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Managerial Accounting Concepts and Principles	p. 1
Managerial Accounting	p. 2
The Differences Between Managerial and Financial Accounting	p. 2
The Management Accountant in the Organization	p. 3
Managerial Accounting in the Management Process	p. 4
A Tour of Manufacturing Operations: Costs and Terminology	p. 7
Direct and Indirect Costs	p. 8
Manufacturing Costs	p. 9
Financial Statements for a Manufacturing Business	p. 13
Balance Sheet for a Manufacturing Business	p. 13
Income Statement for a Manufacturing Company	p. 14
Uses of Managerial Accounting	p. 18
Job Order Cost Systems	p. 38
Cost Accounting System Overview	p. 39
Job Order Cost Systems for Manufacturing Businesses	p. 40
Materials	p. 41
Factory Labor	p. 43
Factory Overhead Cost	p. 45
Work in Process	p. 48
Finished Goods and Cost of Goods Sold	p. 50
Sales	p. 50
Period Costs	p. 51
Summary of Cost Flows for Legend Guitars	p. 51
Job Order Costing for Decision Making	p. 53
Job Order Cost Systems for Professional Service Businesses	p. 54
Process Cost Systems	p. 79
Overview of Process Manufacturers and Process Costing	p. 80
Comparing Job Order and Process Cost Systems	p. 81
Cost Flows for a Process Manufacturer	p. 83
The First-In, First-Out (FIFO) Method	p. 84
Determine the Units to Be Assigned Costs	p. 85
Compute Equivalent Units of Production	p. 86
Determine the Cost per Equivalent Unit	p. 89
Allocate Costs to Transferred and Partially Completed Units	p. 90
Bringing It All Together: The Cost of Production Report	p. 92
Journal Entries for a Process Cost System	p. 94
Using the Cost of Production Report for Decision Making	p. 96
Just-in-Time Processing	p. 97
Average Cost Method	p. 100
Determining Cost Under the Average Cost Method	p. 100
The Cost of Production Report	p. 101
Cost Behavior and Cost-Volume-Profit Analysis	p. 127
Cost Behavior	p. 128
Variable Costs	p. 129
Fixed Costs	p. 130
Mixed Costs	p. 130
Summary of Cost Behavior Concepts	p. 133
Cost-Volume-Profit Relationships	p. 134
Contribution Margin Concept	p. 134
Unit Contribution Margin	p. 135
Mathematical Approach to Cost-Volume-Profit Analysis	p. 136
Break-Even Point	p. 136
Target Profit	p. 140
Graphic Approach to Cost-Volume-Profit Analysis	p. 141
Cost-Volume-Profit (Break-Even) Chart	p. 141
Profit-Volume Chart	p. 143
Use of Computers in Cost-Volume-Profit Analysis	p. 144
Assumptions of Cost-Volume-Profit Analysis	p. 144
Special Cost-Volume-Profit Relationships	p. 145
Sales Mix Considerations	p. 146
Operating Leverage	p. 147
Margin of Safety	p. 148
Variable Costing for Management Analysis	p. 171
The Income Statement Under Variable Costing and Absorption Costing	p. 172
Income from Operations When Units Manufactured Equal Units Sold	p. 174
Income from Operations When Units Manufactured Exceed Units Sold	p. 174
Income from Operations When Units Manufactured Are Less than Units Sold	p. 174
Comparing Income from Operations Under the Two Concepts	p. 177
Income Analysis Under Variable Costing and Absorption Costing	p. 177
Management's Use of Variable Costing and Absorption Costing	p. 180
Controlling Costs	p. 180
Pricing Products	p. 181
Planning Production	p. 182
Analyzing Contribution Margins	p. 182
Analyzing Market Segments	p. 182
Variable Costing in Analyzing Market Segments	p. 182
Sales Territory Profitability Analysis	p. 183
Product Profitability Analysis	p. 184
Salesperson Profitability Analysis	p. 185
Contribution Margin Analysis	p. 187
Variable Costing for Service Firms	p. 189
Variable Costing Income Statement-Service Firm	p. 189
Market Segment Analysis-Service Firm	p. 190
Contribution Margin Analysis	p. 191
