BOOK
Horngren's Cost Accounting: A Managerial Emphasis, Global Edition
Srikant M. Datar | Madhav V. Rajan
(2017)
Additional Information
Book Details
Abstract
About the book
Use the most current information to prepare students for their field
· Emphasis on Global Issues reflect today’s increasingly global business environment, including:
· The importance of joint cost allocation in creating a trade war between poultry farms in South Africa and the United States (Chapter 16).
· The text’s examples of management accounting applications in companies are drawn from international settings.
· Focus on merchandising and service sectors (versus traditional manufacturing settings)highlight the shifts in the US and world economies, including:
· Several Concepts in Action boxes focus on the merchandising and service sectors, including achieving cost leadership at Trader Joes, using activity-based costing to reduce the costs of health care delivery at the Mayo Clinic (Chapter 5), reducing fixed costs at Twitter (Chapter 2), and analyzing operating income performance at Best Buy (Chapter 12) and web-based budgeting at 24 Hour Fitness.
· Emphasis on sustainability as one of the critical managerial challenges of the coming decades, including:
· Material that stress themes of recognizing and accounting for environmental costs, energy independence and the smart grid, setting stretch targets to motivate greater carbon reductions, using cost analysis, carbon tax, and cap-and-trade auctions to reduce environmental footprints, and constructing “green” homes in a cost-effective manner.
· More focus on the role of accounting concepts and systems in fostering and supporting innovation and entrepreneurial activities in firms including:
· The challenges posed by recognizing R&D costs as period expenses even though the benefits of innovation accrue in later periods.
· How companies budget for innovation expenses and develop measures to monitor success of the innovation efforts delinked from operational performance in the current period (Chapter 6).
· The importance of nonfinancial measures when making decisions about innovation (Chapter 11).
· The concept that innovation starts with understanding customer needs (Chapter 13).
· Process innovations for improving quality (Chapter 19).
· Cutting-edge topics are covered, including:
· Material around recent trends in big data and data analytics in predicting costs and when making demand forecasts.
Provide a solid presentation of accounting hallmarks with a great emphasis on strategy
· Strategy maps are presented as a useful tool to implement the balanced scorecard and a simplified presentation of how income statements of companies can be analyzed from the strategic perspective of product differentiation or cost leadership. A new section helps students evaluate strategy maps such as the strength of links, differentiators, focal points and trigger points.
· Try It examples are simple and focus on key ideas or concepts. They are located after a particular concept or calculation, and invite students to practice what they have just learned.
· Becker Multiple Choice Questions in the assignment material probe students’ knowledge of the chapter material and their ability to think critically about key concepts.
· Opening Vignettes. Each chapter opens with a vignette on a real company situation. The vignettes get students engaged in a business situation, or dilemma, illustrating why and how the concepts in the chapter are relevant in business. New examples on Quiksilver, General Motors, Boeing, Delta, Honda, and Viacom have been incorporated.
· Concepts in Action Boxes. Found in every chapter, these boxes cover real-world cost accounting issues across a variety of industries including automobile racing, defense contracting, entertainment, manufacturing, and retailing. New examples include Subway, Chipotle, H&M, Amazon, Under Armour, and Netflix.
Table of Contents
| Section Title | Page | Action | Price |
|---|---|---|---|
| Cover | Cover | ||
| Title Page | 1 | ||
| Copyright Page | 2 | ||
| Brief Contents | 3 | ||
| Contents | 4 | ||
| 1 The Manager and Management Accounting | 21 | ||
| For Coca-Cola, Smaller Sizes Mean Bigger Profits | 21 | ||
| Financial Accounting, Management Accounting, and Cost Accounting | 22 | ||
| Strategic Decisions and the Management Accountant | 23 | ||
| Value-Chain and Supply-Chain Analysis and Key Success Factors | 24 | ||
| Value-Chain Analysis | 24 | ||
| Supply-Chain Analysis | 26 | ||
| Key Success Factors | 27 | ||
| Concepts in Action: Trader Joe’s Recipe for Cost Leadership | 28 | ||
| Decision Making, Planning, and Control: The Five-Step Decision-Making Process | 29 | ||
| Key Management Accounting Guidelines | 32 | ||
| Cost–Benefit Approach | 32 | ||
| Behavioral and Technical Considerations | 33 | ||
| Different Costs for Different Purposes | 33 | ||
| Organization Structure and the Management Accountant | 33 | ||
| Line and Staff Relationships | 33 | ||
| The Chief Financial Officer and the Controller | 34 | ||
| Management Accounting Beyond the Numbers | 35 | ||
| Professional Ethics | 36 | ||
| Institutional Support | 36 | ||
