Managerial Accounting An Introduction to Concepts, Methods and Uses

by Maher, Michael W.; Stickney, Clyde P.; Weil, Roman L.

• ISBN13: 9780324185638
• ISBN10: 0324185634
• Format: Hardcover
• Copyright: 2003-06-11
• Publisher: South-Western College Pub

Summary

This classic text for MBA programs offers balanced coverage of concepts, methods, and uses of managerial accounting with an increasingly strong emphasis on management decision-making. This approach helps to focus on concepts and managerial uses of financial information rather than techniques of cost accounting. The current edition emphasizes international issues, strategic effect of decisions, ethics, and the inclusion of new management accounting trends. Also emphasized are process improvement, integration of financial reporting issues for management decision-making, and application of managerial accounting tools to the emerging service sector, government, and nonprofits in examples and problem material.

Table of Contents

Preface	v
PART ONE OVERVIEW AND BASIC CONCEPTS	1	(126)
Fundamental Concepts	2	(34)
User Orientation	3	(1)
Managerial Application: Why Managers Need Cost Information	4	(1)
Comparing Financial and Managerial Accounting	4	(1)
Problem 1.1 for Self-Study	4	(1)
Implementing Strategies	5	(1)
Misuses of Accounting Information	5	(1)
Key Financial Players in the Organization	6	(2)
Professional Environment	8	(3)
Managerial Application: J & J's Credo	11	(1)
Understanding Basic Cost Concepts	11	(3)
Contrasting Income Statements for Managerial Use to Those for External Reporting	14	(2)
Problem 1.2 for Self-Study	16	(1)
Managing Costs	16	(2)
Combining the Value Chain and Strategic Cost Analysis	18	(3)
Managerial Accounting in Modern Production Environments	21	(2)
Problem 1.3 for Self-Study	23	(1)
Costs and Benefits of Accounting	24	(1)
The Makeup of the Book	24	(1)
Summary	25	(1)
Key Terms and Concepts	26	(1)
Solutions to Self-Study Problems	26	(1)
Appendix 1.1: Standards of Ethical Conduct for Management Accountants	27	(2)
Questions, Exercises, Problems, and Cases	29	(5)
Suggested Solutions to Even-Numbered Exercises	34	(2)
Measuring Product Costs	36	(48)
Product Costs in Manufacturing Companies	37	(1)
Recording Costs by Department and Assigning Costs to Products	38	(1)
Fundamental Accounting Model of Cost Flows	39	(2)
Problem 2.1 for Self-Study	41	(1)
Managerial Application: Using the Basic Cost Flow Equation to Detect Fraud	41	(1)
Cost Measure: Actual or Normal Costing	42	(2)
Terminology Note	44	(1)
Problem 2.2 for Self-Study	44	(1)
Choosing the Right Cost System	44	(2)
Job and Process Costing Systems	46	(1)
Problem 2.3 for Self-Study	47	(1)
Service Organizations: Quality and Service Issues	48	(3)
Problem 2.4 for Self-Study	51	(1)
Customer Profitability Analysis	51	(1)
Ethical Issues in Job Costing	52	(1)
Just-in-Time (JIT) Methods	53	(3)
Problem 2.5 for Self-Study	56	(1)
Do Integrated Accounting Systems Satisfy Managerial Needs?	56	(1)
Summary	57	(1)
Key Terms and Concepts	58	(1)
Appendix 2.1: Computing Costs of Equivalent Production	59	(4)
Solutions to Self-Study Problems	63	(2)
Questions, Exercises, Problems, and Cases	65	(14)
Suggested Solutions to Even-Numbered Exercises	79	(5)
Activity-Based Management	84	(43)
Strategic Use of Activity-Based Management	86	(1)
Activity Analysis	86	(2)
Traditional Methods versus Activity-Based Costing	88	(2)
Activity-Based Costing	90	(1)
Activity-Based Costing Methods	90	(3)
Activity-Based Costing Illustrated	93	(3)
Problem 3.1 for Self-Study	96	(1)
Activity-Based Management and Costing in Marketing	96	(2)
Problem 3.2 for Self-Study	98	(6)
Managerial Application: Identifying Unused Capacity in the Recovery Room	100	(4)
Managerial Application: Impact of ABC on Shareholder Value	104	(1)
Summary	104	(1)
Key Terms and Concepts	105	(1)
Solutions to Self-Study Problems	105	(1)
Questions, Exercises, Problems, and Cases	106	(17)
Suggested Solutions to Even-Numbered Exercises	123	(4)
