Name: Solution Manual for Cost Management Measuring Monitoring and Motivating Performance 2nd Edition by Eldenburg
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This is completed downloadable of Solution Manual for Cost Management Measuring Monitoring and Motivating Performance 2nd Edition by Eldenburg

Product Details:

ISBN-10 ‏ : ‎ 0470769424
ISBN-13 ‏ : ‎ 978-0470769423
Author: Leslie G. Eldenburg (Author), Susan K. Wolcott (Author)

Cost accounting has become an increasingly important tool for managers and accountants alike. The second edition helps them achieve professional success by bridging the gaps between knowledge, skills and abilities. It has been revised to focus on decision-making while still examining the procedural detail. It also emphasizes the analysis and application of concepts. Additional examples and illustrations draw comparisons between government and manufacturing. Real-world scenarios and ethical decision-making sections demonstrate how the material is applied. Accountants and managers will also view Excel spreadsheets to give them a better understanding of the material.

Table of Content:

Chapter 1: The Role of Accounting Information in Management Decision Making
MOTOROLA’S IRIDIUM PROJECT: LOOK BEFORE YOU LEAP
STRATEGIC MANAGEMENT AND DECISION MAKING
Organizational Vision
Organizational Core Competencies
Organizational Strategies
Operating Plans
Actual Operations
Measuring, Monitoring, and Motivating Performance
LEVERS OF CONTROL
Belief Systems
Boundary Systems
Diagnostic Control Systems
Interactive Systems
COST ACCOUNTING AND STRATEGIC MANAGEMENT
Management Accounting and Financial Accounting
A Brief History of Cost Accounting
Strategic Cost Management
INFORMATION SYSTEMS AND STRATEGIC MANAGEMENT
Internal and External Reports
Improvements in Information for Management Decision Making
Business Intelligence and Process Management Systems
RELEVANT INFORMATION FOR DECISION MAKING
Relevant and Irrelevant Cash Flows
Relevance of Income Statement Information
SNOW-BLADE SNOWBOARDS: IDENTIFYING RELEVANT COSTS
Importance of Identifying Relevant Information
BUSINESS RISK
Risk Management
Business Risk and Cost Management
DECISION-MAKING BIASES
RISK OF BIASED DECISIONS: Nonrational Escalation of Commitment
QUALITY OF MANAGEMENT DECISION-MAKING
ETHICAL DECISION MAKING
Conflicting Interests
Motive for Ethical Behavior
FOCUS ON ETHICAL DECISION MAKING: Ethical Considerations in Outsourcing Decisions
Reputation Effects of Suppliers’ Unethical Actions
Analyzing the Ethics of a Decision
APPENDIX 1A Steps for Better Thinking: A Decision-Making Process
SUMMARY
KEY TO SYMBOLS
Self-Study Problems
Key Terms
QUESTIONS
EXERCISES
PROBLEMS
MINI-CASES
Chapter 2: The Cost Function
FLYING LOW DURING AN ECONOMIC DOWNTURN
IDENTIFYING RELEVANT COSTS FOR A DECISION
Relevant Costs for a Cost Object
Identifying Relevant Costs from the Accounting System
Direct and Indirect Costs
Opportunity Costs
Sunk Costs
COST BEHAVIOR
Variable, Fixed, and Mixed Costs
Classifying Costs
Relevant Range
Cost Functions
Cost Driver
Identifying Potential Cost Drivers
No Apparent Cost Driver
Discretionary Costs
Economies of Scale
FOCUS ON ETHICAL DECISION MAKING: Discretionary Costs
Ethics and Pharmaceutical Advertising
INFORMATION USED TO ESTIMATE COSTS
COST ESTIMATION TECHNIQUES
Engineered Estimate of Cost
Analysis at the Account Level
Scatter Plots
Two-Point Method
High-Low Method
RISK OF BIASED DECISIONS: Insensitivity to Sample Size
ESTIMATING THE COST FUNCTION
SMALL ANIMAL CLINIC (PART 1): CREATING A COST FUNCTION
Identify Relevant Costs and Obtain Information Needed for Estimation
Categorize Costs, Apply Cost Estimation Techniques, and Estimate Future Costs
Combine All Relevant Cost Estimates
Estimating Profit
REGRESSION ANALYSIS
Simple Regression Analysis
Interpreting Simple Regression Results
SMALL ANIMAL CLINIC (PART 2): TWO-POINT METHOD AND REGRESSION ANALYSIS
Revised Analysis of the Treatment Supplies Cost
Quarterly Data
Scatter Plots
Two-Point Method
Simple Regression Analysis
Revised Cost Estimate
Review of Methods, Total Cost Function
STRATEGIC RISK MANAGEMENT: Small Animal Clinic (Part 2)
Cost Estimation Accuracy and Strategies
USES AND LIMITATIONS OF COST ESTIMATES
Cost Estimation and Managerial Decision Making
Common Errors in Estimating Relevant Costs