| Typical Ethical Challenges | 37 | ||
| Problem for Self-Study | 39 | ||
| Decision Points | 39 | ||
| Terms to Learn | 40 | ||
| Assignment Material | 40 | ||
| Questions | 40 | ||
| Multiple-Choice Questions | 41 | ||
| Exercises | 41 | ||
| Problems | 43 | ||
| 2 An Introduction to Cost Terms and Purposes | 48 | ||
| High Fixed Costs Bankrupt Quiksilver | 48 | ||
| Costs and Cost Terminology | 49 | ||
| Direct Costs and Indirect Costs | 49 | ||
| Cost Allocation Challenges | 50 | ||
| Factors Affecting Direct/Indirect Cost Classifications | 51 | ||
| Cost-Behavior Patterns: Variable Costs and Fixed Costs | 52 | ||
| Concepts in Action: Zipcar Helps Twitter Reduce Fixed Costs | 54 | ||
| Cost Drivers | 54 | ||
| Relevant Range | 55 | ||
| Relationships Between Types of Costs | 56 | ||
| Total Costs and Unit Costs | 56 | ||
| Unit Costs | 56 | ||
| Use Unit Costs Cautiously | 57 | ||
| Business Sectors, Types of Inventory, Inventoriable Costs, and Period Costs | 58 | ||
| Manufacturing-, Merchandising-, and Service-Sector Companies | 58 | ||
| Types of Inventory | 58 | ||
| Commonly Used Classifications of Manufacturing Costs | 59 | ||
| Inventoriable Costs | 59 | ||
| Period Costs | 59 | ||
| Illustrating the Flow of Inventoriable Costs and Period Costs | 60 | ||
| Manufacturing-Sector Example | 60 | ||
| Recap of Inventoriable Costs and Period Costs | 64 | ||
| Prime Costs and Conversion Costs | 65 | ||
| Measuring Costs Requires Judgment | 66 | ||
| Measuring Labor Costs | 66 | ||
| Overtime Premium and Idle Time | 66 | ||
| Benefits of Defining Accounting Terms | 67 | ||
| Different Meanings of Product Costs | 68 | ||
| A Framework for Cost Accounting and Cost Management | 69 | ||
| Calculating the Cost of Products, Services, and Other Cost Objects | 70 | ||
| Obtaining Information for Planning and Control and Performance Evaluation | 70 | ||
| Analyzing the Relevant Information for Making Decisions | 70 | ||
| Problem for Self-Study | 71 | ||
| Decision Points | 73 | ||
| Terms to Learn | 74 | ||
| Assignment Material | 74 | ||
| Questions | 74 | ||
| Multiple-Choice Questions | 75 | ||
| Exercises | 76 | ||
| Problems | 80 | ||
| 3 Cost–Volume–Profit Analysis | 86 | ||
| How Coachella Tunes Up the Sweet Sound of Profits | 86 | ||
| Essentials of CVP Analysis | 87 | ||
| Contribution Margin | 88 | ||
| Expressing CVP Relationships | 90 | ||
| Cost–Volume–Profit Assumptions | 93 | ||
| Breakeven Point and Target Operating Income | 93 | ||
| Breakeven Point | 93 | ||
| Target Operating Income | 94 | ||
| Income Taxes and Target Net Income | 96 | ||
| Using CVP Analysis for Decision Making | 98 | ||
| Decision to Advertise | 98 | ||
| Decision to Reduce the Selling Price | 98 | ||
| Determining Target Prices | 99 | ||
| Concepts in Action: Cost–Volume–Profit Analysis Makes Subway’s $5 Foot-Long Sandwiches a Success But Innovation Challenges Loom | 99 | ||
| Sensitivity Analysis and Margin of Safety | 100 | ||
| Cost Planning and CVP | 102 | ||
| Alternative Fixed-Cost/Variable-Cost Structures | 102 | ||
| Operating Leverage | 103 | ||
| Effects of Sales Mix on Income | 105 | ||
| CVP Analysis in Service and Not-for-Profit Organizations | 107 | ||
| Contribution Margin Versus Gross Margin | 108 | ||
| Problem for Self-Study | 109 | ||
| Decision Points | 110 | ||
| Appendix: Decision Models and Uncertainty | 111 | ||
| Terms to learn | 114 | ||
| Assignment Material | 115 | ||
| Questions | 115 | ||
| Multiple-Choice Questions | 115 | ||
| Exercises | 116 | ||
| Problems | 120 | ||
| 4 Job Costing | 127 | ||
| Job Costing and the World’s Tallest Building | 127 | ||
| Building-Block Concepts of Costing Systems | 128 | ||
| Job-Costing and Process-Costing Systems | 129 | ||
| Job Costing: Evaluation and Implementation | 130 | ||
| Time Period Used to Compute Indirect-Cost Rates | 131 | ||
| Normal Costing | 133 | ||
| General Approach to Job Costing Using Normal Costing | 133 | ||
| Concepts in Action: The Job-Costing “Game Plan” at AT&T Stadium | 136 | ||
| The Role of Technology | 138 | ||
| Actual Costing | 138 | ||
| A Normal Job-Costing System in Manufacturing | 140 | ||
| General Ledger | 141 | ||
| Explanations of Transactions | 141 | ||
| Subsidiary Ledgers | 144 | ||
| Materials Records by Type of Material | 144 | ||
| Labor Records by Employee | 145 | ||
| Manufacturing Department Overhead Records by Month | 146 | ||
| Work-in-Process Inventory Records by Jobs | 146 | ||
| Finished Goods Inventory Records by Jobs | 147 | ||
| Other Subsidiary Records | 147 | ||
| Nonmanufacturing Costs and Job Costing | 147 | ||
| Budgeted Indirect Costs and End-of-Accounting-Year Adjustments | 148 | ||
| Underallocated and Overallocated Indirect Costs | 148 | ||
| Adjusted Allocation-Rate Approach | 149 | ||
| Proration Approach | 149 | ||
| Write-off to Cost of Goods Sold Approach | 151 | ||
| Choosing Among Approaches | 152 | ||
| Variations from Normal Costing: A Service-Sector Example | 153 | ||
| Problem for Self-Study | 155 | ||
| Decision Points | 157 | ||
| Terms to Learn | 158 | ||
| Assignment Material | 158 | ||
| Questions | 158 | ||
| Multiple-Choice Questions | 159 | ||
