,Brief Contents
1 The Manager and Management Accounting 19
2 An Introduction to Cost Terms and Purposes 46
3 Cost–Volume–Profit Analysis 83
4 Job Costing 122
5 Activity-Based Costing and Activity-Based Management 167
6 Master Budget and Responsibility Accounting 212
7 Flexible Budgets, Direct-Cost Variances, and Management Control 263
8 Flexible Budgets, Overhead Cost Variances, and Management
Control 300
9 Inventory Costing and Capacity Analysis 340
10 Determining How Costs Behave 384
11 Data Analytic Thinking and Prediction 437
12 Decision Making and Relevant Information 484
13 Strategy, Balanced Scorecard, and Strategic Profitability Analysis 535
14 Pricing Decisions and Cost Management 580
15 Cost Allocation, Customer-Profitability Analysis, and Sales-Variance
Analysis 614
16 Allocation of Support-Department Costs, Common Costs, and
Revenues 657
17 Cost Allocation: Joint Products and Byproducts 697
18 Process Costing 728
19 Spoilage, Rework, and Scrap 769
20 Balanced Scorecard: Quality and Time 797
21 Inventory Management, Just-in-Time, and Simplified Costing
Methods 827
22 Capital Budgeting and Cost Analysis 867
23 Management Control Systems, Transfer Pricing, and Multinational
Considerations 905
24 Performance Measurement, Compensation, and Multinational
Considerations 941
,Contents
1 The Manager and Management Cost Drivers 53
Relevant Range 53
Accounting 19 Relationships Between Types of Costs 54
For Coca-Cola, Smaller Sizes Mean Bigger Profits 19 Total Costs and Unit Costs 55
Financial Accounting, Management Accounting, and Unit Costs 55
Cost Accounting 20 Use Unit Costs Cautiously 55
Strategic Decisions and the Management Business Sectors, Types of Inventory, Inventoriable
Accountant 22 Costs, and Period Costs 56
Value-Chain and Supply-Chain Analysis and Key Manufacturing-, Merchandising-, and
Success Factors 22 Service-Sector Companies 56
Value-Chain Analysis 23 Types of Inventory 57
Supply-Chain Analysis 24 Commonly Used Classifications of Manufacturing
Key Success Factors 25 Costs 57
Concepts in Action: Cost Leadership at Costco: Inventoriable Costs 57
Rock-Bottom Prices and Sky-High Profits 26 Period Costs 58
Decision Making, Planning, and Control: The Illustrating the Flow of Inventoriable Costs and
Five-Step Decision-Making Process 27 Period Costs 59
Key Management Accounting Guidelines 30 Manufacturing-Sector Example 59
Cost–Benefit Approach 30 Recap of Inventoriable Costs and Period Costs 63
Behavioral and Technical Considerations 31 Prime Costs and Conversion Costs 64
Different Costs for Different Purposes 31 Measuring Costs Requires Judgment 64
Organization Structure and the Management Labor Costs 64
Accountant 31 Benefits of Defining Accounting Terms 65
Line and Staff Relationships 31 Different Meanings of Product Costs 65
The Chief Financial Officer and the A Framework for Cost Accounting and Cost
Controller 32 Management 67
Management Accounting Beyond the Calculating the Cost of Products, Services, and
Numbers 33 Other Cost Objects 67
Professional Ethics 34 Obtaining Information for Planning and Control
Institutional Support 34 and Performance Evaluation 67
Typical Ethical Challenges 35 Analyzing the Relevant Information for Making
Decisions 67
Problem for Self-Study 37 | Decision Points 37 |
Terms to Learn 38 | Assignment Material 38 | Problem for Self-Study 68 | Decision Points 70 |
Questions 38 | Multiple-Choice Questions 39 | Terms to Learn 71 | Assignment Material 71 |
Exercises 39 | Problems 41 Questions 71 | Multiple-Choice Questions 72 |
Exercises 73 | Problems 78
2 An Introduction to Cost Terms 3 Cost–Volume–Profit Analysis 83
and Purposes 46 How Coachella Tunes Up the Sweet Sound of Profits 83
High Fixed Costs Bankrupt Aéropostale 46 Essentials of CVP Analysis 84
Costs and Cost Terminology 47 Contribution Margin 85
Direct Costs and Indirect Costs 47 Expressing CVP Relationships 87
Cost Allocation Challenges 48 Cost–Volume–Profit Assumptions 89
