Managerial Accounting

Description

The emphasis of Managerial Accounting, 9th edition is on teaching students to use accounting information to best manage an organization. In a practice Hilton pioneered in the first edition, each chapter is written around a realistic business or focus company that guides the reader through the topics of that chapter. Known for balanced examples of Service, Retail, Nonprofit and Manufacturing companies, Hilton offers a clear, engaging writing style that has been praised by instructors and students alike. As in previous editions, there is significant coverage of contemporary topics such as activity-based costing, target costing, the value chain, customer profitability analysis, and throughput costing while also including traditional topics such as job-order costing, budgeting and performance evaluation. Title Contents 1 The Changing Role of Managerial Accounting in a Dynamic Business Environment Managerial Accounting: A Business Partnership with Management Managing Resources, Activities, and People Decision Making Planning Directing Operational Activities Controlling How Managerial Accounting Adds Value to the Organization Objectives of Managerial Accounting Activity The Balanced Scorecard M.A.P. The Balanced Scorecard Managerial versus Financial Accounting Managerial Accounting in Different Types of Organizations Where Are Managerial Accountants Located in an Organization? Organization Chart Cross-Functional Deployment Physical Location Major Themes in Managerial Accounting Information and Incentives Behavioral Issues Costs and Benefits 18 Management of Capacity and Capacity Costs Evolution and Adaptation in Managerial Accounting M.A.P. The Internet as a Lifeline Cost Management Systems Strategic Cost Management and the Value Chain The Ethical Climate of Business and the Role of the Accountant Managerial Accounting as a Career Professional Organizations Professional Certification Professional Ethics Focus on Ethics: IMA Statement of Ethical Professional Practice Chapter Summary Key Terms Review Questions Exercises Problems Case 2 Basic Cost Management Concepts and Accounting for Mass Customization Operations What Do We Mean by a Cost? Product Costs, Period Costs, and Expenses Costs on Financial Statements Income Statement Balance Sheet Manufacturing Operations and Manufacturing Costs M.A.P. Mass Customization Mass-Customization Manufacturing Manufacturing Costs Manufacturing Cost Flows Production Costs in Service Industry Firms and Nonprofit Organizations Basic Cost Management Concepts: Different Costs for Different Purposes The Cost Driver Team Variable and Fixed Costs The Cost Management and Control Team M.A.P. Airline Industry: Cost Structure, Cost Drivers, and a Shifting Business Model The Outsourcing Action Team Costs and Benefits of Information Costs in the Service Industry Focus on Ethics: Was WorldCom’s Controller Just Following Orders? Chapter Summary Review Problems on Cost Classifications Key Terms Review Questions Exercises Problems Cases 3 Product Costing and Cost Accumulation in a Batch Production Environment Product and Service Costing Product Costing in Nonmanufacturing Firms Flow of Costs in Manufacturing Firms Types of Product-Costing Systems Job-Order Costing Systems Process-Costing Systems Summary of Alternative Product-Costing Systems Accumulating Costs in a Job-Order Costing System Job-Cost Record Direct-Material Costs Direct-Labor Costs Manufacturing-Overhead Costs M.A.P. Supply Chain Management Summary of Event Sequence in Job-Order Costing Illustration of Job-Order Costing Purchase of Material Use of Direct Material Use of Indirect Material Use of Direct Labor Use of Indirect Labor Incurrence of Manufacturing-Overhead Costs Application of Manufacturing Overhead Summary of Overhead Accounting Selling and Administrative Costs Completion of a Production Job Sale of Goods Underapplied and Overapplied Overhead Schedule of Cost of Goods Manufactured Schedule of Cost of Goods Sold Posting