Budgeting	p. 213
Nature and Objectives of Budgeting	p. 220
Objectives of Budgeting	p. 220
Human Behavior and Budgeting	p. 222
Budgeting Systems	p. 224
Static Budget	p. 225
Flexible Budget	p. 226
Computerized Budgeting Systems	p. 227
Master Budget	p. 228
Income Statement Budgets	p. 229
Sales Budget	p. 229
Production Budget	p. 229
Direct Materials Purchases Budget	p. 230
Direct Labor Cost Budget	p. 231
Factory Overhead Cost Budget	p. 232
Cost of Goods Sold Budget	p. 233
Selling and Administrative Expenses Budget	p. 234
Budgeted Income Statement	p. 235
Balance Sheet Budgets	p. 235
Cash Budget	p. 235
Capital Expenditures Budget	p. 238
Budgeted Balance Sheet	p. 239
Performance Evaluation Using Variances from Standard Costs	p. 285
Standards	p. 266
Setting Standards	p. 266
Types of Standards	p. 267
Reviewing and Revising Standards	p. 267
Budgetary Performance Evaluation	p. 269
Direct Materials and Direct Labor Variances	p. 271
Direct Materials Variances	p. 271
Direct Labor Variances	p. 273
Factory Overhead Variances	p. 275
The Factory Overhead Flexible Budget	p. 275
Variable Factory Overhead Controllable Variance	p. 276
Fixed Factory Overhead Volume Variance	p. 277
Reporting Factory Overhead Variances	p. 279
Factory Overhead Variances and the Factory Overhead Account	p. 279
Recording and Reporting Variances from Standards	p. 280
Nonfinancial Performance Measures	p. 283
Comprehensive Problem	p. 300
Performance Evaluation for Decentralized Operations	p. 307
Centralized and Decentralized Operations	p. 308
Advantages of Decentralization	p. 308
Disadvantages of Decentralization	p. 309
Responsibility Accounting	p. 309
Responsibility Accounting for Cost Centers	p. 310
Responsibility Accounting for Profit Centers	p. 312
Service Department Charges	p. 312
Profit Center Reporting	p. 314
Responsibility Accounting for Investment Centers	p. 316
Rate of Return on Investment	p. 317
Residual Income	p. 320
The Balanced Scorecard	p. 321
Transfer Pricing	p. 323
Market Price Approach	p. 323
Negotiated Price Approach	p. 324
Cost Price Approach	p. 326
Differential Analysis and Product Pricing	p. 349
Differential Analysis	p. 350
Lease or Sell	p. 351
Discontinue a Segment or Product	p. 353
Make or Buy	p. 355
Replace Equipment	p. 356
Process or Sell	p. 358
Accept Business at a Special Price	p. 359
Setting Normal Product Selling Prices	p. 360
Total Cost Concept	p. 361
Product Cost Concept	p. 363
Variable Cost Concept	p. 364
Choosing a Cost-Plus Approach Cost Concept	p. 365
Activity-Based Costing	p. 365
Target Costing	p. 365
Product Profitability and Pricing Under Production Bottlenecks	p. 366
Product Profitability Under Production Bottlenecks	p. 366
Product Pricing Under Production Bottlenecks	p. 368
Capital Investment Analysis	p. 389
Nature of Capital Investment Analysis	p. 390
Methods of Evaluating Capital Investment Proposals	p. 391
Methods that Ignore Present Value	p. 391
Present Value Methods	p. 394
Factors that Complicate Capital Investment Analysis	p. 401
Income Tax	p. 401
Unequal Proposal Lives	p. 401
Lease versus Capital Investment	p. 402
Uncertainty	p. 403
Changes in Price Levels	p. 403
Qualitative Considerations	p. 403
Capital Rationing	p. 404
Cost Allocation and Activity-Based Costing	p. 425
Product Costing Allocation Methods	p. 426
Single Plantwide Factory Overhead Rate Method	p. 427
Multiple Production Department Factory Overhead Rate Method	p. 429
Production Department Factory Overhead Rates and Allocation	p. 430
Distortion in Product Costs-Single Plantwide versus Multiple Production Department Factory Overhead Rates	p. 432
Activity-Based Costing Method	p. 434