Factors Affecting Direct/Indirect Cost Breakeven Point and Target Operating Income 90
Classifications 49 Breakeven Point 90
Cost-Behavior Patterns: Variable Costs and Fixed Target Operating Income 91
Costs 50 Income Taxes and Target Net Income 93
Concepts in Action: Lyft Helps Hospitals Reduce Their Using CVP Analysis for Decision Making 94
Fixed Transportation Costs 52 Decision to Advertise 94
4
, CONTENTS 5
Decision to Reduce the Selling Price 95 Choosing Among Approaches 147
Determining Target Prices 95 Variations of Normal Costing: A Service-Sector
Concepts in Action: Can Cost–Volume–Profit Analysis Example 148
Help Whole Foods Escape the “Whole Paycheck” Problem for Self-Study 150 | Decision Points 152 |
Trap? 96
Terms to Learn 153 | Assignment Material 153 |
Sensitivity Analysis and Margin of Safety 96
Questions 153 | Multiple-Choice Questions 154 |
Cost Planning and CVP 98
Alternative Fixed-Cost/Variable-Cost Structures 98 Exercises 155 | Problems 161
Operating Leverage 99
Effects of Sales Mix on Income 101 5 Activity-Based Costing and
CVP Analysis in Service and Not-for-Profit Activity-Based Management 167
Organizations 103 Activity-Based Costing and the True Cost of Data
Contribution Margin Versus Gross Margin 104 Breaches 167
Problem for Self-Study 105 | Decision Points 106
Broad Averaging and Its Consequences 168
Undercosting and Overcosting 168
APPENDIX: Decision Models and Uncertainty 107 Product-Cost Cross-Subsidization 169
Simple Costing System at Plastim
Terms to Learn 110 | Assignment Material 110 |
Corporation 169
Questions 110 | Multiple-Choice Questions 111 | Design, Manufacturing, and Distribution
Exercises 111 | Problems 116 Processes 169
Simple Costing System Using a Single
4 Job Costing 122 Indirect-Cost Pool 170
Job Costing and the New Golden State Warriors Applying the Five-Step Decision-Making Process
Arena 122 at Plastim 172
Building-Block Concepts of Costing Systems 123 Refining a Costing System 173
Job-Costing and Process-Costing Systems 124 Developments That Have Increased the Demand
Job Costing: Evaluation and Implementation 125 for Refining Costing Systems 174
Time Period Used to Compute Indirect-Cost Guidelines for Refining a Costing System 174
Rates 126 Activity-Based Costing Systems 175
Normal Costing 128 Plastim’s ABC System 175
General Approach to Job Costing Using Normal Cost Hierarchies 177
Costing 128 Implementing Activity-Based Costing 179
Concepts in Action: Better Job Costing Through Big Implementing ABC at Plastim 179
Data and Data Analytics 131 Comparing Alternative Costing Systems 184
The Role of Technology 133 Considerations in Implementing Activity-Based
Actual Costing 133 Costing Systems 185
A Normal Job-Costing System in Benefits and Costs of Activity-Based Costing
Manufacturing 135 Systems 185
General Ledger 136 ABC in Service and Merchandising
Explanations of Transactions 136 Companies 186
Subsidiary Ledgers 139 Behavioral Issues in Implementing Activity-Based
Materials Records by Type of Material 139 Costing Systems 186
Labor Records by Employee 140 Concepts in Action: Mayo Clinic Uses Time-Driven
Manufacturing Department Overhead Records by Activity-Based Costing to Reduce Costs and
Month 141 Improve Care 187
Work-in-Process Inventory Records by Jobs 141 Activity-Based Management 188
Finished Goods Inventory Records by Jobs 142 Pricing and Product-Mix Decisions 188
Other Subsidiary Records 142 Cost Reduction and Process Improvement
Nonmanufacturing Costs and Job Costing 142 Decisions 189
Budgeted Indirect Costs and End-of-Accounting-Year Design Decisions 190
Adjustments 143 Planning and Managing Activities 190
Underallocated and Overallocated Indirect
Problem for Self-Study 190 | Decision Points 193 |
Costs 143
Terms to Learn 194 | Assignment Material 194 |
Adjusted Allocation-Rate Approach 144
Proration Approach 144 Questions 194 | Multiple-Choice Questions 195 |
Write-Off to Cost of Goods Sold Approach 146 Exercises 195 | Problems 202
