1 Managerial Accounting 1-1
Just Add Water . . . and Paddle: Current Designs 1-1
Managerial Accounting Basics 1-3
Comparing Managerial and Financial Accounting 1-3
Management Functions 1-3
Organizational Structure 1-4
Managerial Cost Concepts 1-7
Manufacturing Costs 1-7
Product Versus Period Costs 1-8
Illustration of Cost Concepts 1-9
Manufacturing Costs in Financial Statements 1-10
Income Statement 1-11
Cost of Goods Manufactured 1-11
Cost of Goods Manufactured Schedule 1-12
Balance Sheet 1-13
Managerial Accounting Today 1-14
Service Industries 1-14
Focus on the Value Chain 1-15
Balanced Scorecard 1-17
Business Ethics 1-17
Corporate Social Responsibility 1-18
2 Job Order Costing 2-1
Profiting from the Silver Screen: Disney 2-1
Cost Accounting Systems 2-3
Process Cost System 2-3
Job Order Cost System 2-3
Job Order Cost Flow 2-4
Accumulating Manufacturing Costs 2-5
Assigning Manufacturing Costs 2-7
Raw Materials Costs 2-8
Factory Labor Costs 2-10
Predetermined Overhead Rates 2-12
Entries for Jobs Completed and Sold 2-15
Assigning Costs to Finished Goods 2-15
Assigning Costs to Cost of Goods Sold 2-16
Summary of Job Order Cost Flows 2-17
Job Order Costing for Service Companies 2-18
Advantages and Disadvantages of Job Order Costing 2-19
Applied Manufacturing Overhead 2-20
Under- or Overapplied Manufacturing Overhead 2-21
3 Process Costing 3-1
The Little Guy Who Could: Jones Soda 3-1
Overview of Process Cost Systems 3-3
Uses of Process Cost Systems 3-3
Process Costing for Service Companies 3-4
Similarities and Differences Between Job Order Cost and Process Cost Systems 3-4
Process Cost Flow and Assigning Costs 3-6
Process Cost Flow 3-6
Assigning Manufacturing Costs-Journal Entries 3-6
Equivalent Units 3-9
Weighted-Average Method 3-9
Refinements on the Weighted-Average Method 3-10
The Production Cost Report 3-12
Compute the Physical Unit Flow (Step 1) 3-13
Compute the Equivalent Units of
Production (Step 2) 3-13
Compute Unit Production Costs (Step 3) 3-14
Prepare a Cost Reconciliation Schedule (Step 4) 3-15
Preparing the Production Cost Report 3-15
Costing Systems-Final Comments 3-16
Appendix 3A: FIFO Method for Equivalent Units 3-19
Equivalent Units Under FIFO 3-19 Comprehensive Example 3-20
FIFO and Weighted-Average 3-24
4 Activity-Based Costing 4-1
Precor Is on Your Side: Precor 4-1
Traditional vs. Activity-Based Costing 4-3
Traditional Costing Systems 4-3
Illustration of a Traditional Costing System 4-3
The Need for a New Approach 4-4
Activity-Based Costing 4-4
ABC and Manufacturers 4-7
Identify and Classify Activities and Allocate Overhead to Cost Pools (Step 1) 4-7
Identify Cost Drivers (Step 2) 4-8
Compute Activity-Based Overhead Rates (Step 3) 4-8
Assign Overhead Costs to Products (Step 4) 4-9
Comparing Unit Costs 4-10
ABC Benefits and Limitations 4-12
The Advantage of Multiple Cost Pools 4-12
The Advantage of Enhanced Cost Control 4-13
The Advantage of Better Management Decisions 4-15
Some Limitations and Knowing When to Use ABC 4-16
ABC and Service Industries 4-17
Traditional Costing Example 4-18
Activity-Based Costing Example 4-18
Appendix 4A: Just-in-Time Processing 4-22
Objective of JIT Processing 4-23
Elements of JIT Processing 4-23
Benefits of JIT Processing 4-23
5 Cost-Volume-Profit 5-1
Don't Worry-Just Get Big: Amazon.com 5-1
Cost Behavior Analysis 5-2
Variable Costs 5-3
Fixed Costs 5-3
Relevant Range 5-5
Mixed Costs 5-6
Mixed Costs Analysis 5-7
High-Low Method 5-7
Importance of Identifying Variable and Fixed Costs 5-9
Cost-Volume-Profit Analysis 5-10
Basic Components 5-10
CVP Income Statement 5-11
Break-Even Analysis 5-14
Mathematical Equation 5-15
Contribution Margin Technique 5-15
Graphic Presentation 5-16
