Managerial Accounting Book

Section M1	Product Costing and Decision Making	1
M1	Accounting and Management Decisions	2
	Introduction to Managerial Accounting	3
	Corporate Structure and Accounting Information Needs	3
	The Changing Needs of Business	5
	The Quality of Accounting Information	5
	The Role of Managerial Accounting in Planning and Control	7
	Planning	8
	Control	8
	Ethics and Control	10
	Interactions Among Accounting, Marketing, and Operations	10
	Managerial Accounting and Marketing	11
	Managerial Accounting and Operations	12
	Other Effects on Marketing and Operations	12
	Responding to the New Business Environment	14
	Total Quality Management	14
	Just-in-Time Manufacturing	15
	Time-Based Competition	15
	Flexible Manufacturing	15
	Effects of the New Business Environment on Managerial Accounting	16
	Traditional Managerial Accounting Systems	17
	New Decision-Making Tools	17
	New Thinking about Performance Measures	20
	Managerial Accounting in Service Companies	21
M2	Cost Categorization, Cost Flow, and Measurement Decisions	34
	The Production Process: An Illustration	35
	Products and Market	35
	Product Design and Manufacturing	36
	Product Costs Versus Period Expense	37
	Product Costs	37
	Cost Flows Through an Organization	40
	Manufacturing Costs	40
	Manufacturing Cost Flow	41
	Traditional Cost Categories	44
	Cost Behavior in Relation to Changes in Activity Levels	44
	Other Behavior Considerations: Management Policies and Time	47
	Cost-Based Decision Making	48
	Target-Costing Decisions	48
	Make or Buy Decisions	51
	Sell-Now or Process-Further Decisions	53
	Cost Information for Service Organizations	54
	Cost Categories	54
	Cost Behavior	54
	Cost Control	54
M3	Unit Costs for Decision Making	76
	The Role of Unit Costs	77
	Placing a Value on Inventory	77
	Managerial Decision Making	78
	The Elements of Unit Cost	80
	Measuring Costs	81
	Actual Costing	81
	Normal Costing	82
	Assigning Unit Costs	85
	Choosing a Costing Method	86
	Job-Order Costing	88
	Process Costing	90
	Accuracy of Unit Costs	95
	Unit Costs in the Service Sector	96
M4	Cost Measurement for Management	120
	Contribution Margin and the Variable-Costing Income Statement	121
	Cost Behavior: A Review	121
	The Variable-Costing Income Statement	122
	Cost-Volume Profit Analysis	123
	Breakeven-Point Analysis	125
	Target-Profit Analysis	126
	Profit-Sensitivity Analysis	127
	Margin-of-Safety Analysis	127
	Managers' Decisions about Fixed Costs and Operating Risk	127
	Variable and Absorption Costing: A Comparison	128
	Pricing Decisions: Unit Product Cost	129
	Performance Evaluation: Net Income	130
	Choosing Between Variable Costing and Absorption Costing	133
	Arguments For and Against Variable Costing	133
	Arguments For and Against Absorption Costing	135
	Measuring Costs for Decision Making in Service Companies	136
M5	Cost Allocation and Business Strategy	160
	The Reasons for Cost Allocation	161
	Volume-Based Allocation: The Traditional Method	161
	Background	162
	Predetermined Overhead Rates: A Review	163
	Volume-Based Allocation: Two Examples	164
	Click Pen Company	165
	Wafer Pen Company	168
	Strategic Implications	172
	The Problems With Volume-Based Allocation	174
	Economies of Scale	174
	The Allocation Base	174
	Cooper's Hierarchy	175
	Unit-Level Costs	175
	Batch-Level Costs	176
	Product-Level Costs	176
	Facility-Level Costs	176
	Activity-Based Costing	177
	Cost Allocation and Decision Making in the Service Sector	181
Section M2	Control, Measurement, and Evaluation	205
M6	The Role of Budgets in Decision Making	206
	Overview of the Master Budget	207
	Developing the Master Budget	208
	Sales Budget	209
	Production Budget	210
	Direct Materials Budget	211
	Direct Labor Budget	212
	Manufacturing Overhead Budget	212
	Selling and Administrative Expense Budget	213
	Pro Forma Budgeted Income Statement	215
	Flexible Budget Approach	215
	Cash Budget	216
	Pro Forma Budgeted Balance Sheet	218
	Sensitivity Analysis in Budgeting	219
	Developing a Sound Budgeting Culture	221
	Considerations in Implementing Budgets	221
	Scope of the Budget	222
	Foreign Operations, Currency Fluctuation, and Inflation	222
	Budget Revisions	222
	Behavioral Concerns in Budgeting	222