Quality of Estimation Techniques
Reliance on Cost Estimates
APPENDIX 2A REGRESSION ANALYSIS-ADDITIONAL TOPICS
MULTIPLE REGRESSION ANALYSIS
Choosing Cost Drivers for Multiple Regression
PRINT MASTERS PRINT SHOP: USING MULTIPLE REGRESSION TO ESTIMATE A COST FUNCTION
Scatter Plots and Simple Regression Results
Multiple Regression Analysis
REGRESSION ANALYSIS ASSUMPTIONS
ADDITIONAL REGRESSION ANALYSIS CONSIDERATIONS
Stepwise Linear Fixed Costs
Piecewise Linear Variable Costs
Data Limitations
APPENDIX 2B: Learning Curves
SUMMARY
KEY TO SYMBOLS
Self-Study Problems
Key Terms
QUESTIONS
EXERCISES
PROBLEMS
MINI-CASES
Chapter 3: Cost-Volume-Profit Analysis
WIRED OR WIRELESS: ADJUSTING TO NEW MARKETS
COST-VOLUME-PROFIT ANALYSIS
Profit Equation and Contribution Margin
CVP Analysis in Units
CVP Analysis in Revenues
CVP for Multiple Products
Breakeven Point
Cost-Volume-Profit Graph
CVP with Income Taxes
DIE GEFLECKTE KUH EIS (THE SPOTTED COW CREAMERY) (PART 1): CVP ANALYSIS WITH INCOME TAXES
Estimating the Cost Function
Estimating After-Tax Profit
Calculating Revenues to Achieve Targeted After-Tax Profit
RISK OF BIASED DECISIONS: Optimism Bias
PERFORMING CVP ANALYSES WITH A SPREADSHEET
CVP Calculations for a Sales Mix
CVP Sensitivity Analysis
Discretionary Expenditure Decision
Planning, Monitoring, and Motivating with CVP
DIE GEFLECKTE KUH EIS (THE SPOTTED COW CREAMERY) (PART 2): THE INFLUENCE OF SALES MIX ON PROFITABILI
STRATEGIC RISK MANAGEMENT: Spotted Cow Creamery (Part 2)
ASSUMPTIONS AND LIMITATIONS OF COST-VOLUME-PROFIT ANALYSIS
Business Risk and Quality of Input Data
Quality of CVP Technique
CVP for Nonprofit Organizations
SMALL ANIMAL CLINIC: NOT-FOR-PROFIT ORGANIZATION CVP ANALYSIS WITH TWO RELEVANT RANGES
Breakeven Compared to Budget
Potential Investment in New Equipment
Calculating and Analyzing Targeted Activity Level
CVP Adjusted for Change in Relevant Range
MARGIN OF SAFETY AND DEGREE OF OPERATING LEVERAGE
Margin of Safety
Degree of Operating Leverage
Using the Degree of Operating Leverage to Plan and Monitor Operations
FOCUS ON ETHICAL DECISION MAKING: Temporary Labor
Ethics and Temporary Labor
SUMMARY
KEY TO SYMBOLS
Self-Study Problems
Key Terms
QUESTIONS
EXERCISES
PROBLEMS
MINI-CASES
Chapter 4: Relevant Information for Decision Making
INTERNATIONAL OUTSOURCING: THE GOOD, THE BAD, AND THE CONTROVERSIAL
RELEVANT INFORMATION FOR DECISION MAKING
Process for Identifying and Analyzing Relevant Information
Operating Decision Examples
SPECIAL ORDERS
Quantitative Rule for Special Order Decisions
BARKLEY BASKETBALLS: SPECIAL ORDER
Quantitative Analysis
Qualitative Analysis
Strategic Prioritization
STRATEGIC RISK MANAGEMENT: Barkley Basketballs
Special Orders and Pricing Policies
Qualitative and Risk Factors for Special Order Decisions
KEEP OR DROP DECISIONS
Quantitative Rule for Product and Business Segment Keep or Drop Decisions
HOME AIDE SERVICES: KEEP OR DROP
Quantitative Analysis
Qualitative Analysis
Strategic Prioritization
STRATEGIC RISK MANAGEMENT: Home Aide Services
The Business Risk of Dropping a Product
Customer Profitability
RISK OF BIASED DECISIONS: Confirmation Bias
Costs of Carrying Inventory
Qualitative and Risk Factors for Keep or Drop Decisions
INSOURCE OR OUTSOURCE (MAKE OR BUY) DECISIONS
Quantitative Rule for Insource or Outsource Decisions
ROADRUNNER PUBLISHERS (PART 1): INSOURCE OR OUTSOURCE
Quantitative Analysis
Qualitative Analysis
Strategic Prioritization
Qualitative and Risk Factors for Outsourcing Decisions
FOCUS ON ETHICAL DECISION MAKING: Offshoring Surgery
The Ethics of International Medical Outsourcing
PRODUCT EMPHASIS DECISIONS
Quantitative Rule for Product Emphasis Decisions
Theory of Constraints and Constrained Resources
Quantitative Rule for Choosing the Product Mix When Resources Are Constrained
Quantitative Rule for Relaxing Constraints for One or Two Products
ROADRUNNER PUBLISHERS (PART 2): CONSTRAINED RESOURCE
Qualitative Analysis
Quantitative Analysis
Strategic Prioritization
STRATEGIC RISK MANAGEMENT: Roadrunner Publishers (Part 2)
Reducing the Risk of Lost Sales
PRODUCT EMPHASIS: MULTIPLE RESOURCE CONSTRAINTS AND MULTIPLE PRODUCTS
Quantitative Rule for Maximizing Contribution Margin with Multiple Constraints and Multiple Products
BERTRAM GOLF CARTS: MULTIPLE CAPACITY CONSTRAINTS AND MULTIPLE PRODUCTS