Journal Entries to the Ledger Further Aspects of Overhead Application Actual and Normal Costing Choosing the Cost Driver for Overhead Application Departmental Overhead Rates Two-Stage Cost Allocation Project Costing: Job-Order Costing in Nonmanufacturing Organizations Changing Technology in Manufacturing Operations EDI and XML Use of Bar Codes M.A.P. Radio Frequency Identification Systems (RFID) Focus on Ethics: Did Boeing Exploit Accounting Rules to Conceal Cost Overruns and Production Snafus? Chapter Summary Review Problem on Job-Order Costing Key Terms Review Questions Exercises Problems Cases 4 Process Costing and Hybrid Product-Costing Systems Comparison of Job-Order Costing and Process Costing Flow of Costs Differences Between Job-Order and Process Costing Equivalent Units: A Key Concept Equivalent Units Illustration of Process Costing Basic Data for Illustration M.A.P. New York Wine Industry Weighted-Average Method of Process Costing Other Issues in Process Costing Actual versus Normal Costing Other Cost Drivers for Overhead Application Subsequent Production Departments Hybrid Product-Costing Systems Operation Costing for Batch Manufacturing Processes Chapter Summary Review Problem on Process Costing Key Terms Review Questions Exercises Problems Cases 5 Activity-Based Costing and Management Traditional, Volume-Based Product-Costing System Trouble in Denver Activity-Based Costing System ABC Stage One ABC Stage Two Interpreting the ABC Product Costs The Punch Line Why Traditional, Volume-Based Systems Distort Product Costs M.A.P. Cost Distortion at Rockwell International Activity-Based Costing: Some Key Issues M.A.P. Cost Distortion at DHL Cost Drivers Collecting ABC Data Activity Dictionary and Bill of Activities Activity-Based Management Two-Dimensional ABC Using ABM to Identify Non-Value-Added Activities and Costs Customer-Profitability Analysis Illustration of Customer-Profitability Analysis M.A.P. Customer Profitability Analysis at Bank One Corp. Activity-Based Costing in the Service Industry M.A.P. Customer Profitability Analysis at Best Buy Activity-Based Costing at Delaware Medical Center Interpreting the Primary Care Unit’s ABC Information Focus on Ethics: Ethical Issues Surrounding Activity-Based Costing Chapter Summary Review Problems on Cost Drivers and Product-Cost Distortion Key Terms Appendix to Chapter 5: Just-in-Time Inventory and Production Management Review Questions Exercises Problems Cases 6 Activity Analysis, Cost Behavior, and Cost Estimation Cost Behavior Patterns Variable Costs Step-Variable Costs Fixed Costs Step-Fixed Costs Semivariable Cost Curvilinear Cost Using Cost Behavior Patterns to Predict Costs M.A.P. Is Direct Labor a Variable or a Fixed Cost? Engineered, Committed, and Discretionary Costs Cost Behavior in Other Industries Cost Estimation Account-Classification Method Visual-Fit Method High-Low Method Least-Squares Regression Method Multiple Regression Data Collection Problems Engineering Method of Cost Estimation Effect of Learning on Cost Behavior Focus on Ethics: Cisco Systems, Walmart, Taco Bell, Starbucks, U-Haul, General Dynamics, and Farmer’s Insurance: Is Direct Labor a Variable Cost? Chapter Summary Review Problems on Cost Behavior and Estimation Key Terms Appendix to Chapter 6: Least-Squares Regression Using Microsoft® Excel Review Questions Exercises Problems Cases 7 Cost-Volume-Profit Analysis Illustration of Cost-Volume-Profit Analysis Projected Expenses and Revenue The Break-Even Point Contribution-Margin Approach Equation Approach Graphing Cost-Volume-Profit Relationships Interpreting the CVP Graph Alternative Format for the CVP Graph Profit-Volume Graph Target Net Profit Contribution-Margin Approach Equation Approach Graphical Approach Applying CVP Analysis Safety Margin Changes in Fixed Expenses Changes in the Unit Contribution Margin Predicting Profit Given Expected Volume Interdependent Changes in Key Variables CVP Information in Published Annual Reports M.A.P. Airlines Keep a Close