| Exercises | 160 | ||
| Problems | 166 | ||
| 5 Activity-Based Costing and Activity-Based Management | 172 | ||
| General Motors and Activity-Based Costing | 172 | ||
| Broad Averaging and Its Consequences | 173 | ||
| Undercosting and Overcosting | 173 | ||
| Product-Cost Cross-Subsidization | 174 | ||
| Simple Costing System at Plastim Corporation | 174 | ||
| Design, Manufacturing, and Distribution Processes | 174 | ||
| Simple Costing System Using a Single Indirect-cost Pool | 175 | ||
| Applying the Five-Step Decision-Making Process at Plastim | 177 | ||
| Refining A Costing System | 178 | ||
| Reasons for Refining a Costing System | 179 | ||
| Guidelines for Refining a Costing System | 179 | ||
| Activity-Based Costing Systems | 180 | ||
| Plastim’s ABC System | 180 | ||
| Cost Hierarchies | 182 | ||
| Implementing Activity-Based Costing | 184 | ||
| Implementing ABC at Plastim | 184 | ||
| Comparing Alternative Costing Systems | 189 | ||
| Considerations in Implementing Activity-Based Costing Systems | 190 | ||
| Benefits and Costs of Activity-Based Costing Systems | 190 | ||
| Behavioral Issues in Implementing Activity-Based Costing Systems | 191 | ||
| Activity-Based Management | 192 | ||
| Pricing and Product-Mix Decisions | 192 | ||
| Cost Reduction and Process Improvement Decisions | 192 | ||
| Design Decisions | 193 | ||
| Planning and Managing Activities | 194 | ||
| Activity-Based Costing and Department Costing Systems | 194 | ||
| ABC in Service and Merchandising Companies | 195 | ||
| Concepts in Action: Mayo Clinic Uses Time-driven Activity-Based Costing to Reduce Costs and Improve Care | 196 | ||
| Problem for Self-Study | 196 | ||
| Decision Points | 199 | ||
| Terms to Learn | 200 | ||
| Assignment Material | 200 | ||
| Questions | 200 | ||
| Multiple-Choice Questions | 201 | ||
| Exercises | 201 | ||
| Problems | 208 | ||
| 6 Master Budget and Responsibility Accounting | 217 | ||
| “Scrimping” at the Ritz: Master Budgets | 217 | ||
| Budgets and the Budgeting Cycle | 218 | ||
| Strategic Plans and Operating Plans | 218 | ||
| Budgeting Cycle and Master Budget | 219 | ||
| Advantages and Challenges of Implementing Budgets | 220 | ||
| Promoting Coordination and Communication | 220 | ||
| Providing a Framework for Judging Performance and Facilitating Learning | 220 | ||
| Motivating Managers and Other Employees | 221 | ||
| Challenges in Administering Budgets | 221 | ||
| Developing an Operating Budget | 222 | ||
| Time Coverage of Budgets | 222 | ||
| Steps in Preparing an Operating Budget | 222 | ||
| Financial Planning Models and Sensitivity Analysis | 235 | ||
| Concepts in Action: 24 Hour Fitness and Internet-Based Budgeting | 237 | ||
| Budgeting and Responsibility Accounting | 237 | ||
| Organization Structure and Responsibility | 237 | ||
| Feedback | 238 | ||
| Responsibility and Controllability | 239 | ||
| Human Aspects of Budgeting | 240 | ||
| Budgetary Slack | 240 | ||
| Stretch Targets | 241 | ||
| Kaizen Budgeting | 242 | ||
| Budgeting for Reducing Carbon Emissions | 243 | ||
| Budgeting in Multinational Companies | 243 | ||
| Problem for Self-Study | 244 | ||
| Decision Points | 245 | ||
| Appendix: The Cash Budget | 246 | ||
| Terms to Learn | 252 | ||
| Assignment Material | 252 | ||
| Questions | 252 | ||
| Multiple-Choice Questions | 253 | ||
| Exercises | 253 | ||
| Problems | 258 | ||
| 7 Flexible Budgets, Direct-Cost Variances, and Management Control | 269 | ||
| SingaDeli Bakery and Incentive Controls | 269 | ||
| Static Budgets and Variances | 270 | ||
| The Use of Variances | 270 | ||
| Static Budgets and Static-Budget Variances | 271 | ||
| Flexible Budgets | 273 | ||
| Flexible-Budget Variances and Sales-Volume Variances | 274 | ||
| Sales-Volume Variances | 274 | ||
| Flexible-Budget Variances | 275 | ||
| Standard Costs for Variance Analysis | 276 | ||
| Obtaining Budgeted Input Prices and Budgeted Input Quantities | 277 | ||
| Price Variances and Efficiency Variances for Direct-Cost Inputs | 278 | ||
| Price Variances | 279 | ||
| Efficiency Variance | 279 | ||
| Journal Entries Using Standard Costs | 282 | ||
| Implementing Standard Costing | 284 | ||
| Management’s Use of Variances | 284 | ||
| Multiple Causes of Variances | 284 | ||
| Concepts in Action: Can Chipotle Wrap Up Its Materials-Cost Variance Increases? | 285 | ||
| When to Investigate Variances | 285 | ||
| Using Variances for Performance Measurement | 286 | ||
| Organization Learning | 286 | ||
| Continuous Improvement | 287 | ||
| Financial and Nonfinancial Performance Measures | 287 | ||
| Benchmarking and Variance Analysis | 287 | ||
| Problem for Self-Study | 289 | ||
| Decision Points | 290 | ||
| AppendIx: Mix and Yield Variances for Substitutable Inputs | 291 | ||
| Terms to Learn | 295 | ||
| Assignment Material | 295 | ||
| Questions | 295 | ||
| Multiple-Choice Questions | 295 | ||
| Exercises | 296 | ||
| Problems | 300 | ||
| 8 Flexible Budgets, Overhead Cost Variances, and Management Control | 308 | ||
| Tesla Motors Gigafactory | 308 | ||
| Planning of Variable and Fixed Overhead Costs | 309 | ||
| Planning Variable Overhead Costs | 309 | ||