STRATEGIC RISK MANAGEMENT: Bertram Golf Carts
Risky Assumptions
METHODS FOR RELAXING CONSTRAINTS
Use Constrained Resources More Efficiently
Increase Available Resources
Qualitative and Risk Factors for Product Emphasis and Constrained Resource Problems
QUALITY OF OPERATING DECISIONS
Quality of Information
Strategic Alignment
Decision-Maker Bias
Opportunity Costs
ROADRUNNER PUBLISHERS (PART 3): INSOURCE OR OUTSOURCE WITH OPPORTUNITY COSTS
Business Risk and Sensitivity Analysis
Control System Incentive and Behavioral Effects
Appendix 4A: Using Excel Solver for Product Emphasis and Constrained Resource Decisions
1. Determine the Objective (Target) Function
2. Create Constraint Functions
3. Set Up an Excel Spreadsheet
4. Use Excel Solver to Maximize the Objective Function
5. Interpret the Solver Output
SUMMARY
KEY TO SYMBOLS
Self-Study Problem
Key Terms
QUESTIONS
EXERCISES
PROBLEMS
MINI-CASES
Chapter 5: Job Costing
BOMBARDIER: CUSTOM MANUFACTURING
ASSIGNING PRODUCT COSTS TO INDIVIDUAL GOODS OR SERVICES
Product Costs
Process Costing
Job Costing
JOB COSTING IN MANUFACTURING
Assigning Direct Costs
Computerized and Manual Job Costing Systems
ALLOCATING OVERHEAD
Actual and Normal Costing
ALUMINUM BENDERS (PART 1): ALLOCATING OVERHEAD COSTS IN JOB COSTING
Evaluating Overhead Cost Pools and Allocation Bases
Understanding the Overhead Cost Allocation Method
GENERAL LEDGER ENTRIES FOR A MANUFACTURER
Overapplied and Underapplied Overhead
SERVICE SECTOR JOB COSTING
NIGHTHAWK, LLP: JOB COSTING IN A LAW FIRM
Estimated Job Costs and Price
Competitor’s Job Costs and Price
Monitoring Job Costs
STRATEGIC RISK MANAGEMENT: Nighthawk, LLP
Relevance of Fixed Costs
JOB COST INFORMATION, DECISIONMAKING, AND INCENTIVES
Allocated Overhead Costs and Decision Making
ALUMINUM BENDERS (PART 2): JOB COSTS RELEVANT FOR DECISION MAKING
Qualitative Factors
Judgment and Uncertainties in Job Costing System Design
Measuring Job Costs for Diagnostic Control
Allocated Overhead and Relevant Costs
RISK OF BIASED DECISIONS: Hindsight Bias
FOCUS ON ETHICAL DECISION MAKING: Overbilling Clients for Expenses
Tracing Rebates and Discounts Directly to Jobs
SPOILAGE, REWORK, AND SCRAP IN JOB COSTING
Normal and Abnormal Spoilage
ALUMINUM BENDERS (PART 3): ASSIGNING SPOILAGE COSTS
Rework
Scrap
PRODUCTION QUALITY AND BEHAVIOR IMPLICATIONS
Spoilage Opportunity Costs
Investing in Quality
Effect of Accounting on Manager Behavior
External Monitoring
SUMMARY
KEY TO SYMBOLS
Self-Study Problems
Key Terms
QUESTIONS
EXERCISES
PROBLEMS
MINI-CASES
Chapter 6: Process Costing
NESTLÉ: BOTTLING WATER IN TENNESSEE
ACCOUNTING FOR THE COST OF MASS-PRODUCED GOODS
Assigning Direct Materials and Conversion Costs
Work in Process and Equivalent Units
PROCESS COSTING METHODS
Detailed Example
RISK OF BIASED DECISIONS: Lake Wobegon Effect
GENERAL LEDGER ACCOUNTS FOR PROCESS COSTING
PREMIER PLASTICS (PART 1): CHOOSING A PROCESS COSTING METHOD
Weighted Average and FIFO Process Cost Reports
Comparison of Weighted Average and FIFO
FOCUS ON ETHICAL DECISION MAKING: Humane Treatment of Chickens
The Ethics of Production Methods
PROCESS COSTING UNDER DIFFERENT ASSUMPTIONS
Direct Materials Added During the Process
Nonuniform Conversion Costs and Multiple Cost Pools
Costs Transferred from Another Department
PREMIER PLASTICS (PART 2): COSTS TRANSFERRED FROM ANOTHER DEPARTMENT AND DIRECT MATERIALS ADDED LATE
ALTERNATIVE SYSTEMS FOR COSTING MASS PRODUCTION
Standard Costing
Just-in-Time and Long-Term Procurement Contracts
Hybrid Costing Systems and Operation Costing
ACCOUNTING FOR SPOILAGE IN PROCESS COSTING
PREMIER PLASTICS (PART 3): FIFO COST REPORT WITH NORMAL AND ABNORMAL SPOILAGE
FIFO Process Cost Report and Journal Entries with Spoilage
Using Spoilage Cost Information
STRATEGIC RISK MANAGEMENT: Premier Plastics (Part 3)
Acceptability of Normal Spoilage
Quality-Related Costs
PROCESS COST INFORMATION AND MANAGER’S INCENTIVES AND DECISIONS
Diagnostic Control of Process Quality and Costs
Process Costing Information and Decision Making
Mismeasurement of Cost Flows
Work in Process Units at Different Stages of Completion
SUMMARY
KEY TO SYMBOLS
Self-Study Problem
Key Terms
QUESTIONS
EXERCISES
PROBLEMS
MINI-CASES
Chapter 7: Multi-Pool, Multi-Driver Costing Methods
SUN LIFE: ANALYZING THE COST OF CLAIMS PROCESSING
ACTIVITY-BASED COSTING (ABC)
