Managerial Accounting PDF
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Managerial Accounting Managerial Accounting F o u r t e e n t h E d i t i o n Ray H. Garrison , D.B.A., CPA Professor E meritus Brigham Young U niversity Eric W. Noreen , Ph.D., CMA Professor E meritus University of Washington Peter C. Brewer , Ph.D., CPA Miami U niversity—Oxford, O hio MANAGERIAL ACCOUNTING Published by McGraw-Hill/Irwin, a business unit of The McGraw-Hill Companies, Inc., 1221 Avenue of the Americas, New York, NY, 10020. Copyright © 2012, 2010, 2008, 2006, 2003, 2000, 1997, 1994, 1991, 1988, 1985, 1982, 1979, 1976 by The McGraw-Hill Companies, Inc. All rights reserved. No part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written consent of The McGraw-Hill Companies, Inc., including, but not limited to, in any network or other electronic storage or transmission, or broadcast for distance learning. Some ancillaries, including electronic and print components, may not be available to customers outside the United States. This book is printed on acid-free paper. 1 2 3 4 5 6 7 8 9 0 DOW/DOW 1 0 9 8 7 6 5 4 3 2 1 ISBN 978-0-07-811100-6 MHID 0-07-811100-5 Vice president and editor-in-chief: Brent Gordon Editorial director: Stewart Mattson Publisher: Tim Vertovec Sponsoring editor: Donna Dillon Executive director of development: Ann Torbert Development editor: Katie Jones Vice president and director of marketing: Robin J. Zwettler Marketing director: Brad Parkins Senior marketing manager: Kathleen Klehr Vice president of editing, design, and production: Sesha Bolisetty Lead project manager: Pat Frederickson Senior buyer: Carol A. Bielski Lead designer: Matthew Baldwin Senior photo research coordinator: Keri Johnson Senior media project manager: Allison Souter Media project manager: Cathy L. Tepper Cover image: © Getty Images Typeface: 10.5/12 Times Roman Compositor: Laserwords Private Limited Printer: R. R. Donnelley Library of Congress Cataloging-in-Publication Data Garrison, Ray H. Managerial accounting / Ray H. Garrison, Eric W. Noreen, Peter C. Brewer. — 14th ed. p. cm. Includes index. ISBN-13: 978-0-07-811100-6 (alk. paper) ISBN-10: 0-07-811100-5 (alk. paper) 1. Managerial accounting. I. Noreen, Eric W. II. Brewer, Peter C. III. Title. HF5657.4.G37 2012 658.15’11—dc22 2010045770 www.mhhe.com Dedication To our families and to our many colleagues who use this book. About the Authors Ray H. Garrison is emeritus professor of accounting at Brigham Young University, Provo, Utah. He received his BS and MS degrees from Brigham Young University and his DBA degree from Indiana University. As a certified public accountant, Professor Garrison has been involved in management consulting work with both national and regional accounting firms. He has published articles in The Accounting Review, Management Accounting, and other professional journals. Innovation in the classroom has earned Professor Garrison the Karl G. Maeser Distinguished Teaching Award from Brigham Young University. Eric W. Noreen has held appointments at institutions in the United States, Europe, and Asia. He is emeritus professor of accounting at the University of Washington. He received his BA degree from the University of Washington and MBA and PhD degrees from Stanford University. A Certified Management Accountant, he was awarded a Certificate of Distinguished Performance by the Institute of Certified Management Accountants. Professor Noreen has served as associate editor of The Accounting Review and the Journal of Accounting and Economics. He has numerous articles in academic journals including: the Journal of Accounting Research; The Accounting Review; the Journal of Accounting and Economics; Accounting Horizons; Accounting, Organizations and Society; Contemporary Accounting Research; the Journal of Management Accounting Research; and the Review of Accounting Studies. Professor Noreen has won a number of awards from students for his teaching. vi Garrison Noreen Brewer Peter C. Brewer is a professor in the Department of Accountancy at Miami University, Oxford, Ohio. He holds a BS degree in accounting from Penn State University, an MS degree in accounting from the University of Virginia, and a PhD from the University of Tennessee. He has published more than 30 articles in a variety of journals including: Management Accounting Research, the Journal of Information Systems, Cost Management, Strategic Finance, the Journal of Accountancy, Issues in Accounting Education, and the Journal of Business Logistics. Professor Brewer is a member of the editorial board of the Journal of Accounting Education and has served on the editorial board of Issues in Accounting Education. His article “Putting Strategy into the Balanced Scorecard” won the 2003 International Federation of Accountants’ Articles of Merit competition, and his articles “Using Six Sigma to Improve the Finance Function” and “Lean Accounting: What’s It All About?” were awarded the Institute of Management Accountants’ Lybrand Gold and Silver Medals in 2005 and 2006. He has received Miami University’s Richard T. Farmer School of Business Teaching Excellence Award and has been recognized on two occasions by the Miami University Associated Student Government for “making a remarkable commitment to students and their educational development.” He is a leading thinker in undergraduate management accounting curriculum innovation and is a frequent presenter at various professional and academic conferences. Prior to joining the faculty at Miami University, Professor Brewer was employed as an auditor for Touche Ross in the firm’s Philadelphia office. He also worked as an internal audit manager for the Board of Pensions of the Presbyterian Church (U.S.A.). He frequently collaborates with companies such as Harris Corporation, Ghent Manufacturing, Cintas, Ethicon Endo-Surgery, Schneider Electric, Lenscrafters, and Fidelity Investments in a consulting or case writing capacity. Managerial Accounting Fourteenth Edition vii Garrison Let be Your Guide For centuries, the lighthouse has provided guidance and safe passage for sailors. Similarly, Garrison/Noreen/Brewer has successfully guided millions of students through managerial accounting, helping them sail It is the ‘Bible’ of smoothly through the course. Managerial Accounting. Decades ago, lighthouses were still being operated manually. In these Mark Motluck , Anderson University days of digital transformation, lighthouses are run using automatic lamp changers and other modern devices. In much the same way, Garrison/ Noreen/Brewer has evolved over the years. Today, the Garrison book An excellent choice not only guides students—accounting majors and other business majors for a fi rst course in alike—safely through the course but is enhanced by a number of powerful managerial accounting. new tools to augment student learning and increase student motivation. Steven Huddart , Penn State McGraw-Hill’s C onnect™ Accounting offers a number of features to facilitate student learning. Embedded within Connect Accounting, our NEW intelligent technology, LearnSmart, offers flashcards that personalize Garrison is the study experience by constantly adapting, emphasizing the concepts a the gold standard student still needs to master. N EW animated, narrated Guided Examples of all accounting texts. connected to practice exercises within C onnect Accounting provide a Gene Johnson , step-by-step walkthrough of a similar exercise, assisting students when they Clark College need it most. C onnect Accounting’s NEW Self-Quiz and Study provides a study plan that recommends specific readings from the text, supplemental narrated PowerPoints, and practice exercises that will improve students’ understanding of each learning objective. Finally, the student library within Connect gives students access to additional resources, such as forms for the N EW Applying Excel feature, Interactive Presentations for each learning objective, an electronic version of the textbook, and more. Just as the lighthouse continues to provide reliable guidance to seafarers, the Garrison/Noreen/Brewer book continues its tradition of helping students sail successfully through managerial accounting by always focusing on three important qualities: relevance, accuracy, and clarity. viii Garrison Noreen Brewer Garrison’s Managerial Accounting text is one of RELEVANCE. the best introductory texts Every effort is made to help students available today. It provides relate the concepts in this book to the decisions made by working students with the tools and managers. In the fourteenth edition, the authors have written a information needed to help new Chapter 1 with the goal of helping all business students better them successfully learn this understand why managerial accounting is relevant to their future material in an interesting careers. New and revised In Business boxes throughout the book and engaging manner. link chapter concepts to pertinent real-world examples. Service The Garrison text is the only option. industry references appear throughout the chapter narrative and end-of-chapter material to provide students with relevant context Tracy Campbell Tuttle , San Diego Mesa Community College for the material they are learning. The robust Connect Accounting technology package is populated with new and exciting tools to help keep students engaged in the learning process. For these reasons and many more, a student reading Garrison should Good service industry never have to ask “Why am I learning this?” materials. The more I read the book, the more ACCURACY. I appreciated this information. The Garrison book continues to set the The homework . . . directed standard