Eye on Break- Even Load Factors CVP Analysis with Multiple Products Assumptions Underlying CVP Analysis Role of Computerized Planning Models and Electronic Spreadsheets CVP Relationships and the Income Statement Traditional Income Statement Contribution Income Statement Comparison of Traditional and Contribution Income Statements Cost Structure and Operating Leverage Operating Leverage M.A.P. Operating Leverage Helps Web Companies Become Profitable Cost Structure and Operating Leverage: A Cost-Benefit Issue M.A.P. Cost Structure and Operating Leverage CVP Analysis, Activity-Based Costing, and Advanced Manufacturing Systems A Move toward JIT and Flexible Manufacturing Chapter Summary Review Problem on Cost-Volume-Profit Analysis Key Terms Appendix to Chapter 7: Effect of Income Taxes Review Questions Exercises Problems Cases 8 Absorption and Variable Costing Product Costs Illustration of Absorption and Variable Costing Absorption-Costing Income Statements Variable-Costing Income Statements Reconciling Income under Absorption and Variable Costing Cost-Volume-Profit Analysis Evaluation of Absorption and Variable Costing M.A.P. IRS: Unique Product Packaging Is an Inventoriable Cost Throughput Costing Throughput-Costing Income Statements Focus on Ethics: Incentive to Overproduce Inventory Chapter Summary Review Problem on Absorption and Variable Costing Key Terms Review Questions Exercises Problems Cases 9 Profit Planning and Activity-Based Budgeting Purposes of Budgeting Systems Types of Budgets The Master Budget: A Planning Tool Sales of Services or Goods Sales Forecasting Operational Budgets Budgeted Financial Statements Nonprofit Organizations M.A.P. Activity-Based Budgeting (ABB) at American Express and AT&T Paradyne Activity-Based Budgeting Using Activity-Based Budgeting to Prepare the Master Budget Sales Budget Production Budget Direct-Material Budget Direct-Labor Budget Manufacturing-Overhead Budget Selling, General, and Administrative (SG&A) Expense Budget Cash Receipts Budget Cash Disbursements Budget Cash Budget: Combining Receipts and Disbursements Budgeted Schedule of Cost of Goods Manufactured and Sold Budgeted Income Statement Budgeted Statement of Cash Flows Budgeted Balance Sheet Assumptions and Predictions Underlying the Master Budget Financial Planning Models Budget Administration M.A.P. Budget Administration at Cornell University International Aspects of Budgeting Budgeting Product Life-Cycle Costs Behavioral Impact of Budgets Budgetary Slack: Padding the Budget Participative Budgeting Focus on Ethics: Is Padding the Budget Unethical? Chapter Summary Review Problem on Preparing Master Budget Schedules Key Terms Review Questions Exercises Problems Cases 10 Standard Costing, Operational Performance Measures, and the Balanced Scorecard Managing Costs Management by Exception Setting Standards Methods for Setting Standards Participation in Setting Standards Perfection versus Practical Standards: A Behavioral Issue Use of Standards by Service Organizations Cost Variance Analysis Direct-Material Standards Direct-Labor Standards Standard Costs Given Actual Output Analysis of Cost Variances Direct-Material Variances Direct-Labor Variances M.A.P. Parker Hannifin Corporation’s Brass Products Division Multiple Types of Direct Material or Direct Labor Allowing for Spoilage or Defects Significance of Cost Variances A Statistical Approach Behavioral Impact of Standard Costing Controllability of Variances Interaction among Variances Standard Costs and Product Costing Evaluation of Standard Costing Systems Advantages of Standard Costing Criticisms of Standard Costing in Today’s Manufacturing Environment M.A.P. Cost of Ownership Operational Performance Measures in Today’s Manufacturing Environment Gain-Sharing Plans The Balanced Scorecard Lead and Lag Measures: The Key to the Balanced Scorecard Linking the Balanced Scorecard to Organizational Strategy M.A.P. Linking the Balanced Scorecard to Organizational Strategy Focus on Ethics: Sacrificing