Target Net Income and Margin of Safety 5-18
Target Net Income 5-18
Margin of Safety 5-20
Appendix 5A: Regression Analysis 5-22
6 Cost-Volume-Profit Analysis:Additional Issues 6-1
Not Even a Flood Could Stop It: Whole Foods Market 6-1
Basic CVP Concepts 6-3
Basic Concepts 6-3
Basic Computations 6-3
CVP and Changes in the Business
Environment 6-5
Sales Mix and Break-Even Sales 6-8
Break-Even Sales in Units 6-8
Break-Even Sales in Dollars 6-9
Sales Mix with Limited Resources 6-12
Operating Leverage and Profitability 6-14
Effect on Contribution Margin Ratio 6-15
Effect on Break-Even Point 6-15
Effect on Margin of Safety Ratio 6-16
Operating Leverage 6-16
Appendix 6A: Absorption Costing vs. Variable Costing 6-19
Example Comparing Absorption Costing with Variable Costing 6-19
Net Income Effects 6-21
Decision-Making Concerns 6-25
Potential Advantages of Variable Costing 6-27
7 Incremental Analysis 7-1
Keeping It Clean: Method Products 7-1
Decision-Making and Incremental Analysis 7-3
Incremental Analysis Approach 7-3
How Incremental Analysis Works 7-4
Qualitative Factors 7-5
Relationship of Incremental Analysis and Activity-Based Costing 7-5
Types of Incremental Analysis 7-6
Special Orders 7-6
Make or Buy 7-8
Opportunity Cost 7-9
Sell or Process Further 7-10
Single-Product Case 7-11
Multiple-Product Case 7-11
Repair, Retain, or Replace Equipment 7-14
Eliminate Unprofitable Segment or Product 7-15
8 Pricing 8-1
They've Got Your Size-and Color: Zappos.com 8-1
Target Costing 8-3
Establishing a Target Cost 8-4
Cost-Plus and Variable-Cost Pricing 8-5
Cost-Plus Pricing 8-5
Limitations of Cost-Plus Pricing 8-7
Variable-Cost Pricing 8-8
Time-and-Material Pricing 8-10
Transfer Prices 8-13
Negotiated Transfer Prices 8-14
Cost-Based Transfer Prices 8-17
Market-Based Transfer Prices 8-18
Effect of Outsourcing on Transfer Pricing 8-18
Transfers Between Divisions in Diff erent Countries 8-19
Appendix 8A: Absorption-Cost and Variable-Cost Pricing 8-21
Absorption-Cost Pricing 8-21
Variable-Cost Pricing 8-23
Appendix 8B: Transfers Between Divisions in Different Countries 8-24
9 Budgetary Planning 9-1
What's in Your Cupcake?: BabyCakes NYC 9-1
Effective Budgeting and the Master Budget 9-3
Budgeting and Accounting 9-3
The Benefits of Budgeting 9-3
Essentials of Eff ective Budgeting 9-3
The Master Budget 9-6
Sales, Production, and Direct Materials Budgets 9-8
Sales Budget 9-8
Production Budget 9-9
Direct Materials Budget 9-10
Direct Labor, Manufacturing Overhead, and S&A Expense Budgets 9-13
Direct Labor Budget 9-13
Manufacturing Overhead Budget 9-14
Selling and Administrative Expense Budget 9-15
Budgeted Income Statement 9-15
Cash Budget and Budgeted Balance Sheet 9-17
Cash Budget 9-17
Budgeted Balance Sheet 9-20
Budgeting in Nonmanufacturing Companies 9-22
Merchandisers 9-22
Service Companies 9-23
Not-for-Profit Organizations 9-24
10 Budgetary Control and Responsibility Accounting 10-1
Pumpkin Madeleines and a Movie: Tribeca Grand Hotel 10-1
Budgetary Control and Static Budget Reports 10-3
Budgetary Control 10-3
Static Budget Reports 10-4
Flexible Budget Reports 10-6
Why Flexible Budgets? 10-7
Developing the Flexible Budget 10-9
Flexible Budget-A Case Study 10-9
Flexible Budget Reports 10-11
Responsibility Accounting and Responsibility Centers 10-13
Controllable versus Noncontrollable Revenues and Costs 10-15
Principles of Performance Evaluation 10-15
Responsibility Reporting System 10-17
Types of Responsibility Centers 10-18
Investment Centers 10-22
Return on Investment (ROI) 10-23
Responsibility Report 10-23
Judgmental Factors in ROI 10-24
Improving ROI 10-24
Appendix 10A: ROI vs. Residual Income 10-28
Residual Income Compared to ROI 10-28
Residual Income Weakness 10-29