1 The Manager and Management Accounting 19
2 An Introduction to Cost Terms and Purposes 46
3 Cost–Volume–Profit Analysis 83
4 Job Costing 122
5 Activity-Based Costing and Activity-Based Management 167
6 Master Budget and Responsibility Accounting 212
7 Flexible Budgets, Direct-Cost Variances, and Management Control 263
8 Flexible Budgets, Overhead Cost Variances, and Management
Control 300
9 Inventory Costing and Capacity Analysis 340
10 Determining How Costs Behave 384
11 Data Analytic Thinking and Prediction 437
12 Decision Making and Relevant Information 484
13 Strategy, Balanced Scorecard, and Strategic Profitability Analysis 535
14 Pricing Decisions and Cost Management 580
15 Cost Allocation, Customer-Profitability Analysis, and Sales-Variance
Analysis 614
16 Allocation of Support-Department Costs, Common Costs, and
Revenues 657
17 Cost Allocation: Joint Products and Byproducts 697
18 Process Costing 728
19 Spoilage, Rework, and Scrap 769
20 Balanced Scorecard: Quality and Time 797
21 Inventory Management, Just-in-Time, and Simplified Costing
Methods 827
22 Capital Budgeting and Cost Analysis 867
23 Management Control Systems, Transfer Pricing, and Multinational
Considerations 905
24 Performance Measurement, Compensation, and Multinational
Considerations 941
,Contents
1 The Manager and Management Cost Drivers 53
Relevant Range 53
Accounting 19 Relationships Between Types of Costs 54
For Coca-Cola, Smaller Sizes Mean Bigger Profits 19 Total Costs and Unit Costs 55
Financial Accounting, Management Accounting, and Unit Costs 55
Cost Accounting 20 Use Unit Costs Cautiously 55
Strategic Decisions and the Management Business Sectors, Types of Inventory, Inventoriable
Accountant 22 Costs, and Period Costs 56
Value-Chain and Supply-Chain Analysis and Key Manufacturing-, Merchandising-, and
Success Factors 22 Service-Sector Companies 56
Value-Chain Analysis 23 Types of Inventory 57
Supply-Chain Analysis 24 Commonly Used Classifications of Manufacturing
Key Success Factors 25 Costs 57
Concepts in Action: Cost Leadership at Costco: Inventoriable Costs 57
Rock-Bottom Prices and Sky-High Profits 26 Period Costs 58
Decision Making, Planning, and Control: The Illustrating the Flow of Inventoriable Costs and
Five-Step Decision-Making Process 27 Period Costs 59
Key Management Accounting Guidelines 30 Manufacturing-Sector Example 59
Cost–Benefit Approach 30 Recap of Inventoriable Costs and Period Costs 63
Behavioral and Technical Considerations 31 Prime Costs and Conversion Costs 64
Different Costs for Different Purposes 31 Measuring Costs Requires Judgment 64
Organization Structure and the Management Labor Costs 64
Accountant 31 Benefits of Defining Accounting Terms 65
Line and Staff Relationships 31 Different Meanings of Product Costs 65
The Chief Financial Officer and the A Framework for Cost Accounting and Cost
Controller 32 Management 67
Management Accounting Beyond the Calculating the Cost of Products, Services, and
Numbers 33 Other Cost Objects 67
Professional Ethics 34 Obtaining Information for Planning and Control
Institutional Support 34 and Performance Evaluation 67
Typical Ethical Challenges 35 Analyzing the Relevant Information for Making
Decisions 67
Problem for Self-Study 37 | Decision Points 37 |
Terms to Learn 38 | Assignment Material 38 | Problem for Self-Study 68 | Decision Points 70 |
Questions 38 | Multiple-Choice Questions 39 | Terms to Learn 71 | Assignment Material 71 |
Exercises 39 | Problems 41 Questions 71 | Multiple-Choice Questions 72 |
Exercises 73 | Problems 78
2 An Introduction to Cost Terms 3 Cost–Volume–Profit Analysis 83
and Purposes 46 How Coachella Tunes Up the Sweet Sound of Profits 83
High Fixed Costs Bankrupt Aéropostale 46 Essentials of CVP Analysis 84
Costs and Cost Terminology 47 Contribution Margin 85
Direct Costs and Indirect Costs 47 Expressing CVP Relationships 87
Cost Allocation Challenges 48 Cost–Volume–Profit Assumptions 89
