Managerial Accounting

648 Pages·2010·12.143 MB·English

by  Susan V. Crosson, Belverd E. Needles Jr

Managerial
Accounting
NINTH EDITION
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Managerial
Accounting
NINTH EDITION
Susan V. Crosson, M.S. Accounting, C.P.A
Santa Fe College
Belverd E. Needles, Jr., Ph.D., C.P.A., C.M.A.
DePaul University
Managerial Accounting, © 2011, 2008 South-Western, Cengage Learning
Ninth Edition
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Library of Congress Control Number: 2009943379
Student Edition ISBN 10: 0-538-74280-1
Student Edition ISBN 13: 978-0-538-74280-1
Instructors Edition ISBN 10: 0-538-74281-X
Instructors Edition ISBN 13: 978-0-538-74281-8
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BRIEF CONTENTS
1 The Changing Business Environment: A Manager’s Perspective 2
2 Cost Concepts and Cost Allocation 44
3 Costing Systems: Job Order Costing 90
4 Costing Systems: Process Costing 128
5 Value-Based Systems: ABM and Lean 166
6 Cost Behavior Analysis 206
7 The Budgeting Process 248
8 Performance Management and Evaluation 300
9 Standard Costing and Variance Analysis 344
10 Short-Run Decision Analysis 392
11 Capital Investment Analysis 432
12 Pricing Decisions, Including Target Costing and Transfer
Pricing 470
13 Quality Management and Measurement 516
14 Financial Analysis of Performance 554
APPENDIX A Present Value Tables 604
v
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CONTENTS
Preface xv
About the Authors xxix
CHAPTER 1 The Changing Business Environment: A Manager’s Perspective 2
DECISION POINT (cid:2) A MANAGER’S FOCUS WAL-MART Achieving Continuous Improvement 17
STORES, INC. 3
Performance Measures: A Key to Achieving
The Role of Management Accounting 4 Organizational Objectives 19
Management Accounting and Financial Accounting: Using Performance Measures in the Management
A Comparison 4 Process 19
Management Accounting and the Management The Balanced Scorecard 20
Process 5
Benchmarking 22
Value Chain Analysis 11
Standards of Ethical Conduct 22
Primary Processes and Support Services 12
A LOOK BACK AT (cid:2) WAL-MART STORES, INC. 25
Advantages of Value Chain Analysis 13
STOP & REVIEW 27
Managers and Value Chain Analysis 13
CHAPTER ASSIGNMENTS 29
Continuous Improvement 15
Management Tools for Continuous
Improvement 16
CHAPTER 2 Cost Concepts and Cost Allocation 44
DECISION POINT (cid:2) A MANAGER’S FOCUS THE HERSHEY Income Statement and Accounting for
COMPANY 45 Inventories 50
Cost Information 46 Statement of Cost of Goods Manufactured 51
Managers’ Use of Cost Information 46 Cost of Goods Sold and a Manufacturer’s Income
Cost Information and Organizations 46 Statement 53
Cost Classifications and Their Uses 46 Inventory Accounts in Manufacturing
Organizations 54
Cost Traceability 47
Document Flows and Cost Flows Through the
Cost Behavior 48
Inventory Accounts 54
Value-Adding Versus Nonvalue-Adding
The Manufacturing Cost Flow 56
Costs 48
Cost Classifications for Financial Reporting 48 Elements of Product Costs 58
Prime Costs and Conversion Costs 59
Financial Statements and the Reporting
of Costs 50 Computing Product Unit Cost 59
vii
viii Contents
Product Cost Measurement Methods 60 Allocating Overhead: The ABC Approach 67
Computing Service Unit Cost 62 A LOOK BACK AT (cid:2) THE HERSHEY COMPANY 69
Cost Allocation 63 STOP & REVIEW 71
Allocating the Costs of Overhead 63 CHAPTER ASSIGNMENTS 74