PART TWO MANAGERIAL DECISION MAKING	127	(224)
Strategic Management of Costs, Quality, and Time	128	(28)
Why Is Quality Important?	129	(1)
Traditional versus Quality-Based View	130	(1)
Quality According to the Customer	130	(2)
Quality Control	132	(1)
Costs of Failing to Control and Improve Quality	133	(1)
Trading Off Quality Control and Failure Costs	133	(2)
Problem 4.1 for Self-Study	135	(1)
Measuring the Cost of Quality in a Nonmanufacturing Setting	136	(1)
Does Quality Really Have a Cost?	136	(1)
Managerial Application: Firestone Blows It	137	(1)
Identifying Quality Problems	137	(2)
Just-in-Time and Total Quality Management	139	(1)
The Importance of Time in a Competitive Environment	140	(2)
Using Activity-Based Management to Improve Customer Response Time	142	(1)
Using the Balanced Scorecard to Measure Performance	142	(2)
Managerial Application: Reducing Delivery Time to Gain a Competitive Advantage	143	(1)
Traditional Managerial Accounting Systems Can Limit the Impact of Total Quality Management	144	(1)
Summary	145	(1)
Key Terms and Concepts	146	(1)
Solution to Self-Study Problem	146	(1)
Questions, Exercises, and Problems	147	(6)
Suggested Solutions to Even-Numbered Exercises	153	(3)
Cost Drivers and Cost Behavior	156	(50)
The Nature of Fixed and Variable Costs	158	(4)
Types of Fixed Costs	162	(1)
Other Cost Behavior Patterns	162	(3)
Problem 5.1 for Self-Study	165	(3)
Problem 5.2 for Self-Study	168	(1)
Cost Estimation Methods	168	(1)
Estimating Costs Using Historical Data	168	(8)
Problem 5.3 for Self-Study	176	(2)
Data Problems	178	(1)
Ethical Issues in Data Analysis	178	(1)
Managerial Application: United Airlines Uses Regression to Estimate Cost Behavior	179	(1)
Strengths and Weaknesses of Cost Estimation Methods	179	(2)
Problem 5.4 for Self-Study	181	(1)
Summary	182	(1)
Key Terms and Concepts	183	(1)
Solutions to Self-Study Problems	183	(3)
Appendix 5.1: Deriving Learning Curves	186	(1)
Appendix 5.2: Interpreting Regression Analysis Output	187	(2)
Questions, Exercises, and Problems	189	(14)
Suggested Solutions to Even-Numbered Exercises	203	(3)
Financial Modeling for Short-Term Decision Making	206	(44)
What Is Financial Modeling?	207	(1)
The Cost-Volume-Profit Model	208	(1)
Terminology Note	208	(5)
Applications of Financial Modeling	213	(1)
Problem 6.1 for Self-Study	214	(2)
Problem 6.2 for Self-Study	216	(2)
Using Sales Dollars as a Measure of Volume	218	(1)
Income Taxes	219	(1)
Managerial Application: Calculating Break-Even Points for a Brewpub	220	(1)
Multiple Product Financial Modeling	220	(4)
Problem 6.3 for Self-Study	224	(1)
Simplifications and Assumptions	225	(1)
Financial Modeling and ABC's Multiple-Cost Drivers	226	(3)
Summary	229	(1)
Key Terms and Concepts	230	(1)
Solutions to Self-Study Problems	230	(2)
Questions, Exercises, Problems, and Cases	232	(13)
Suggested Solutions to Even-Numbered Exercises	245	(5)
Differential Cost Analysis for Marketing Decisions	250	(26)
The Differential Principle	251	(3)
Major Influences on Pricing	254	(1)
Short-Run versus Long-Run Pricing Decisions	255	(1)
Differential Approach to Pricing	256	(1)
Problem 7.1 for Self-Study	256	(1)
Long-Run Pricing Decisions	257	(1)
Managerial Application: Pricing Practices in Various Countries	258	(1)
Using Target Prices to Set Target Costs	258	(2)
Managerial Application: A Target Costing Challenge in Forest Products	259	(1)
Legal Issues Relating Costs to Prices	260	(1)
Customer Profitability and Differential Analysis	260	(2)
Problem 7.2 for Self-Study	262	(1)
Summary	263	(1)
Key Terms and Concepts	263	(1)
Solutions to Self-Study Problems	264	(1)
Questions, Exercises, and Problems	264	(10)
Suggested Solutions to Even-Numbered Exercises	274	(2)
Differential Cost Analysis for Production Decisions	276	(40)
Product Choice Decisions	277	(3)
Theory of Constraints and Throughput Contribution Analysis	280	(2)
Make-or-Buy Decisions	282	(1)
Problem 8.1 for Self-Study	283	(1)
Joint Products: Sell or Process Further	283	(2)
Problem 8.2 for Self-Study	285	(1)