Traditional Cost Accounting Systems
Activity-Based Costing Systems
ABC COST HIERARCHY
Organization-Sustaining Activities
Facility-Sustaining Activities
Customer-Sustaining Activities
Product-Sustaining Activities
Batch-Level Activities
Unit-Level Activities
ASSIGNING COSTS USING AN ABC SYSTEM
1. Identify the Relevant Cost Object
2. Identify Activities
3. Assign Costs to Activity-Based Cost Pools
4. For Each ABC Cost Pool, Choose a Cost Driver
5. For Each ABC Cost Pool, Calculate an Allocation Rate
6. For Each ABC Cost Pool, Allocate Activity Costs to the Cost Object
KEENER DOORS AND WINDOWS (PART 1): COMPARISON OF ABC AND TRADITIONAL JOB COSTING
Product Costs Using Job Costing
Product Costs Using ABC
Using ABC Product Cost Information
STRATEGIC RISK MANAGEMENT: Keener Doors and Windows (Part 1)
Product Cost Information Bias
ABC IN SERVICE ORGANIZATIONS
ACTIVITY-BASED MANAGEMENT
Managing Customer Profitability
Managing Product and Process Design
KEENER DOORS AND WINDOWS (PART 2): CUSTOMER PROFITABILITY ANALYSIS, WARRANTY COST ANALYSIS, AND ABM
Using ABC for Customer Profitability
Using ABC for Warranty Costs
Managing Environmental Costs
Managing Quality
Drawbacks of ABC
SWISS WATCH: ABM AND THE COST OF QUALITY
Estimating the Costs of Quality
Using Quality Cost Information to Better Manage Operations
STRATEGIC RISK MANAGEMENT: Swiss Watch
Quality and Reputation
Modified Versions of ABC
FOCUS ON ETHICAL DECISION MAKING: Promoting Inappropriate Uses of ABC
Ethics of Consultant Services
OTHER MULTI-POOL, MULTI-DRIVER COST ACCOUNTING SYSTEMS
Grenzplankostenrechnung (GPK)
Resource Consumption Accounting (RCA)
Cost Pool Calculations Under GPK and RCA
Idle/Excess Capacity Analysis
Multi-Level Income Statement
Drawbacks of GPK and RCA
RISK OF BIASED DECISIONS: Status Quo Bias
MULTI-POOL, MULTI-DRIVER SYSTEMS, DECISION MAKING, AND INCENTIVES
Benefits of ABC, GPK, and RCA Systems
Costs of ABC, GPK, and RCA Systems
SUMMARY
KEY TO SYMBOLS
Self-Study Problems
Key Terms
QUESTIONS
EXERCISES
PROBLEMS
MINI-CASES
Chapter 8: Measuring and Assigning Support Department Costs
ALLOCATING SUPPORT DEPARTMENT COSTS IN SEATTLE
SUPPORT DEPARTMENT COST ALLOCATION
Objectives for Support Department Cost Allocation
PROCESS FOR ALLOCATING SUPPORT DEPARTMENT COSTS
Clarifying the Purpose
Identifying Support and Operating Department Cost Pools
Assigning Costs to Cost Pools and Choosing Allocation Bases
Allocation Methods
DIRECT METHOD
MIDDLETOWN CHILDREN’S CLINIC (PART 1): DIRECT METHOD ALLOCATION
Cost Object, Cost Pools, and Assigning Costs
Choosing Allocation Bases
Direct Method Calculations
STEP-DOWN METHOD
MIDDLETOWN CHILDREN’S CLINIC (PART 2): STEP-DOWN METHOD ALLOCATION
RECIPROCAL METHOD
MIDDLETOWN CHILDREN’S CLINIC (PART 3): RECIPROCAL METHOD ALLOCATION
Allocating Support Costs Among Support Departments
Allocating Support Costs to Operating Departments
Comparing Results and Choosing an Allocation Method
STRATEGIC RISK MANAGEMENT: Middletown Children’s Clinic (Part 3)
Accuracy of Cost Measurement
Comparing the Direct, Step-Down, and Reciprocal Methods
SINGLE-VERSUS DUAL-RATE ALLOCATIONS
MIDDLETOWN CHILDREN’S CLINIC (PART 4): DUAL RATES AND RECIPROCAL METHOD WITH THREE SUPPORT DEPARTM
Charges Based on Single-Rate Allocation
Analysis of Cost Behavior and Revision of Cost Pools
Charges Based on Variable Cost Allocation
Dual-Rate Allocation
STRATEGIC RISK MANAGEMENT: Middletown Children’s Clinic (Part 4)
Support Cost Allocations in a Diagnostic Control System
SUPPORT COST ALLOCATIONS, DECISION MAKING, AND INCENTIVES
Relevant Support Costs for Decision Making
Support Department Allocations as Transfer Prices
Setting Transfer Prices for Support Services
Incentive Effects of Budgeted Versus Actual Rates
Fairness and Allocation of Common Costs
RISK OF BIASED DECISIONS: Fairness Bias
Incentives Under Cost-Based Contracting
FOCUS ON ETHICAL DECISION MAKING: Classifying Overhead Costs at Stanford University
The Ethics of Accurate Cost Classification
APPENDIX 8A: Using Solver to Calculate Simultaneous Equations for the Reciprocal Method
SUMMARY
KEY TO SYMBOLS
Self-Study Problem
Key Terms
QUESTIONS
EXERCISES
PROBLEMS
MINI-CASES
Chapter 9: Joint Product and By-Product Costing
HYPERION—TURNING WASTE INTO PROFIT
JOINT PRODUCTS AND COSTS
ALLOCATING JOINT COSTS
Physical Output Method