| Planning Fixed Overhead Costs | 309 | ||
| Standard Costing at Webb Company | 310 | ||
| Developing Budgeted Variable Overhead Rates | 310 | ||
| Developing Budgeted Fixed Overhead Rates | 311 | ||
| Variable Overhead Cost Variances | 312 | ||
| Flexible-Budget Analysis | 312 | ||
| Variable Overhead Efficiency Variance | 313 | ||
| Variable Overhead Spending Variance | 314 | ||
| Journal Entries for Variable Overhead Costs and Variances | 316 | ||
| Fixed Overhead Cost Variances | 317 | ||
| Production-Volume Variance | 318 | ||
| Interpreting the Production-Volume Variance | 319 | ||
| Journal Entries for Fixed Overhead Costs and Variances | 320 | ||
| Concepts in Action: Variance Analysis and Standard Costing Help Sandoz Manage Its Overhead Costs | 321 | ||
| Integrated Analysis of Overhead Cost Variances | 323 | ||
| 4-Variance Analysis | 323 | ||
| Combined Variance Analysis | 323 | ||
| Production-Volume Variance and Sales-Volume Variance | 325 | ||
| Variance Analysis and Activity-Based Costing | 327 | ||
| Flexible Budget and Variance Analysis for Direct Materials-Handling Labor Costs | 328 | ||
| Flexible Budget and Variance Analysis for Fixed Setup Overhead Costs | 330 | ||
| Overhead Variances in Nonmanufacturing Settings | 332 | ||
| Financial and Nonfinancial Performance Measures | 333 | ||
| Problem for Self-Study | 334 | ||
| Decision Points | 336 | ||
| Terms to Learn | 337 | ||
| Assignment Material | 337 | ||
| Questions | 337 | ||
| Multiple-Choice Questions | 337 | ||
| Exercises | 339 | ||
| Problems | 343 | ||
| 9 Inventory Costing and Capacity Analysis | 349 | ||
| Lean Manufacturing Helps Boeing Work Through Its Backlog | 349 | ||
| Variable and Absorption Costing | 350 | ||
| Variable Costing | 350 | ||
| Absorption Costing | 350 | ||
| Comparing Variable and Absorption Costing | 350 | ||
| Variable vs. Absorption Costing: Operating Income and Income Statements | 352 | ||
| Comparing Income Statements for One Year | 352 | ||
| Comparing Income Statements for Multiple Years | 354 | ||
| Variable Costing and the Effect of Sales and Production on Operating Income | 357 | ||
| Absorption Costing and Performance Measurement | 358 | ||
| Undesirable Buildup of Inventories | 359 | ||
| Proposals for Revising Performance Evaluation | 360 | ||
| Comparing Inventory Costing Methods | 361 | ||
| Throughput Costing | 361 | ||
| A Comparison of Alternative Inventory-Costing Methods | 362 | ||
| Denominator-Level Capacity Concepts and Fixed-Cost Capacity Analysis | 363 | ||
| Absorption Costing and Alternative Denominator-Level Capacity Concepts | 364 | ||
| Effect on Budgeted Fixed Manufacturing Cost Rate | 365 | ||
| Choosing a Capacity Level | 366 | ||
| Product Costing and Capacity Management | 366 | ||
| Pricing Decisions and the Downward Demand Spiral | 367 | ||
| Concepts in Action: Can ESPN Avoid the Cord-Cutting “Death Spiral”? | 368 | ||
| Performance Evaluation | 369 | ||
| Financial Reporting | 369 | ||
| Tax Requirements | 372 | ||
| Planning and Control of Capacity Costs | 372 | ||
| Difficulties in Forecasting Chosen Denominator-Level Concept | 372 | ||
| Difficulties in Forecasting Fixed Manufacturing Costs | 373 | ||
| Nonmanufacturing Costs | 373 | ||
| Activity-Based Costing | 374 | ||
| Problem for Self-Study | 374 | ||
| Decision Points | 376 | ||
| Appendix: Breakeven Points in Variable Costing and Absorption Costing | 377 | ||
| Terms to Learn | 379 | ||
| Assignment Material | 379 | ||
| Questions | 379 | ||
| Multiple-Choice Questions | 379 | ||
| Exercises | 381 | ||
| Problems | 385 | ||
| 10 Determining How Costs Behave | 392 | ||
| UPS Uses “Big Data” to Understand Its Costs While Helping the Environment | 392 | ||
| Basic Assumptions and Examples of Cost Functions | 393 | ||
| Basic Assumptions | 393 | ||
| Linear Cost Functions | 393 | ||
| Review of Cost Classification | 395 | ||
| Identifying Cost Drivers | 396 | ||
| The Cause-and-Effect Criterion | 396 | ||
| Cost Drivers and the Decision-Making Process | 397 | ||
| Cost Estimation Methods | 397 | ||
| Industrial Engineering Method | 398 | ||
| Conference Method | 398 | ||
| Account Analysis Method | 398 | ||
| Quantitative Analysis Method | 399 | ||
| Estimating a Cost Function Using Quantitative Analysis | 400 | ||
| High-Low Method | 402 | ||
| Regression Analysis Method | 404 | ||
| Evaluating and Choosing Cost Drivers | 405 | ||
| Cost Drivers and Activity-Based Costing | 408 | ||
| Nonlinear Cost Functions | 409 | ||
| Learning Curves | 410 | ||
| Cumulative Average-Time Learning Model | 411 | ||
| Incremental Unit-Time Learning Model | 412 | ||
| Incorporating Learning-Curve Effects into Prices and Standards | 413 | ||
| Concepts in Action: Does Joint Strike Fighter Production Have a Learning Curve? | 415 | ||
| Data Collection and Adjustment Issues | 415 | ||
| Problem for Self-Study | 417 | ||
| Decision Points | 419 | ||
| Appendix: Regression Analysis | 420 | ||
| Terms to Learn | 429 | ||
| Assignment Material | 429 | ||
| Questions | 429 | ||
| Multiple-Choice Questions | 430 | ||
| Exercises | 430 | ||
| Problems | 436 | ||
| 11 Decision Making and Relevant Information | 446 | ||