Quality to Cut Standard Costs Chapter Summary Review Problems on Standard Costing and Operational Performance Measures Key Terms Appendix to Chapter 10: Use of Standard Costs for Product Costing Review Questions Exercises Problems Cases 11 Flexible Budgeting and the Management of Overhead and Support Activity Costs Overhead Budgets Flexible Budgets Advantages of Flexible Budgets The Activity Measure Flexible Overhead Budget Illustrated Formula Flexible Budget Overhead Application in a Standard-Costing System Choice of Activity Measure Criteria for Choosing the Activity Measure Cost Management Using Overhead Cost Variances Variable Overhead Fixed Overhead Overhead Cost Performance Report M.A.P. Cost Management Systems in Germany Activity-Based Flexible Budget Flexible Budgeting in the Service Industry Focus on Ethics: Misstated Standards Affect Accuracy of Reports Chapter Summary Review Problem on Overhead Variances Key Terms Appendix A to Chapter 11: Standard Costs and Product Costing Appendix B to Chapter 11: Sales Variances Review Questions Exercises Problems Cases 12 Responsibility Accounting, Quality Control, and Environmental Cost Management Responsibility Centers Illustration of Responsibility Accounting Performance Reports Budgets, Variance Analysis, and Responsibility Accounting Cost Allocation Cost Allocation Bases Allocation Bases Based on Budgets Activity-Based Responsibility Accounting Behavioral Effects of Responsibility Accounting Information versus Blame Controllability Motivating Desired Behavior Segmented Reporting Segments versus Segment Managers Key Features of Segmented Reporting Customer-Profitability Analysis and Activity- Based Costing Total Quality Management Measuring and Reporting Quality Costs Changing Views of Optimal Product Quality M.A.P. Six Sigma for Quality Management and Cost Reduction ISO 9000 Standards Environmental Cost Management Classifying Environmental Costs Managing Private Environmental Costs Environmental Cost Strategies Tie-In to the Responsibility-Accounting System Focus on Ethics: Short-Sighted View of Cost Cutting Chapter Summary Review Problem on Responsibility Accounting Key Terms Review Questions Exercises Problems Cases 13 Investment Centers and Transfer Pricing Delegation of Decision Making Obtaining Goal Congruence: A Behavioral Challenge Adaptation of Management Control Systems Measuring Performance in Investment Centers Return on Investment Residual Income Economic Value Added M.A.P. Pay for Performance Based on EVA Measuring Income and Invested Capital Invested Capital Measuring Investment-Center Income Inflation: Historical-Cost versus Current- Value Accounting Other Issues in Segment Performance Evaluation Alternatives to ROI, Residual Income, and Economic Value Added (EVA) Importance of Nonfinancial Information Measuring Performance in Nonprofit Organizations Transfer Pricing Goal Congruence General Transfer-Pricing Rule Transfers Based on the External Market Price Negotiated Transfer Prices Cost-Based Transfer Prices Standard versus Actual Costs Undermining Divisional Autonomy An International Perspective M.A.P. Transfer Pricing and Tax Issues Transfer Pricing in the Service Industry Behavioral Issues: Risk Aversion and Incentives Goal Congruence and Internal Control Systems Chapter Summary Review Problems on Investment Centers and Transfer Pricing Key Terms Review Questions Exercises Problems Cases 14 Decision Making: Relevant Costs and Benefits The Managerial Accountant’s Role in Decision Making Steps in the Decision-Making Process Quantitative versus Qualitative Analysis Obtaining Information: Relevance, Accuracy, and Timeliness Relevant Information Unique versus Repetitive Decisions Importance of Identifying Relevant Costs and Benefits Identifying Relevant Costs and Benefits Sunk Costs Irrelevant Future Costs and Benefits Opportunity Costs Summary Analysis of Special Decisions Accept or Reject a Special Offer Outsource a Product or Service M.A.P. Outsourcing Add or Drop a