Sales Value at Split-Off Point Method
Net Realizable Value Method
Constant Gross Margin NRV Method
CHOOSING AN APPROPRIATE JOINT COST ALLOCATION METHOD
Pros and Cons of Alternative Allocation Methods
MERRITT BROTHERS (PART 1): CHOOSING AN APPROPRIATE ALLOCATION METHOD
PROCESSING A JOINT PRODUCT BEYOND THE SPLIT-OFF POINT
MERRITT BROTHERS (PART 2): JOINT PRODUCT DECISION MAKING
Quantitative and Qualitative Factors
STRATEGIC RISK MANAGEMENT: Merritt Brothers (Part 2)
Relevant Information for Product Line Decisions
Judgment and Bias in Incremental Revenue and Cost Estimates
RISK OF BIASED DECISIONS: Joint-Versus-Separate Preference Reversals
JOINT PRODUCTS AND BY-PRODUCTS
Accounting for By-Products
Income Statement Effects of Recognizing By-Product Value at Time of Production Versus at Sale
JOINT PRODUCT COSTING WITH A SALES MIX
PREMIUM PINEAPPLE COMPANY JOINT PRODUCT COSTING WITH A SALES MIX
Physical Output Method
Sales Value at Split-Off Point Method
Net Realizable Value Method
Constant Gross Margin NRV Method
Comparing Methods
STRATEGIC RISK MANAGEMENT: Premium Pineapple Company
JOINT COST ALLOCATIONS, DECISION MAKING, AND INCENTIVES
Diagnostic Control of Joint Processes and Costs
FOCUS ON ETHICAL DECISION MAKING: Hazardous Cement
Ethics and Hazardous Waste
SUMMARY
KEY TO SYMBOLS
Self-Study Problem
Key Terms
QUESTIONS
EXERCISES
PROBLEMS
MINI-CASES
Chapter 10: Static and Flexible Budgets
PLANNING FOR A MOVING TARGET
BUDGETS AND THE STRATEGIC MANAGEMENT PROCESS
Budgets and Levers of Control
MASTER BUDGET
Developing a Master Budget
Forecasting
RISK OF BIASED DECISIONS: Recency Effect
UNIQUE SINKS (PART 1): DEVELOPING A MASTER BUDGET
Developing the Revenue Budget
Developing the Production Budget
Developing the Direct Materials and Direct Labor Budget
Developing the Manufacturing Overhead Budget
Developing the Budgeted Statement of Cost of Goods Manufactured and Sold
Developing the Selling and Administration Budget
Developing the Cash Receipts and Disbursements Budget
Developing the Short-Term Financing Budget
Developing the Budgeted Statement of Income and Retained Earnings
Developing the Budgeted Balance Sheet
Approving and Using the Master Budget
STRATEGIC RISK MANAGEMENT: Unique Sinks (Part 1)
Budgets as Controls
Budget Assumptions and Business Risks
Bias in Operational Planning
Budgeting in Nonmanufacturing Organizations
Budgeting in International Organizations
FLEXIBLE BUDGETS
Budget Sensitivity Analysis
UNIQUE SINKS (PART 2): DEVELOPING AND USING A FLEXIBLE BUDGET
Developing a Flexible Budget
Flexible Budget Operating Income and Breakeven Point
Flexible Budget Cash Receipts and Disbursements
Using the Flexible Budget for Planning
STRATEGIC RISK MANAGEMENT: Unique Sinks (Part 2)
Flexible Budget and Quality of Information
BUDGETS AS PERFORMANCE BENCHMARKS
Budget Variances and Analyses
UNIQUE SINKS (PART 3): DEVELOPING A VARIANCE REPORT
Static Versus Flexible Budget Variances
Relevant Variance Information
STRATEGIC RISK MANAGEMENT: Unique Sinks (Part 3)
Variances in a Diagnostic Control System
Variances and the Degree of Business Risk
PEOPLE: THE CENTER OF THE BUDGETING PROCESS
Budget Responsibility and Performance Evaluation
Participation in Budgeting
Budget Manipulation
Zero-Based Budgeting
FOCUS ON ETHICAL DECISION MAKING: Timely Reporting of Budget Problems
Budgets, Teamwork, and Ethics
BEYOND TRADITIONAL BUDGETING
Activity-Based Budgets
GPK and RCA Budgets
Beyond Budgeting: Relative Performance Evaluation
Beyond Budgeting: Dynamic Forecasting (Rolling Budgets)
Kaizen Budgets
Technology and Budgeting
SUMMARY
KEY TO SYMBOLS
Self-Study Problems
Key Terms
QUESTIONS
EXERCISES
PROBLEMS
MINI-CASES
Chapter 11: Standard Costs and Variance Analysis
RESPONDING TO UNEXPECTED CHANGES IN RESOURCE SUPPLIES AND PRICES
VARIANCE ANALYSIS AND THE STRATEGIC MANAGEMENT PROCESS
Variance Analysis
Variance Analysis in a Diagnostic Control System
Behavior Implications of Variances in a Diagnostic Control System
Variance Analysis in an Interactive Control System
STANDARD COSTING
Standard Costing System and Variances
Standard Cost Categories
Developing Standard Costs
CEMENTOS JUAREZ (PART 1): SETTING STANDARD COSTS
Setting Cost Standards
Summary of Direct and Overhead Cost Standards
Cost Budget
RISK OF BIASED DECISIONS: Anchoring Trap