| Relevant Costs and Broadway Shows | 446 | ||
| Information and the Decision Process | 447 | ||
| The Concept of Relevance | 447 | ||
| Relevant Costs and Relevant Revenues | 447 | ||
| Qualitative and Quantitative Relevant Information | 449 | ||
| One-Time-Only Special Orders | 450 | ||
| Potential Problems in Relevant-Cost Analysis | 453 | ||
| Short-Run Pricing Decisions | 453 | ||
| Insourcing-Versus-Outsourcing and Make-or-Buy Decisions | 454 | ||
| Outsourcing and Idle Facilities | 454 | ||
| Strategic and Qualitative Factors | 456 | ||
| International Outsourcing | 456 | ||
| The Total Alternatives Approach | 457 | ||
| Concepts in Action: Starbucks Brews Up Domestic Production | 457 | ||
| The Opportunity-Cost Approach | 458 | ||
| Carrying Costs of Inventory | 461 | ||
| Product-Mix Decisions with Capacity Constraints | 462 | ||
| Bottlenecks, Theory of Constraints, and Throughput-Margin Analysis | 464 | ||
| Customer Profitability and Relevant Costs | 467 | ||
| Relevant-Revenue and Relevant-Cost Analysis of Dropping a Customer | 468 | ||
| Relevant-Revenue and Relevant-Cost Analysis of Adding a Customer | 470 | ||
| Relevant-Revenue and Relevant-Cost Analysis of Closing or Adding Branch Offices or Business Divisions | 470 | ||
| Irrelevance of Past Costs and Equipment-Replacement Decisions | 471 | ||
| Decisions and Performance Evaluation | 473 | ||
| Problem for Self-Study | 475 | ||
| Decision Points | 477 | ||
| Appendix: Linear Programming | 478 | ||
| Terms to Learn | 481 | ||
| Assignment Material | 481 | ||
| Questions | 481 | ||
| Multiple-Choice Questions | 482 | ||
| Exercises | 483 | ||
| Problems | 488 | ||
| 12 Strategy, Balanced Scorecard, and Strategic Profitability Analysis | 497 | ||
| Barclays Turns to the Balanced Scorecard | 497 | ||
| What Is Strategy? | 498 | ||
| Building Internal Capabilities: Quality Improvement and Reengineering at Chipset | 500 | ||
| Strategy Implementation and the Balanced Scorecard | 501 | ||
| The Balanced Scorecard | 501 | ||
| Strategy Maps and the Balanced Scorecard | 502 | ||
| Implementing a Balanced Scorecard | 508 | ||
| Different Strategies Lead to Different Scorecards | 509 | ||
| Environmental and Social Performance and the Balanced Scorecard | 509 | ||
| Features of a Good Balanced Scorecard | 513 | ||
| Pitfalls in Implementing a Balanced Scorecard | 514 | ||
| Evaluating the Success of Strategy and Implementation | 514 | ||
| Strategic Analysis of Operating Income | 515 | ||
| Growth Component of Change in Operating Income | 517 | ||
| Price-Recovery Component of Change in Operating Income | 518 | ||
| Productivity Component of Change in Operating Income | 519 | ||
| Further Analysis of Growth, Price-Recovery, and Productivity Components | 521 | ||
| Concepts in Action: Operating Income Analysis Reveals Strategic Challenges at Best Buy | 523 | ||
| Applying the Five-Step Decision-Making Framework to Strategy | 524 | ||
| Downsizing and the Management of Processing Capacity | 524 | ||
| Engineered and Discretionary Costs | 524 | ||
| Identifying Unused Capacity for Engineered and Discretionary Overhead Costs | 525 | ||
| Managing Unused Capacity | 525 | ||
| Problem for Self-Study | 526 | ||
| Decision Points | 530 | ||
| Appendix: Productivity Measurement | 531 | ||
| Terms to Learn | 534 | ||
| Assignment Material | 534 | ||
| Questions | 534 | ||
| Multiple-Choice Questions | 534 | ||
| Exercises | 535 | ||
| Problems | 537 | ||
| 13 Pricing Decisions and Cost Management | 544 | ||
| Extreme Pricing and Cost Management at IKEA | 544 | ||
| Major Factors that Affect Pricing Decisions | 545 | ||
| Customers | 545 | ||
| Competitors | 545 | ||
| Costs | 545 | ||
| Weighing Customers, Competitors, and Costs | 545 | ||
| Costing and Pricing for the Long Run | 546 | ||
| Calculating Product Costs for Long-Run Pricing Decisions | 547 | ||
| Alternative Long-Run Pricing Approaches | 548 | ||
| Market-Based Approach: Target Costing for Target Pricing | 550 | ||
| Understanding Customers’ Perceived Value | 550 | ||
| Competitor Analysis | 551 | ||
| Implementing Target Pricing and Target Costing | 551 | ||
| Concepts in Action: H&M Uses Target Pricing to Bring Fast Fashion to Stores Worldwide | 551 | ||
| Value Engineering, Cost Incurrence, and Locked-in Costs | 553 | ||
| Value-Chain Analysis and Cross-Functional Teams | 553 | ||
| Achieving the Target Cost per Unit for Provalue | 554 | ||
| Cost-Plus Pricing | 557 | ||
| Cost-Plus Target Rate of Return on Investment | 557 | ||
| Alternative Cost-Plus Methods | 558 | ||
| Cost-Plus Pricing and Target Pricing | 559 | ||
| Life-Cycle Product Budgeting and Costing | 560 | ||
| Life-Cycle Budgeting and Pricing Decisions | 560 | ||
| Managing Environmental and Sustainability Costs | 562 | ||
| Customer Life-Cycle Costing | 562 | ||
| Non-Cost Factors in Pricing Decisions | 563 | ||
| Price Discrimination | 563 | ||
| Peak-Load Pricing | 563 | ||
| International Pricing | 563 | ||
| Antitrust Laws and Pricing Decisions | 564 | ||
| The Supreme Court has not Specified the “appropriate measure of Costs.” | 564 | ||
| Problem for Self-Study | 565 | ||
| Decision Points | 567 | ||