11 Standard Costs and Balanced Scorecard 11-1
80,000 Different Caffeinated Combinations: Starbucks 11-2
Overview of Standard Costs 11-3
Distinguishing Between Standards and Budgets 11-4
Setting Standard Costs 11-4
Direct Materials Variances 11-7
Analyzing and Reporting Variances 11-7
Calculating Direct Materials Variances 11-9
Direct Labor and Manufacturing Overhead Variances 11-11
Direct Labor Variances 11-11
Manufacturing Overhead Variances 11-14
Variance Reports and Balanced Scorecards 11-16
Reporting Variances 11-16
Income Statement Presentation of Variances 11-16
Balanced Scorecard 11-17
Appendix 11A: Standard Cost Accounting System 11-21
Journal Entries 11-21
Ledger Accounts 11-23
Appendix 11B: Overhead Controllable and Volume Variances 11-24
Overhead Controllable Variance 11-24
Overhead Volume Variance 11-25
12 Planning for Capital Investments 12-1
Floating Hotels: Holland America Line 12-2
Capital Budgeting and Cash Payback 12-3
Cash Flow Information 12-3
Illustrative Data 12-4
Cash Payback 12-4
Net Present Value Method 12-6
Equal Annual Cash Flows 12-7
Unequal Annual Cash Flows 12-8
Choosing a Discount Rate 12-9
Simplifying Assumptions 12-9
Comprehensive Example 12-10
Capital Budgeting Challenges and Refinements 12-11
Intangible Benefits 12-11
Profitability Index for Mutually Exclusive Projects 12-13
Risk Analysis 12-14
Post-Audit of Investment Projects 12-15
Internal Rate of Return 12-16
Comparing Discounted Cash Flow Methods 12-17
Annual Rate of Return 12-18
13 Statement of Cash Flows 13-1
Got Cash?: Microsoft 13-1
Usefulness and Format of the Statement of Cash Flows 13-3
Usefulness of the Statement of Cash Flows 13-3
Classification of Cash Flows 13-3
Significant Noncash Activities 13-4
Format of the Statement of Cash Flows 13-5
Preparing the Statement of Cash Flows-Indirect Method 13-6
Indirect and Direct Methods 13-7
Indirect Method-Computer Services Company 13-7
Step 1: Operating Activities 13-9
Summary of Conversion to Net Cash Provided by Operating Activities-Indirect Method 13-12
Step 2: Investing and Financing Activities 13-13
Step 3: Net Change in Cash 13-14
Analyzing the Statement of Cash Flows 13-17
Free Cash Flow 13-17
Appendix 13A: Statement of Cash Flows-Direct Method 13-19
Step 1: Operating Activities 13-19
Step 2: Investing and Financing Activities 13-25
Step 3: Net Change in Cash 13-26
Appendix 13B: Worksheet for the Indirect Method 13-26
Preparing the Worksheet 13-27
Appendix 13C: Statement of Cash Flows-T-Account Approach 13-31
14 Financial Analysis: The Big Picture 14-1
It Pays to Be Patient: Warren Buffett 14-1
Sustainable Income and Quality of Earnings 14-3
Sustainable Income 14-3
Quality of Earnings 14-7
Horizontal Analysis and Vertical Analysis 14-9
Horizontal Analysis 14-10
Vertical Analysis 14-12
Ratio Analysis 14-14
Liquidity Ratios 14-15
Solvency Ratios 14-16
Profitability Ratios 14-16
Comprehensive Example of Ratio Analysis 14-17
Appendix A Time Value of Money A-1
Interest and Future Values A-1
Nature of Interest A-1
Future Value of a Single Amount A-3
Future Value of an Annuity A-5
Present Value A-7
Present Value Variables A-7
Present Value of a Single Amount A-7
Present Value of an Annuity A-9
Time Periods and Discounting A-11
Present Value of a Long-Term Note or Bond A-11
Capital Budgeting Situations A-14
Using Financial Calculators A-15
Present Value of a Single Sum A-16
Present Value of an Annuity A-17
Future Value of a Single Sum A-17
Future Value of an Annuity A-17
Internal Rate of Return A 18
Useful Applications of the Financial Calculator A-18
Cases for Managerial Decision-Making
(The full text of these cases is available in WileyPLUS.)
Company Index I-1
Subject Index I-3