STRATEGIC RISK MANAGEMENT: Cementos Juarez (Part 1)
Standard Costs in a Diagnostic Control System
DIRECT COST VARIANCES
Price Variances
Efficiency Variances
Journal Entries for Direct Costs and Variances
CEMENTOS JUAREZ (PART 2): VARIANCES FOR DIRECT MATERIALS AND DIRECT LABOR
Direct Materials Price Variance
Direct Labor Price Variance
Direct Materials Efficiency Variance
Direct Labor Efficiency Variance
ANALYZING DIRECT COST VARIANCE INFORMATION
Identifying Reasons for Direct Cost Variances
Recognizing Resource and Quality Trade-Offs
CEMENTOS JUAREZ (PART 3): ANALYZING DIRECT COST VARIANCE INFORMATION
OVERHEAD VARIANCES
Variable Overhead Spending Variance
Variable Overhead Efficiency Variance
Fixed Overhead Spending Variance
Production Volume Variance
Journal Entries for Overhead Costs and Variances
CEMENTOS JUAREZ (PART 4): OVERHEAD VARIANCES
Variable Overhead Spending and Efficiency Variances
Fixed Overhead Spending and Production Volume Variances
ANALYZING OVERHEAD VARIANCE INFORMATION
Analyzing Overhead Spending Variances
Interpreting the Variable Overhead Efficiency Variance
Interpreting the Production Volume Variance
COST VARIANCE ADJUSTMENTS
FOCUS ON ETHICAL DECISION MAKING: Wasted Soup
Ethics and Continuous Improvement
APPENDIX 11A: Profit-Related Variances
Revenue Variances
Sales Price and Revenue Sales Quantity Variances
Contribution Margin–Related Variances
Contribution Margin Variance and Contribution Margin Sales Volume Variance
Contribution Margin Sales Mix Variance and Contribution Margin Sales Quantity Variance
Analyzing Revenue and Contribution Margin Variance Information
SUMMARY
KEY TO SYMBOLS
Self-Study Problems
Key Terms
QUESTIONS
EXERCISES
PROBLEMS
MINI-CASES
Chapter 12: Strategic Investment Decisions
KEEPING AN EYE ON CHINESE MANUFACTURING CAPACITY
STRATEGIC INVESTMENT DECISIONS
Capital Budgeting
Identifying and Prioritizing Investment Opportunities
Relevant Cash Flows
Quantitative and Qualitative Analyses
NET PRESENT VALUE METHOD
Present Value of a Series of Cash Flows
Net Present Value of a Project
Profitability Index
Identifying a Reasonable Discount Rate
BUSINESS RISK AND SENSITIVITY ANALYSIS
Cash Flow Risks
Estimating Project Life and Discount Rates
Sensitivity Analysis
RISK OF BIASED DECISIONS: Overconfidence Trap
BOULDER MEDICAL SUPPLY (PART 1): NET PRESENT VALUE WITH OPPORTUNITY COST AND SENSITIVITY ANALYSIS
Relevant Cash Flows and Timeline
NPV Analysis
STRATEGIC RISK MANAGEMENT: Boulder Medical Supply (Part 1)
Relevant Information for a Strategic Investment
INTERNAL RATE OF RETURN
IRR Calculations
Comparison of NPV and IRR Methods
PAYBACK METHOD
Advantages and Disadvantages of the Payback Method
ACCRUAL ACCOUNTING RATE OF RETURN METHOD
Advantages and Disadvantages of the Accrual Accounting Rate of Return Method
OTHER CONSIDERATIONS FOR STRATEGIC INVESTMENT DECISIONS
Qualitative Factors
Reputation, Environment, Quality, and Community
Making and Monitoring Strategic Investment Decisions
FOCUS ON ETHICAL DECISION MAKING: The Right Thing To Do
Ethical Priorities for Strategic Investments
INCOME TAXES AND THE NET PRESENT VALUE METHOD
U.S. Income Tax Provisions
Calculating Incremental Tax Cash Flows
BOULDER MEDICAL SUPPLY (PART 2): NET PRESENT VALUE WITH INCOME TAXES
After-Tax Incremental Operating Cash Flows
Depreciation Tax Shield
After-Tax Terminal Cash Flow
Net Present Value and Investment Decision
APPENDIX 12A: Inflation and the Net Present Value Method
Real and Nominal Methods for NPV Analysis
Internal Consistency in NPV Analysis
CENTRAL IRRIGATION, INC.: NPV ANALYSIS WITH INCOME TAXES AND INFLATION
NPV Calculations: Real Method
NPV Calculations: Nominal Method
Comparison of Nominal and Real Methods
Real and Nominal Methods under Varying Inflation Rates
APPENDIX 12B: Present and Future Value Tables
SUMMARY
KEY TO SYMBOLS
Self-Study Problems
Key Terms
QUESTIONS
EXERCISES
PROBLEMS
MINI-CASES
Chapter 13: Strategic Pricing and Cost Management
COMPETITION AND STRATEGIC LOSSES
SECTION 1: Continuous Cost Improvemet
VALUE CHAIN ANALYSIS
Value-Added and Non-Value-Added Activities
Supply Chain Analysis
Using the Internet to Improve Inventory Supply
Just-in-Time Production
Other Benefits of Analyzing Production and Service Systems
BUILDING DESIRED PROFIT INTO DECISIONS
TARGET COSTING
Target Costing Process
Factors That Affect the Success of Target Costing