Factors Affecting Direct/Indirect Cost Breakeven Point and Target Operating Income 90
Classifications 49 Breakeven Point 90
Cost-Behavior Patterns: Variable Costs and Fixed Target Operating Income 91
Costs 50 Income Taxes and Target Net Income 93
Concepts in Action: Lyft Helps Hospitals Reduce Their Using CVP Analysis for Decision Making 94
Fixed Transportation Costs 52 Decision to Advertise 94
4
, CONTENTS 5
Decision to Reduce the Selling Price 95 Choosing Among Approaches 147
Determining Target Prices 95 Variations of Normal Costing: A Service-Sector
Concepts in Action: Can Cost–Volume–Profit Analysis Example 148
Help Whole Foods Escape the “Whole Paycheck” Problem for Self-Study 150 | Decision Points 152 |
Trap? 96
Terms to Learn 153 | Assignment Material 153 |
Sensitivity Analysis and Margin of Safety 96
Questions 153 | Multiple-Choice Questions 154 |
Cost Planning and CVP 98
Alternative Fixed-Cost/Variable-Cost Structures 98 Exercises 155 | Problems 161
Operating Leverage 99
Effects of Sales Mix on Income 101 5 Activity-Based Costing and
CVP Analysis in Service and Not-for-Profit Activity-Based Management 167
Organizations 103 Activity-Based Costing and the True Cost of Data
Contribution Margin Versus Gross Margin 104 Breaches 167
Problem for Self-Study 105 | Decision Points 106
Broad Averaging and Its Consequences 168
Undercosting and Overcosting 168
APPENDIX: Decision Models and Uncertainty 107 Product-Cost Cross-Subsidization 169
Simple Costing System at Plastim
Terms to Learn 110 | Assignment Material 110 |
Corporation 169
Questions 110 | Multiple-Choice Questions 111 | Design, Manufacturing, and Distribution
Exercises 111 | Problems 116 Processes 169
Simple Costing System Using a Single
4 Job Costing 122 Indirect-Cost Pool 170
Job Costing and the New Golden State Warriors Applying the Five-Step Decision-Making Process
Arena 122 at Plastim 172
Building-Block Concepts of Costing Systems 123 Refining a Costing System 173
Job-Costing and Process-Costing Systems 124 Developments That Have Increased the Demand
Job Costing: Evaluation and Implementation 125 for Refining Costing Systems 174
Time Period Used to Compute Indirect-Cost Guidelines for Refining a Costing System 174
Rates 126 Activity-Based Costing Systems 175
Normal Costing 128 Plastim’s ABC System 175
General Approach to Job Costing Using Normal Cost Hierarchies 177
Costing 128 Implementing Activity-Based Costing 179
Concepts in Action: Better Job Costing Through Big Implementing ABC at Plastim 179
Data and Data Analytics 131 Comparing Alternative Costing Systems 184
The Role of Technology 133 Considerations in Implementing Activity-Based
Actual Costing 133 Costing Systems 185
A Normal Job-Costing System in Benefits and Costs of Activity-Based Costing
Manufacturing 135 Systems 185
General Ledger 136 ABC in Service and Merchandising
Explanations of Transactions 136 Companies 186
Subsidiary Ledgers 139 Behavioral Issues in Implementing Activity-Based
Materials Records by Type of Material 139 Costing Systems 186
Labor Records by Employee 140 Concepts in Action: Mayo Clinic Uses Time-Driven
Manufacturing Department Overhead Records by Activity-Based Costing to Reduce Costs and
Month 141 Improve Care 187
Work-in-Process Inventory Records by Jobs 141 Activity-Based Management 188
Finished Goods Inventory Records by Jobs 142 Pricing and Product-Mix Decisions 188
Other Subsidiary Records 142 Cost Reduction and Process Improvement
Nonmanufacturing Costs and Job Costing 142 Decisions 189
Budgeted Indirect Costs and End-of-Accounting-Year Design Decisions 190
Adjustments 143 Planning and Managing Activities 190
Underallocated and Overallocated Indirect
Problem for Self-Study 190 | Decision Points 193 |
Costs 143
Terms to Learn 194 | Assignment Material 194 |
Adjusted Allocation-Rate Approach 144
Proration Approach 144 Questions 194 | Multiple-Choice Questions 195 |
Write-Off to Cost of Goods Sold Approach 146 Exercises 195 | Problems 202