Adding and Dropping Parts of Operations	285	(1)
Problem 8.3 for Self-Study	286	(1)
Inventory Management Decisions	287	(2)
Innovations in Inventory Management and Flexible Manufacturing	289	(1)
Problem 8.4 for Self-Study	290	(1)
Summary	290	(1)
Key Terms and Concepts	291	(1)
Solutions to Self-Study Problems	292	(1)
Appendix 8.1: Linear Programming	293	(6)
Appendix 8.2: Economic Order Quantity Model	299	(1)
Questions, Exercises, Problems, and Cases	300	(13)
Suggested Solutions to Even-Numbered Exercises	313	(3)
Capital Expenditure Decisions	316	(35)
Capital Budgeting: Investment and Financing Decisions	318	(1)
Strategic Considerations	318	(1)
Managerial Application: Environmental Investments	319	(1)
Discounted Cash Flow	319	(3)
A Basic Example of Discounted Cash Flow Analysis	322	(1)
Expanded Example of Discounted Cash Flow Analysis	323	(1)
Problem 9.1 for Self-Study	324	(1)
Sensitivity of Net Present Value to Estimates	325	(3)
Internal Rate of Return	328	(1)
Net Present Value and Internal Rate of Return: A Comparison	328	(1)
Problem 9.2 for Self-Study	329	(1)
Justification of Investments in Advanced Production Systems	329	(2)
Managerial Application: Investing in Improved Technology	329	(2)
Problem 9.3 for Self-Study	331	(1)
Identifying Good Investments	332	(1)
Audits and Capital Budgeting	333	(1)
Behavioral Issues	333	(1)
Summary	334	(1)
Key Terms and Concepts	335	(1)
Solutions to Self-Study Problems	336	(3)
Questions, Exercises, Problems, and Cases	339	(8)
Suggested Solutions to Even-Numbered Exercises	347	(4)
PART THREE MOTIVATING MANAGERS TO MAKE GOOD DECISIONS	351	(239)
Profit Planning and Budgeting	352	(52)
Stragetic Planning	353	(1)
The Organizational Plan	354	(1)
The Human Element in Budgeting	355	(3)
Managerial Application: Honesty in Managerial Reporting	357	(1)
Tools for Planning and Performance Evaluation	358	(2)
The Process of Developing the Master Budget	360	(1)
Managerial Application: Developing Master Budgets Throughout the World	360	(1)
Where to Start? With Your Customers (Forecasting Sales)	360	(2)
Victoria's Gourmet Coffee: A Comprehensive Illustration	362	(7)
Managerial Application: Using the Internet for Budgeting	369	(1)
Incentives for Accurate Forecasts	369	(1)
Comparison of the Flexible and Master Budgets	369	(3)
Problem 10.1 for Self-Study	372	(1)
Budgeting in Nonprofit Organizations	372	(1)
Ethical Issues in Budgeting	372	(1)
Establishing an Operating Budget in the Real World	373	(3)
Summary	376	(1)
Key Terms and Concepts	377	(1)
Solution to Self-Study Problem	377	(1)
Appendix 10.1: Comprehensive Master Budget---Victoria's Gourmet Coffee	378	(6)
Appendix 10.2: Incentive Model for Accurate Reporting	384	(2)
Questions, Exercises, Problems, and Cases	386	(13)
Suggested Solutions to Even-Numbered Exercises	399	(5)
Profit Center Performance Evaluation	404	(34)
Variance Analysis	405	(3)
Problem 11.1 for Self-Study	408	(1)
Responsibility for Variances	409	(2)
Overview of Variances	411	(1)
Profit Variance Analysis for Service and Merchandise Organizations	411	(1)
Problem 11.2 for Self-Study	412	(1)
Beyond the Numbers	412	(2)
Performance Evaluation: The Process	414	(2)
Performance Measurement: The Measures	416	(3)
Managerial Application: Does Effective Total Quality Management Require Nontraditional Performance Measures?	418	(1)
Employee Involvement	419	(1)
Summary	420	(1)
Key Terms and Concepts	421	(1)
Solutions to Self-Study Problems	422	(1)
Questions, Exercises, Problems, and Cases	423	(12)
Suggested Solutions to Even-Numbered Exercises	435	(3)
Cost Center Performance Evaluation	438	(44)
Production Cost Variance Analysis	439	(2)
Responsibility for Production Variances	441	(2)
Reasons for Materials, Labor, and Variable Manufacturing Overhead Variances	443	(1)
Managerial Application: An Antidote to Biased Standards: How Workers Develop Their Own Standards at NUMMI	444	(1)
Problem 12.1 for Self-Study	444	(1)
Fixed Manufacturing Cost Variances	445	(2)
