4032592-1 |
| title | Managerial accounting |
| title_auth | Managerial accounting |
| title_exact_search | Managerial accounting |
| title_exact_search_txtP | Managerial accounting |
| title_full | Managerial accounting James Jiambalvo |
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| title_short | Managerial accounting |
| title_sort | managerial accounting |
| topic | Managerial accounting Kostenrechnung (DE-588)4032592-1 gnd |
| topic_facet | Managerial accounting Kostenrechnung |
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