	Changing Behavior	223
	Participation in the Budget Process	223
	Slack in Budgets	224
	Budgets in Undesirable Behavior	225
	Strategic Considerations in Budgeting	226
	Budgeting in Service Companies	226
M7	Evaluating Performance Within an Organization	253
	MetalArt: Performance Evaluation and the Manufacturing Process	254
	Coil Shearing	254
	Coating	254
	Printing	256
	Wrapping and Shipping	256
	MetalArt: Cost and Quality Management	257
	MetalArt--March 2000	257
	MetalArt--2002	257
	Variance Analysis for Direct Materials and Direct Labor	258
	MetalArt--April 2000	258
	Direct Materials and Direct Labor Variances	258
	Calculation and Interpretation of Materials and Labor Variances	260
	Limitations of Traditional Variance Analysis	263
	Quality Cost Concepts	265
	Taguchi's Quality Loss Function	266
	MetalArt--December 2001	268
	Statistical Process Control	271
	Performance Evaluation for Service Organizations	273
M8	Controlling Decisions in Decentralized Organizations	299
	The American Paper Company	300
	Theoretical Framework for Behavior Within Organizations	302
	Management of Decentralized Organizations	303
	Benefits of Decentralization	304
	Performance Evaluation Using ROI	306
	Discussion of Results	307
	Criticisms of Using ROI to Evaluate Performance	309
	Economic Value Added Compared to ROI	311
	The Balanced Scorecard Approach	312
	Transfer Pricing	315
	The Scenario	315
	Transfer Pricing Summary	319
	Management of Decentralized Service Organizations	320
M9	Management Accounting in a Competitive Business Environment	342
	The New Competitive Environment	343
	Total Quality Management at Tuff Cut	344
	Principles of Just-in-Time Manufacturing	348
	Nonfinancial Performance Measures	349
	Product-Oriented Versus Process-Oriented Plant Layout	353
	Financial Benefits Resulting from JIT	356
	Drawbacks to the Just-in-Time Manufacturing Philosophy	358
	The Theory of Constraints	358
	Steps to Improve Performance	359
	Implementation of the Theory of Constraints	359
	Just-in-Time and Theory of Constraints Similarities and Differences	361
	Service Organizations in a Global Business Environment	363
M10	Decisions About Capital Investments	382
	Factors Affecting Decisions	383
	Controlling Capital Investments	385
	Traditional Approaches	386
	Net Present Value	386
	Internal Rate of Return	388
	Payback Period	390
	Accounting Rate of Return	391
	Other Considerations	391
	The New Manufacturing Environment	392
	Automation and Modern Manufacturing	393
	Making Sound Strategic Decisions	394
	Problems in Making Decisions	395
	Avoiding Problems	396
	Moving Baseline Concept	397
	Uncertain and Hidden Costs	397
	Responding to Bad Capital Investment Decisions	399
	Opportunity Costs in Capital Investment Decisions	401
	Capital Investment Decisions in Service Companies	401
Section M3	Expanded Topics	421
M11	Internal Control	422
	Internal Control Objectives	423
	Internal Control and Human Behavior	424
	The Structure of an Internal Control System	426
	Organizational Environment	427
	Risk Assessment	430
	Other Aspects of Internal Control Structure	431
	Internal Control Activities	431
	Communication of Internal Control Policies and Problems	435
	Monitoring	436
	Internal Auditing	436
M12	A Closer Look at Service Organizations	452
	Background and Environment of Stonebrook Medical Center	453
	Modern Cost Management Systems for Service Organizations	454
	Step-down and Simultaneous Algebraic Equation Methods for Allocating Reciprocal Support Costs	455
	Cost Management Systems for Service Companies	460
	Performance Measurement and Cost Management Strategies in the Service Environment	463
	Outcomes Data Dissemination	464
	Critical Path Utilization	466
	Summary	467
M13	The Japanese Perspective	488
	Confrontation Strategy and the Survival Triplet	489
	The Survival Triplet	490
	Techniques to Control Future Costs	494
	Target Costing	494
	Value Engineering	496
	Decision Makers Affected	498
	Interorganizational Cost Management Systems	498
	Who Benefits from Target Costing and Value Engineering?	498
	Techniques to Control Current Costs	499
	Service Organizations	501
Appendix A	Future and Present Value	1
Appendix B	A Short Introduction to Excel	3
	Glossary	1
	Index	1