for accurate and reliable material in its fourteenth toward service business edition. With each revision, the authors evaluate the book and expands the relevance of the its supplements in their entirety, working diligently to ensure material to the student. that the end-of-chapter material, solutions manual, and test Don Lucy , bank are consistent, current, and accurate. Indian River State College CLARITY. Generations of students have praised Garrison for the friendliness and readability of its writing, but A well-done text that is a that’s just the beginning. In the fourteenth edition, the authors pleasure to teach from. have rewritten various chapters with input and guidance from Joseph Gerard , University of Wisconsin—Whitewater instructors around the country to ensure that teaching and learning from Garrison remains as easy as it can be. In addition, the authors have taken an active role in building out Connect Accounting, carefully reviewing its various components to ensure It’s still the best book on the clarity and consistency with the textbook. market, and my students continually tell me what a The authors’ steady focus on these three core elements has led great book it is. to tremendous results. Managerial Accounting has consistently led Charles Caliendo , the market, being used by over two million students and earning University of Minnesota a reputation for reliability that other texts aspire to match. Managerial Accounting Fourteenth Edition ix Garrison’s Managerial Accounting includes pedagogical elements that engage and instruct students without cluttering the pages or interrupting student learning. Garrison’s key pedagogical tools enhance and support students’ understanding of the concepts rather than compete with the narrative for their attention. NEW to the fourteenth edition of Garrison! Job-Order Costing 113 Applying Excel Applying Excel Available with McGraw-Hill’s Connect™ Accounting . LEARNING OBJECTIVES 1, 4, 7 The Excel worksheet form that appears below is to be used to recreate part of the example on This NEW and exciting end-of-chapter feature links page 104. Download the workbook containing this form from the Online Learning Center at www. mhhe.com/garrison14e. On the website you will also receive instructions about how to use this worksheet form. the power of Excel with managerial accounting concepts by illustrating how Excel functionality can be used to better understand accounting data. Applying Excel goes beyond plugging numbers into a template by providing students with an opportunity to build their own Excel worksheets and formulas. Students are then asked “what if” questions in which they analyze not You should proceed to the requirements below only after completing your worksheet. only h ow related pieces of accounting data affect each Required: 1 . CDhaetac ka ryeoa utro w60o,r0k0sh0e meta bcyh inche-ahnoguinrsg, tkheee peisntigm aaltle odf ttohtea lo athmeor udnatt ao ft hteh es aamlloec aasti oinn tbhaes oe riing itnhael other but why they do. Applying Excel immediately example. If your worksheet is operating properly, the predetermined overhead rate should now be $5.00 per machine-hour. If you do not get this answer, find the errors in your work- s heetH aonwd cmorurcehc ti sth tehme .underapplied (overapplied) manufacturing overhead? Did it change? precedes the Exercises in twelve of the fifteen chapters Why or why not? 2. Determine the underapplied (overapplied) manufacturing overhead for a different company with the following data: in the book and is also i ntegrated with McGraw- Allocation base. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Machine-hours EEssttiimmaatteedd mtoatanlu afamcotuurnint go fo vtheerh aelalodc acotiostn .b . a. s.e . .. .. .. .. .. .. .. .. .. .. .. $ 1 0500,,000000 machine-hours Hill’s Connect™ Accounting, allowing students to Actual manufacturing overhead cost . . . . . . . . . . . . . . . . . . $90,000 Actual total amount of the allocation base . . . . . . . . . . . . . . 40,000 machine-hours practice their skills online with algorithmically generated datasets. An excellent pedagogical feature that helps further reinforce students’ knowledge of key concepts in the text book, while strengthening students’ Excel skills that are so important in the work place. This will further enhance an already excellent text. Marianne L. James , California State University, Los Angeles [Applying Excel is] an excellent way for students to programmatically develop spreadsheet skills without having to be taught spreadsheet techniques by the instructor. A signifi cant associated benefi t is that students gain more exposure to the dynamics of accounting information by working with what-if scenarios. Earl Godfrey , Gardner–Webb University x Garrison Noreen Brewer
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