Allocating Overhead: The Traditional Approach 65
CHAPTER 3 Costing Systems: Job Order Costing 90
DECISION POINT (cid:2) A MANAGER’S FOCUS COLD STONE Overhead 98
CREAMERY, INC. 91 Completed Units 99
Product Unit Cost Information and the Sold Units 99
Management Process 92
Reconciliation of Overhead Costs 100
Planning 92
A Job Order Cost Card and the Computation
Performing 92
of Unit Cost 101
Evaluating 92
A Manufacturer’s Job Order Cost Card and the
Communicating 92 Computation of Unit Cost 101
Product Costing Systems 93 Job Order Costing in a Service Organization 102
Job Order Costing in a Manufacturing A LOOK BACK AT (cid:2) COLD STONE CREAMERY, INC. 105
Company 95 STOP & REVIEW 107
Materials 96 CHAPTER ASSIGNMENTS 109
Labor 98
CHAPTER 4 Costing Systems: Process Costing 128
DECISION POINT (cid:2) A MANAGER’S FOCUS DEAN Accounting for Units 136
FOODS 129 Accounting for Costs 139
The Process Costing System 130 Assigning Costs 139
Patterns of Product Flows and Cost Flow Process Costing for Two or More Production
Methods 131 Departments 141
Cost Flows Through the Work in Process Inventory Preparing a Process Cost Report Using the
Accounts 132
Average Costing Method 143
Computing Equivalent Production 133 Accounting for Units 143
Equivalent Production for Direct Materials 134 Accounting for Costs 145
Equivalent Production for Conversion Costs 135 Assigning Costs 145
Summary of Equivalent Production 135 A LOOK BACK AT (cid:2) DEAN FOODS 148
Preparing a Process Cost Report Using the STOP & REVIEW 151
FIFO Costing Method 136 CHAPTER ASSIGNMENTS 153
Contents ix
CHAPTER 5 Value-Based Systems: ABM and Lean 166
DECISION POINT (cid:2) A MANAGER’S FOCUS LA-Z-BOY, The New Operating Environment and Lean
INC. 167 Operations 176
Value-Based Systems and Just-in-Time (JIT) 176
Management 168
Continuous Improvement of the Work
Value Chains and Supply Chains 169 Environment 178
Process Value Analysis 170 Accounting for Product Costs in a JIT Operating
Value-Adding and Non-Value-Adding Activities 171 Environment 178
Value-Based Systems 171 Backflush Costing 180
Activity-Based Management 171 Comparison of ABM and Lean 184
Managing Lean Operations 172 A LOOK BACK AT (cid:2) LA-Z-BOY, INC. 185
Activity-Based Costing 172 STOP & REVIEW 188
The Cost Hierarchy and the Bill of Activities 173 CHAPTER ASSIGNMENTS 190
CHAPTER 6 Cost Behavior Analysis 206
DECISION POINT (cid:2) A MANAGER’S FOCUS FLICKR 207 Breakeven Analysis 220
Cost Behavior and Management 208 Using an Equation to Determine the Breakeven
Point 221
The Behavior of Costs 208
The Breakeven Point for Multiple Products 222
Mixed Costs and the Contribution Margin
Income Statement 214 Using C-V-P Analysis to Plan Future Sales,
Costs, and Profits 225
The Engineering Method 214
Applying C-V-P to Target Profits 225
The Scatter Diagram Method 214
The High-Low Method 215 A LOOK BACK AT (cid:2) FLICKR 228
STOP & REVIEW 231
Statistical Methods 217
CHAPTER ASSIGNMENTS 233
Contribution Margin Income Statements 217
Cost-Volume-Profit Analysis 218
CHAPTER 7 The Budgeting Process 248
DECISION POINT (cid:2) A MANAGER’S FOCUS FRAMERICA Preparation of a Master Budget 253
CORPORATION 249 Budget Procedures 256
The Budgeting Process 250
Operating Budgets 257
Advantages of Budgeting 250
The Sales Budget 257
Budgeting and Goals 251
The Production Budget 258
Budgeting Basics 251
The Direct Materials Purchases Budget 259
The Master Budget 253 The Direct Labor Budget 261