Service, Product, or Department M.A.P. Adding a Service Special Decisions in Manufacturing Firms Joint Products: Sell or Process Further Decisions Involving Limited Resources Uncertainty Activity-Based Costing and Today’s Advanced Manufacturing Environment Conventional Outsourcing (Make-or-Buy) Analysis Activity-Based Costing Analysis of the Outsourcing Decision Other Issues in Decision Making Incentives for Decision Makers Short-Run versus Long-Run Decisions Pitfalls to Avoid Focus on Ethics: Effects of Decision to Close a Department and Outsource Chapter Summary Review Problem on Relevant Costs Key Terms Appendix to Chapter 14: Linear Programming Review Questions Exercises Problems Cases 15 Target Costing and Cost Analysis for Pricing Decisions Major Influences on Pricing Decisions Customer Demand Actions of Competitors Costs Political, Legal, and Image-Related Issues Economic Profit-Maximizing Pricing Total Revenue, Demand, and Marginal Revenue Curves Total Cost and Marginal Cost Curves Profit-Maximizing Price and Quantity Price Elasticity Limitations of the Profit-Maximizing Model Costs and Benefits of Information Role of Accounting Product Costs in Pricing Cost-Plus Pricing Absorption-Cost Pricing Formulas Variable-Cost Pricing Formulas Determining the Markup M.A.P. Price Competition and Cost Management Cost-Plus Pricing: Summary and Evaluation Strategic Pricing of New Products Target Costing M.A.P. Pricing on the Internet by “e-Tailers” A Strategic Profit and Cost Management Process Activity-Based Costing and Target Costing Product-Cost Distortion and Pricing: The Role of Activity-Based Costing Value Engineering and Target Costing Time and Material Pricing Competitive Bidding Effect of Antitrust Laws on Pricing Chapter Summary Review Problem on Cost-Plus Pricing Key Terms Review Questions Exercises Problems Cases 16 Capital Expenditure Decisions Section 1: Discounted-Cash-Flow Analysis Net-Present-Value Method Internal-Rate-of-Return Method Comparing the NPV and IRR Methods Assumptions Underlying Discounted-Cash- Flow Analysis Choosing the Hurdle Rate 69 Depreciable Assets Comparing Two Investment Projects Managerial Accountant’s Role Postaudit Real Option Analysis Section 2: Income Taxes and Capital Budgeting After-Tax Cash Flows Accelerated Depreciation Modified Accelerated Cost Recovery System (MACRS) Gains and Losses on Disposal Investment in Working Capital Extended Illustration of Income-Tax Effects in Capital Budgeting M.A.P. Capital Budgeting at Pharmaceutical Firms Ranking Investment Projects Section 3: Alternative Methods for Making Investment Decisions Payback Method Accounting-Rate-of-Return Method Estimating Cash Flows: The Role of Activity- Based Costing Justification of Investments in Advanced Manufacturing Systems Focus on Ethics: Dysfunctional Focus on Early Cash Flows Chapter Summary Review Problems on Capital Expenditure Decisions Key Terms Appendix A to Chapter 16: Future Value and Present Value Tables Appendix B to Chapter 16: Impact of Inflation Review Questions Exercises Problems Cases 17 Allocation of Support Activity Costs and Joint Costs Section 1: Service Department Cost Allocation Direct Method Step-Down Method Reciprocal-Services Method Fixed versus Variable Costs M.A.P. Cost Management in the Health Care Industry Dual Cost Allocation Allocate Budgeted Costs Today’s Advanced Manufacturing Environment The Rise of Activity-Based Costing Section 2: Joint Product Cost Allocation Allocating Joint Costs M.A.P. Joint Cost Allocation in the Petroleum Industry Chapter Summary Review Problem on Service Department Cost Allocation Key Terms Appendix to Chapter 17: Reciprocal-Services Method Review Questions Exercises Problems Cases Appendix I: The Sarbanes-Oxley Act, Internal Controls, and Management Accounting Appendix II: Compound Interest and the Concept of Present Value Appendix III: Inventory Management References for “In Their Own Words” Glossary Photo Credits Index of Companies and Organizations Index of Subjects