Variable Overhead in Service Organizations	447	(1)
Problem 12.2 for Self-Study	448	(1)
Preparing and Analyzing Additional Production Cost Variances	448	(1)
Problem 12.3 for Self-Study	448	(2)
Problem 12.4 for Self-Study	450	(7)
Problem 12.5 for Self-Study	457	(1)
Activity-Based Standard Costing	457	(1)
Variance Analysis in High-Technology Companies	458	(1)
Quality Control and Variance Investigation	459	(2)
Quality Management and the Baldrige Award	461	(1)
Problem 12.6 for Self-Study	462	(1)
Summary	462	(1)
Key Terms and Concepts	463	(1)
Appendix 12.1: Mix Variances	464	(1)
Problem 12.7 for Self-Study	465	(1)
Solutions to Self-Study Problems	466	(2)
Questions, Exercises, Problems, and Cases	468	(9)
Suggested Solutions to Even-Numbered Exercises	477	(5)
Investment Center Performance Evaluation	482	(42)
Divisional Organization and Performance	483	(2)
Return on Investment as the Performance Measure	485	(1)
Transfer Pricing: Measuring Divisional Revenue and Costs for Transactions inside the Organization	486	(2)
Alternative Ways to Set Transfer Prices	488	(4)
Problem 13.1 for Self-Study	492	(1)
Global Transfer Pricing Practices	493	(1)
Multinational and Multistate Transfer Pricing	493	(2)
Managerial Application: Just-In-Time Production in Japan and the Internal Revenue Service in the United States	494	(1)
Problem 13.2 for Self-Study	495	(1)
Measuring Division Operating Costs	495	(2)
Measuring the Investment in Divisions	497	(1)
Contribution Approach to Division Reporting	497	(1)
Components of Return on Investment	498	(1)
Economic Value Added	499	(4)
Managerial Application: Does Economic Value Added Beat Earnings?	502	(1)
Problem 13.3 for Self-Study	503	(1)
Summary	503	(2)
Key Terms and Concepts	505	(1)
Solutions to Self-Study Problems	505	(1)
Questions, Exercises, Problems, and Cases	506	(14)
Suggested Solutions to Even-Numbered Exercises	520	(4)
Incentive Issues	524	(36)
Divisional Incentive Compensation Plans	525	(3)
Managerial Application: Conflicts in an Incentive Compensation Plan	527	(1)
Views of Behavior	528	(1)
Using the Balanced Scorecard	529	(3)
Building the Incentive Plan around the Balanced Scorecard	532	(6)
Managerial Application: Cost Management in Action: Why Hewlett-Packard Now Manages Suppliers Instead of Overhead	533	(2)
Managerial Application: Does Customer Satisfaction Pay Off?	535	(2)
Managerial Application: Successfully Implementing the Balanced Scorecard: The FMC Experience	537	(1)
Problem 14.1 for Self-Study	538	(1)
Motivational Issues in Designing Incentive Systems for Division Managers and Their Subordinates	538	(3)
Applications to Nonprofit Organizations	541	(1)
Problems with Incentive Compensation Plans	542	(1)
Fraudulent Financial Reporting	543	(1)
Types of Fraud	544	(2)
Managerial Application: Software Company's Stock Tanks after Premature Revenue Recognition Disclosed	545	(1)
Causes of Financial Fraud	546	(2)
Environmental Conditions	548	(1)
Controls to Prevent Fraud	548	(1)
Incentive Problems in International Markets	549	(1)
Problem 14.2 for Self-Study	550	(1)
Summary	550	(1)
Key Terms and Concepts	551	(1)
Solutions to Self-Study Problems	551	(1)
Questions, Exercises, Problems, and Cases	552	(7)
Suggested Solutions to Even-Numbered Exercises	559	(1)
Allocating Costs to Responsibility Centers	560	(30)
The Nature of Common Costs	561	(1)
Managerial Application: Allocating Corporate Costs to Retail Stores	562	(1)
Cost Allocation	562	(5)
Problem 15.1 for Self-Study	567	(1)
Marketing and Administrative Expenses	568	(1)
Allocating Joint-Process Costs	568	(2)
Joint-Process Cost Allocation Methods	570	(1)
Problem 15.2 for Self-Study	571	(1)
Problem 15.3 for Self-Study	572	(1)
Summary	572	(1)
Key Terms and Concepts	573	(1)
Solutions to Self-Study Problems	573	(3)
Questions, Exercises, Problems, and Cases	576	(11)
Suggested Solutions to Even-Numbered Exercises	587	(3)
Appendix: Compound Interest Examples and Applications	590	(19)
Compound Interest and Annuity Tables	609	(6)
Glossary	615	(90)
Index	705