MOUNT RAINIER BIKES (PART 1): TARGET COSTING
Determine Product Target Price, Quality, and Functionality
Determine Target Cost
Design Product and Production Process to Achieve Target Cost
Product Design Changes
Supplier Negotiations
Nonmanufacturing Costs
Total Planned Cost Reduction
Pilot Project to Evaluate Feasibility
KAIZEN COSTING
Planned Cost Reductions
Achieving Planned Cost Reductions
MOUNT RAINIER BIKES (PART 2): KAIZEN COSTING
Cost Reductions
Continuous Monitoring of Costs
Using Target and Kaizen Costing over Time
LIFE CYCLE COSTING
RISK OF BIASED DECISIONS: Positive Illusions
LEAN ACCOUNTING
SECTION 2: Price Management
PRICING METHODS
Cost-Based Pricing
Market-Based Pricing
PROFIT-MAXIMIZING MARKET-BASED PRICE
Price Elasticity of Demand
FRENCH PERFUMERY: USING PRICE ELASTICITY TO CALCULATE PRODUCT PRICES
Profit-Maximizing Prices for Breezy and Exotique
Market Price Guidelines
Estimating the Effect of Prices on Demand
OTHER MARKET-BASED PRICING METHODS
COST-BASED VERSUS MARKET-BASED PRICING
OTHER INFLUENCES ON PRICE
FOCUS ON ETHICAL DECISION MAKING: Price Gouging after Tragedy
Ethics in a Strategic Pricing Decision
PRICING IN NOT-FOR-PROFIT ORGANIZATIONS
GOVERNMENT REGULATIONS AND PRICING
SUMMARY
KEY TO SYMBOLS
Self-Study Problems
Key Terms
QUESTIONS
EXERCISES
PROBLEMS
MINI-CASES
Chapter 14: Measuring and Assigning Costs for Income Statements
INVENTORY: SCARCITY OR ABUNDANCE?
ABSORPTION COSTING AND VARIABLE COSTING
Absorption Costing
Variable Costing
Managers’ Incentives Under Absorption Costing and Variable Costing
RISK OF BIASED DECISION MAKING: Weasel Words
BOATS AFLOAT YACHT COMPANY (PART 1): ABSORPTION COSTING AND VARIABLE COSTING INCOME STATEMENTS
Absorption Costing
Reconciling Absorption and Variable Costing Incomes
BOATS AFLOAT YACHT COMPANY (PART 2): RECONCILING ABSORPTION COSTING AND VARIABLE COSTING INCOME STAT
THROUGHPUT COSTING
Advantages of Throughput Costing
COMPARISON OF ABSORPTION, VARIABLE, AND THROUGHPUT COSTING
ABSORPTION COSTING USING NORMAL COSTING
Motivation for Normal Costing
Allocation Rate Denominator Considerations
Volume Variance with Normal Costing
Evaluating Denominator Choices
SKI DOODLE: COMPARING RESULTS USING ACTUAL PRODUCTION VOLUMES AND NORMAL CAPACITY
Variable Costing
Absorption Costing with Actual Volume
Absorption Costing with Normal Capacity
Choice of Fixed Overhead Allocation Rate Denominator and Volume Variance Adjustment
The Effects of Beginning Inventory Balances on Income Reconciliation
FLYING FORTRESS: ABSORPTION AND VARIABLE INCOME STATEMENTS WITH BEGINNING INVENTORIES
Variable Costing
Absorption Costing
Reconciliation of Variable and Absorption Costing Income
Using Variable and Absorption Costing Information
DECISION MAKING AND MANAGER INCENTIVES
Incentives to Build Up Inventories
Disincentives to Build Up Inventories
Desirable Inventory Levels and Business Risk
Different Methods for Different Purposes
FOCUS ON ETHICAL DECISION MAKING: Channel Stuffing at Bristol-Myers Squibb
Thinking Critically about Ethics and Channel Stuffing
SUMMARY
KEY TO SYMBOLS
Self-Study Problem
Key Terms
QUESTIONS
EXERCISES
PROBLEMS
MINI-CASES
Chapter 15: Performance Evaluation and Compensation
NUCOR: A GROUP OF PEOPLE IN HEADLONG PURSUIT OF A SHARED PURPOSE*
AGENCY THEORY
Agency Costs
Alternative Theories of Manager and Employee Behavior
DECISION-MAKING AUTHORITY AND RESPONSIBILITY
Centralized and Decentralized Organizations
General Versus Specific Knowledge
Technology and Globalization
Choosing a Centralized Versus Decentralized Organizational Structure
Organizational Structure and Span of Control
RESPONSIBILITY ACCOUNTING
Cost Centers
Revenue Centers
Profit Centers
Investment Centers
Responsibility Centers, Managers’ Incentives, and Diagnostic Controls
INVESTMENT CENTER PERFORMANCE EVALUATION
Return on Investment
COMPUTER WIZARDS (PART 1) RETURN ON INVESTMENT AND DUPONT ANALYSIS
Strategies for Increasing ROI
Choosing a Plan of Action
ROI and Managers’ Incentives
Residual Income
Economic Value Added
COMPUTER WIZARDS (PART 2): COMPARING ALTERNATIVE INVESTMENT CENTER MEASURES
Calculating Residual Income and EVA
Analyzing the Results of Alternative Performance Measures
Residual Income, EVA, and Managers’ Incentives
MOTIVATING PERFORMANCE WITH COMPENSATION
Bonus System Incentives