Activity Rates and Allocation	p. 435
Distortion in Product Costs-Multiple Production Department Factory Overhead Rate Method versus Activity-Based Costing	p. 437
The Dangers of Product Cost Distortion	p. 438
Activity-Based Costing for Selling and Administrative Expenses	p. 439
Activity-Based Costing in Service Businesses	p. 441
Cost Management for Just-in-Time Environments	p. 472
Just-in-Time Principles	p. 473
Reducing Inventory	p. 473
Reducing Lead Times	p. 474
Reducing Setup Time	p. 475
Emphasizing Product-Oriented Layout	p. 478
Emphasizing Employee Involvement	p. 478
Emphasizing Pull Manufacturing	p. 478
Emphasizing Zero Defects	p. 479
Emphasizing Supply Chain Management	p. 479
Applying a Just-in-Time Approach to Anderson Metal Fabricators	p. 480
Traditional Operations-AMF	p. 480
Just-in-Time Operations-AMF	p. 481
Accounting for Just-in-Time Operations	p. 482
Fewer Transactions	p. 483
Combined Accounts	p. 483
Nonfinancial Performance Measures	p. 485
Direct Tracing of Overhead	p. 485
Just-in-Time for Nonmanufacturing Processes	p. 485
Activity Analysis	p. 487
Costs of Quality Using Activity Analysis	p. 487
The Relationship between the Costs of Quality	p. 488
Pareto Chart of Quality Costs	p. 489
Cost of Quality Report	p. 490
Value-Added/Non-Value-Added Activity Analysis	p. 491
Activity Analysis for Processes	p. 492
Statement of Cash Flows	p. 513
Reporting Cash Flows	p. 514
Cash Flows from Operating Activities	p. 515
Cash Flows from Investing Activities	p. 516
Cash Flows from Financing Activities	p. 517
Noncash Investing and Financing Activities	p. 517
No Cash Flow per Share	p. 518
Statement of Cash Flows-The Indirect Method	p. 518
Retained Earnings	p. 519
Cash Flows from Operating Activities-Indirect Method	p. 519
Cash Flows Used for Payment of Dividends	p. 525
Common Stock	p. 525
Bonds Payable	p. 526
Building	p. 526
Land	p. 527
Preparing the Statement of Cash Flows	p. 527
Statement of Cash Flows-The Direct Method	p. 528
Cash Received from Customers	p. 528
Cash Payments for Merchandise	p. 530
Cash Payments for Operating Expenses	p. 531
Gain on Sale of Land	p. 532
Interest Expense	p. 532
Cash Payments for Income Taxes	p. 532
Reporting Cash Flows from Operating Activities-Direct Method	p. 532
Financial Analysis and Interpretation	p. 534
Spreadsheet (Work Sheet) for Statement of Cash Flows-The Indirect Method	p. 534
Analyzing Accounts	p. 535
Retained Earnings	p. 535
Other Accounts	p. 536
Preparing the Statement of Cash Flows	p. 537
Financial Statement Analysis	p. 563
Basic Analytical Procedures	p. 564
Horizontal Analysis	p. 564
Vertical Analysis	p. 567
Common-Size Statements	p. 569
Other Analytical Measures	p. 569
Solvency Analysis	p. 570
Current Position Analysis	p. 570
Accounts Receivable Analysis	p. 572
Inventory Analysis	p. 574
Ratio of Fixed Assets to Long-Term Liabilities	p. 575
Ratio of Liabilities to Stockholders' Equity	p. 576
Number of Times Interest Charges Earned	p. 576
Profitability Analysis	p. 577
Ratio of Net Sales to Assets	p. 577
Rate Earned on Total Assets	p. 578
Rate Earned on Stockholders' Equity	p. 579
Rate Earned on Common Stockholders' Equity	p. 580
Earnings per Share on Common Stock	p. 581
Price-Earnings Ratio	p. 581
Dividends per Share and Dividend Yield	p. 582
Summary of Analytical Measures	p. 583
Corporate Annual Reports	p. 585
Management Discussion and Analysis	p. 585
Report on Adequacy of Internal Control	p. 585
Report on Fairness of Financial Statements	p. 586
Interest Tables	p. A-2
The Williams-Sonoma, Inc., 2005 Annual Report	p. B-1
Glossary	p. G-1
Subject Index	p. 1-1
Company Index	p. 1-9
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