| Terms to Learn | 568 | ||
| Assignment Material | 569 | ||
| Questions | 569 | ||
| Multiple-Choice Questions | 569 | ||
| Exercises | 569 | ||
| Problems | 573 | ||
| 14 Cost Allocation, Customer-Profitability Analysis, and Sales-Variance Analysis | 579 | ||
| Delta Flies from Frequent Flyers to Big Spenders | 579 | ||
| Customer-Profitability Analysis | 580 | ||
| Customer-Revenue Analysis | 580 | ||
| Customer-Cost Analysis | 581 | ||
| Customer-Level Costs | 582 | ||
| Customer-Profitability Profiles | 585 | ||
| Presenting Profitability Analysis | 586 | ||
| Concepts in Action: Amazon Prime and Customer Profitability | 588 | ||
| Using the Five-Step Decision-Making Process to Manage Customer Profitability | 588 | ||
| Cost-Hierarchy-Based Operating Income Statement | 589 | ||
| Criteria to Guide Cost Allocations | 591 | ||
| Fully Allocated Customer Profitability | 593 | ||
| Implementing Corporate and Division Cost Allocations | 594 | ||
| Issues in Allocating Corporate Costs to Divisions and Customers | 597 | ||
| Using Fully Allocated Costs for Decision Making | 598 | ||
| Sales Variances | 599 | ||
| Static-Budget Variance | 600 | ||
| Flexible-Budget Variance and Sales-Volume Variance | 600 | ||
| Sales-Mix Variance | 601 | ||
| Sales-Quantity Variance | 602 | ||
| Market-Share and Market-Size Variances | 603 | ||
| Market-Share Variance | 603 | ||
| Market-Size Variance | 603 | ||
| Problem for Self-Study | 605 | ||
| Decision Points | 607 | ||
| Terms to Learn | 608 | ||
| Assignment Material | 608 | ||
| Questions | 608 | ||
| Multiple-Choice Questions | 609 | ||
| Exercises | 609 | ||
| Problems | 614 | ||
| 15 Allocation of Support-Department Costs, Common Costs, and Revenues | 621 | ||
| Cost Allocation and “Smart Grid” Energy Infrastructure | 621 | ||
| Allocating Support Department Costs Using the Single-Rate and Dual-Rate Methods | 622 | ||
| Single-Rate and Dual-Rate Methods | 622 | ||
| Allocation Based on the Demand for (or Usage of) Materials-Handling Services | 623 | ||
| Allocation Based on the Supply of Capacity | 624 | ||
| Advantages and Disadvantages of Single-Rate Method | 626 | ||
| Advantages and Disadvantages of Dual-Rate Method | 626 | ||
| Budgeted Versus Actual Costs and the Choice of Allocation Base | 627 | ||
| Budgeted Versus Actual Rates | 627 | ||
| Budgeted Versus Actual Usage | 628 | ||
| Fixed-Cost Allocation Based on Budgeted Rates and Budgeted Usage | 628 | ||
| Fixed-Cost Allocation Based on Budgeted Rates and Actual Usage | 628 | ||
| Allocating Budgeted Fixed Costs Based on Actual Usage | 629 | ||
| Allocating Costs of Multiple Support Departments | 630 | ||
| Direct Method | 633 | ||
| Step-Down Method | 634 | ||
| Reciprocal Method | 635 | ||
| Overview of Methods | 639 | ||
| Calculating the Cost of Job WPP 298 | 639 | ||
| Allocating Common Costs | 641 | ||
| Stand-Alone Cost-Allocation Method | 641 | ||
| Incremental Cost-Allocation Method | 642 | ||
| Cost Allocations and Contract Disputes | 643 | ||
| Bundled Products and Revenue Allocation Methods | 644 | ||
| Bundling and Revenue Allocation | 644 | ||
| Concepts in Action: Contract Disputes over Reimbursable Costs with the U.S. Government | 645 | ||
| Stand-Alone Revenue-Allocation Method | 646 | ||
| Incremental Revenue-Allocation Method | 647 | ||
| Problem for Self-Study | 649 | ||
| Decision Points | 652 | ||
| Terms to Learn | 653 | ||
| Assignment Material | 653 | ||
| Questions | 653 | ||
| Exercises | 653 | ||
| Problems | 657 | ||
| 16 Cost Allocation: Joint Products and Byproducts | 663 | ||
| Joint-Cost Allocation and the Wounded Warrior Project | 663 | ||
| Joint-Cost Basics | 664 | ||
| Allocating Joint Costs | 665 | ||
| Approaches to Allocating Joint Costs | 666 | ||
| Concepts in Action: U.S.-South Africa Trade Dispute Over Joint-Cost Allocation | 666 | ||
| Sales Value at Splitoff Method | 668 | ||
| Physical-Measure Method | 668 | ||
| Net Realizable Value Method | 670 | ||
| Constant Gross-Margin Percentage NRV Method | 671 | ||
| Choosing an Allocation Method | 674 | ||
| Not Allocating Joint Costs | 675 | ||
| Why Joint Costs Are Irrelevant for Decision Making | 675 | ||
| Sell-or-Process-Further Decisions | 675 | ||
| Decision Making and Performance Evaluation | 676 | ||
| Pricing Decisions | 676 | ||
| Accounting for Byproducts | 677 | ||
| Production Method: Byproducts Recognized at Time Production Is Completed | 678 | ||
| Sales Method: Byproducts Recognized at Time of Sale | 679 | ||
| Problem for Self-Study | 680 | ||
| Decision Points | 683 | ||
| Terms to Learn | 683 | ||
| Assignment Material | 683 | ||
| Questions | 683 | ||
| Multiple-Choice Questions | 684 | ||
| Exercises | 685 | ||
| Problems | 690 | ||
| 17 Process Costing | 695 | ||
| Haynes Suffers as Nickel Prices Drop | 695 | ||
| Illustrating Process Costing | 696 | ||
| Case 1: Process Costing with No Beginning or Ending Work-in-Process Inventory | 697 | ||
| Case 2: Process Costing with Zero Beginning and Some Ending Work-in-Process Inventory | 698 | ||
| Summarizing the Physical Units and Equivalent Units (Steps 1 and 2) | 699 | ||
| Calculating Product Costs (Steps 3, 4, and 5) | 701 | ||