Using Budgets to Monitor and Reward Performance
Performance Measure Targets
RISK OF BIASED DECISIONS: Regression to the Mean
Budget and Variance Adjustments
Long-Term Versus Short-Term Incentives
International Executive Compensation
FOCUS ON ETHICAL DECISION MAKING: Bailouts and Bonuses
Ethics of Compensation Practices
TRANSFER PRICE POLICIES
Transfer Prices and Conflicts Among Managers
Setting an Appropriate Transfer Price
COMPUTER WIZARDS (PART 3): NEGOTIATED TRANSFER PRICES
ADDITIONAL TRANSFER PRICE CONSIDERATIONS
International Income Taxes
Transfer Prices for Support Services
Setting Transfer Prices for Internal Services
Transfer of Corporate Overhead Costs
SUMMARY
KEY TO SYMBOLS
Self-Study Problems
Key Terms
QUESTIONS
EXERCISES
PROBLEMS
MINI-CASES
Chapter 16: Strategic Performance Measurement
WAL-MART STORES: MAINTAINING A LOW-COST STRATEGY
STRATEGIC MANAGEMENT AND DECISION MAKING
Communicating the Organization’s Vision
Clarifying Core Competencies and Developing Strategies
Developing Operating Plans
Strategic Decision Making Throughout an Organization
MEASURING ORGANIZATIONAL PERFORMANCE
Financial Measures
Nonfinancial Measures
Using a Combination of Measures
BALANCED SCORECARD
ROYAL PHILIPS ELECTRONICS: ADOPTING A BALANCED SCORECARD
Financial Perspective and Related Measures
Customer Perspective and Related Measures
Internal Business Process Perspective and Related Measures
Learning and Growth Perspective and Related Measures
Balanced Scorecard Performance Measures and Concepts Introduced in Prior Chapters
RISK OF BIASED DECISIONS: Information Overload
IMPLEMENTING A BALANCED SCORECARD
Clarify Vision, Core Competencies, and Strategies
Analyze Perspectives, Develop Strategic Objectives and Create a Strategy Map
Communicate, Link Throughout the Organization, and Refine
Establish Measures, Tactical Plans, and Performance Targets
Collect and Analyze Scorecard Data
Investigate Variances and Reward Employees
Provide Feedback and Refine Balanced Scorecard
COMMUNITY HOSPITAL: IMPLEMENTING A BALANCED SCORECARD
Clarify Vision, Core Competencies, and Strategies
Analyze Perspectives, Develop Strategic Objectives, and Create Strategy Map
Communicate, Link Throughout the Organization, and Refine
Establish Measures, Tactical Plans, and Performance Targets
Completing the Balanced Scorecard Implementation Process
STRATEGIC RISK MANAGEMENT: Community Hospital
Strategy Map Linkages
BALANCED SCORECARD, STRATEGIC MANAGEMENT, AND INCENTIVES
Strengths
Weaknesses
Barriers to Implementing Strategies
How Valuable Is the Balanced Scorecard?
Balanced Scorecard and Levers of Control
FOCUS ON ETHICAL DECISION MAKING: Economic Medicalization of Research Studies
Ethics of Economic Medicalization
ENVISIONING THE FUTURE OF COST ACCOUNTING
SUMMARY
KEY TO SYMBOLS
Self-Study Problem
Key Terms
QUESTIONS
EXERCISES
PROBLEMS
MINI-CASES
Chapter 17: Sustainability Accounting
THE SCOOP ON SOCIAL AND ENVIRONMENTAL REPORTING AT BEN & JERRY’S®
SUSTAINABLE MANAGEMENT
Sustainability and Sustainable Management
Strategic Process for Sustainable Management
FOCUS ON ETHICAL DECISION MAKING: Rooting Out Bribery
Ethics and Similar Codes of Conduct in Practice
Sustainability and Levers of Control
SUSTAINABILITY ACCOUNTING AND REPORTING
Sustainability Accounting and Sustainability Management Accounting
Internal and External Sustainability Reporting
EXTERNAL SUSTAINABILITY REPORTING
Motivations for External Sustainability Reporting
RISK OF BIASED DECISIONS: Greenwashing
Frameworks and Guidelines for External Sustainability Reporting
Recognition for High-Quality Sustainability Management and Reporting
SUSTAINABILITY MANAGEMENT ACCOUNTING TOOLS
Relevant Sustainability Costs and Benefits for Decision Making
More Accurate Assignment of Sustainability Costs
Material Flow Accounting
Material Flow Cost Accounting
PREMIER PLASTICS (PART 4): MATERIAL FLOW FIFO COST REPORT
STRATEGIC RISK MANAGEMENT: Premier Plastics (Part 4)
Accounting for Manufacturing Material Flow
Sustainability Life Cycle Costing
Sustainability and Capital Budgeting
Sustainability Balanced Scorecard
Role of Management Accounting in Sustainability
SUMMARY
KEY TO SYMBOLS
Self-Study Problems
Key Terms
QUESTIONS
EXERCISES
PROBLEMS
MINI-CASE
SUSTAINABILITY HOMEWORK IN OTHER CHAPTERS
Glossary
Credits
Organization and People Index
Subject Index