| Journal Entries | 702 | ||
| Case 3: Process Costing with Some Beginning and Some Ending Work-in-Process Inventory | 704 | ||
| Weighted-Average Method | 704 | ||
| First-In, First-Out Method | 707 | ||
| Comparing the Weighted-Average and FIFO Methods | 711 | ||
| Transferred-In Costs in Process Costing | 712 | ||
| Transferred-In Costs and the Weighted-Average Method | 713 | ||
| Transferred-In Costs and the FIFO Method | 715 | ||
| Points to Remember About Transferred-In Costs | 717 | ||
| Hybrid Costing Systems | 717 | ||
| Overview of Operation-Costing Systems | 717 | ||
| Concepts in Action: Hybrid Costing for Under Armour 3D Printed Shoes | 718 | ||
| Illustrating an Operation-Costing System | 719 | ||
| Journal Entries | 720 | ||
| Problem for Self-Study | 721 | ||
| Decision Points | 723 | ||
| Appendix: Standard-Costing Method of Process Costing | 724 | ||
| Terms to Learn | 728 | ||
| Assignment Material | 728 | ||
| Questions | 728 | ||
| Multiple-Choice Questions | 728 | ||
| Exercises | 730 | ||
| Problems | 733 | ||
| 18 Spoilage, Rework, and Scrap | 738 | ||
| Airbag Rework Sinks Honda’s Record Year | 738 | ||
| Defining Spoilage, Rework, and Scrap | 739 | ||
| Two Types of Spoilage | 739 | ||
| Normal Spoilage | 740 | ||
| Abnormal Spoilage | 740 | ||
| Spoilage in Process Costing Using Weighted-Average and FIFO | 740 | ||
| Count All Spoilage | 741 | ||
| Five-Step Procedure for Process Costing with Spoilage | 742 | ||
| Weighted-Average Method and Spoilage | 743 | ||
| FIFO Method and Spoilage | 746 | ||
| Journal Entries | 747 | ||
| Inspection Points and Allocating Costs of Normal Spoilage | 747 | ||
| Job Costing and Spoilage | 750 | ||
| Job Costing and Rework | 751 | ||
| Accounting for Scrap | 753 | ||
| Recognizing Scrap at the Time of Its Sale | 753 | ||
| Recognizing Scrap at the Time of Its Production | 754 | ||
| Concepts in Action: Nestlé’s Journey to Zero Waste for Disposal | 755 | ||
| Problem for Self-Study | 756 | ||
| Decision Points | 756 | ||
| Appendix: Standard-Costing Method and Spoilage | 757 | ||
| Terms to Learn | 759 | ||
| Assignment Material | 759 | ||
| Questions | 759 | ||
| Multiple-Choice Questions | 760 | ||
| Exercises | 761 | ||
| Problems | 764 | ||
| 19 Balanced Scorecard: Quality and Time | 768 | ||
| Toyota Plans Changes After Millions of Defective Cars Are Recalled | 768 | ||
| Quality as a Competitive Tool | 769 | ||
| The Financial Perspective: The Costs of Quality | 770 | ||
| Using Nonfinancial Measures to Evaluate and Improve Quality | 773 | ||
| The Customer Perspective: Nonfinancial Measures of Customer Satisfaction | 773 | ||
| The Internal-Business-Process Perspective: Analyzing Quality Problems and Improving Quality | 774 | ||
| The Learning-and-Growth Perspective: Quality Improvements | 777 | ||
| Weighing the Costs and Benefits of Improving Quality | 777 | ||
| Evaluating a Company’s Quality Performance | 779 | ||
| Time as a Competitive Tool | 780 | ||
| Customer-Response Time and On-Time Performance | 780 | ||
| Bottlenecks and Time Drivers | 781 | ||
| Concepts in Action: Netflix Works to Overcome Internet Bottlenecks | 782 | ||
| Relevant Revenues and Costs of Delays | 784 | ||
| Balanced Scorecard and Time-Based Measures | 786 | ||
| Problem for Self-Study | 787 | ||
| Decision Points | 788 | ||
| Terms to Learn | 789 | ||
| Assignment Material | 789 | ||
| Questions | 789 | ||
| Multiple-Choice Questions | 789 | ||
| Exercises | 790 | ||
| Problems | 793 | ||
| 20 Inventory Management, Just-in-Time, and Simplified Costing Methods | 798 | ||
| Walmart Uses Big Data to Better Manage Its Inventory | 798 | ||
| Inventory Management in Retail Organizations | 799 | ||
| Costs Associated with Goods for Sale | 799 | ||
| The Economic-Order-Quantity Decision Model | 800 | ||
| When to Order, Assuming Certainty | 802 | ||
| Safety Stock | 803 | ||
| Estimating Inventory-Related Relevant Costs and Their Effects | 805 | ||
| Cost of a Prediction Error | 805 | ||
| Conflicts Between the EOQ Decision Model and Managers’ Performance Evaluation | 806 | ||
| Just-in-Time Purchasing | 807 | ||
| JIT Purchasing and EOQ Model Parameters | 807 | ||
| Relevant Costs of JIT Purchasing | 807 | ||
| Supplier Evaluation and Relevant Costs of Quality and Timely Deliveries | 809 | ||
| JIT Purchasing, Planning and Control, and Supply-Chain Analysis | 811 | ||
| Inventory Management, MRP, and JIT Production | 812 | ||
| Materials Requirements Planning | 812 | ||
| Just-in-Time (JIT) Production | 812 | ||
| Features of JIT Production Systems | 812 | ||
| Costs and Benefits of JIT Production | 813 | ||
| Concepts in Action: Just-in-Time Live-Concert Recordings | 813 | ||
| JIT in Service Industries | 814 | ||
| Enterprise Resource Planning (ERP) Systems | 814 | ||
| Performance Measures and Control in JIT Production | 815 | ||
| Effect of JIT Systems on Product Costing | 815 | ||
| Backflush Costing | 816 | ||
| Simplified Normal or Standard-Costing Systems | 816 | ||
| Special Considerations in Backflush Costing | 822 | ||
| Lean Accounting | 824 | ||
| Problems for Self-Study | 827 | ||
| Decision Points | 828 | ||
| Terms to Learn | 829 | ||
| Assignment Material | 829 | ||
| Questions | 829 | ||
| Multiple-Choice Questions | 830 | ||
| Exercises | 830 | ||
| Problems | 833 | ||
| 21 Capital Budgeting and Cost Analysis | 838 | ||
| Changing NPV Calculations Shake Up Solar Financing | 838 | ||
| Stages of Capital Budgeting | 839 | ||
| Concepts in Action: Capital Budgeting for Sustainability at Johnson & Johnson | 841 | ||
| Discounted Cash Flow | 842 | ||
| Net Present Value Method | 843 | ||
| Internal Rate-of-Return Method | 844 | ||
| Comparing the Net Present Value and Internal Rate-of-Return Methods | 846 | ||
| Sensitivity Analysis | 846 | ||
| Payback Method | 847 | ||
| Uniform Cash Flows | 847 | ||
| Nonuniform Cash Flows | 848 | ||
| Accrual Accounting Rate-of-Return Method | 850 | ||
| Relevant Cash Flows in Discounted Cash Flow Analysis | 851 | ||
| Relevant After-Tax Flows | 852 | ||
| Categories of Cash Flows | 853 | ||
| Project Management and Performance Evaluation | 857 | ||
| Post-Investment Audits | 857 | ||
| Performance Evaluation | 858 | ||
| Strategic Considerations in Capital Budgeting | 858 | ||
| Investment in Research and Development | 858 | ||
| Customer Value and Capital Budgeting | 859 | ||
| Problem for Self-Study | 859 | ||
| Decision Points | 862 | ||
| Appendix: Capital Budgeting and Inflation | 863 | ||
| Terms to Learn | 865 | ||
| Assignment Material | 866 | ||
| Questions | 866 | ||
| Multiple-Choice Questions | 866 | ||
| Exercises | 867 | ||
| Problems | 871 | ||
| Answers to Exercises in Compound Interest (Exercise 21-21) | 875 | ||
| 22 Management Control Systems, Transfer Pricing, and Multinational Considerations | 876 | ||
| Google’s U.K. Tax Settlement | 876 | ||
| Management Control Systems | 877 | ||
| Formal and Informal Systems | 877 | ||
| Effective Management Control | 878 | ||
| Decentralization | 878 | ||
| Benefits of Decentralization | 879 | ||
| Costs of Decentralization | 879 | ||
| Comparing Benefits and Costs | 880 | ||
| Decentralization in Multinational Companies | 881 | ||
| Choices About Responsibility Centers | 881 | ||
| Transfer Pricing | 882 | ||
| Criteria for Evaluating Transfer Prices | 882 | ||
| Calculating Transfer Prices | 883 | ||
| An Illustration of Transfer Pricing | 883 | ||
| Market-Based Transfer Prices | 886 | ||
| Perfectly-Competitive-Market Case | 886 | ||
| Distress Prices | 886 | ||
| Imperfect Competition | 887 | ||
| Cost-Based Transfer Prices | 887 | ||
| Full-Cost Bases | 887 | ||
| Variable-Cost Bases | 889 | ||
| Hybrid Transfer Prices | 890 | ||
| Prorating the Difference Between Maximum and Minimum Transfer Prices | 890 | ||
| Negotiated Pricing | 891 | ||
| Dual Pricing | 891 | ||
| A General Guideline for Transfer-Pricing Situations | 892 | ||
| How Multinationals Use Transfer Pricing to Minimize Their Taxes | 894 | ||
| Concepts in Action: E.U. Accuses Starbucks and Netherlands of Unfair Tax deal | 896 | ||
| Transfer Prices Designed for Multiple Objectives | 897 | ||
| Problem for Self-Study | 898 | ||
| Decision Points | 900 | ||
| Terms to Learn | 901 | ||
| Assignment Material | 901 | ||
| Questions | 901 | ||
| Exercises | 901 | ||
| Problems | 905 | ||
| 23 Performance Measurement, Compensation, and Multinational Considerations | 911 | ||
| Executive Compensation at Viacom | 911 | ||
| Financial and Nonfinancial Performance Measures | 912 | ||
| Accounting-Based Measures for Business Units | 913 | ||
| Return on Investment | 914 | ||
| Residual Income | 915 | ||
| Economic Value Added | 917 | ||
| Return on Sales | 918 | ||
| Comparing Performance Measures | 919 | ||
| Choosing the Details of the Performance Measures | 919 | ||
| Alternative Time Horizons | 919 | ||
| Alternative Definitions of Investment | 920 | ||
| Alternative Asset Measurements | 920 | ||
| Target Levels of Performance and Feedback | 923 | ||
| Choosing Target Levels of Performance | 923 | ||
| Choosing the Timing of Feedback | 924 | ||
| Performance Measurement in Multinational Companies | 924 | ||
| Calculating a Foreign Division’s ROI in the Foreign Currency | 925 | ||
| Calculating the Foreign Division’s ROI in U.S. Dollars | 926 | ||
| Distinguishing the Performance of Managers from the Performance of Their Subunits | 927 | ||
| The Basic Tradeoff: Creating Incentives Versus Imposing Risk | 927 | ||
| Intensity of Incentives and Financial and Nonfinancial Measurements | 928 | ||
| Concepts in Action: Performance Measurement at Unilever | 929 | ||
| Benchmarks and Relative Performance Evaluation | 929 | ||
| Performance Measures at the Individual Activity Level | 929 | ||
| Executive Performance Measures and Compensation | 930 | ||
| Strategy and Levers of Control | 931 | ||
| Boundary Systems | 932 | ||
| Belief Systems | 933 | ||
| Interactive Control Systems | 933 | ||
| Problem for Self-Study | 933 | ||
| Decision Points | 935 | ||
| Terms to Learn | 936 | ||
| Assignment Material | 936 | ||
| Questions | 936 | ||
| Multiple-Choice Questions | 936 | ||
| Exercises | 937 | ||
| Problems | 941 | ||
| Appendix A: Notes on Compound Interest and Interest Tables | 947 | ||
| Glossary | 955 | ||
| Index | 966 |