Cost Accounting,9780130648150

Cost Accounting

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Edition: 11th
ISBN13: 9780130648150
ISBN10: 0130648159
Format: Hardcover
Pub. Date: 2002-01-01
Publisher(s): Pearson College Div
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Summary

This acclaimed, number one market-leading book embraces the basic theme of "different costs for different purposes." It reaches beyond cost accounting procedures to consider concepts, analyses, and management. Chapter topics cover: the accountant's role in the organization; an introduction to cost terms and purposes; cost-volume-profit analysis; job costing; activity-based costing and activity-based management; master budget and responsibility accounting; flexible budgets, variances, and management control; inventory costing and capacity analysis; determining how costs behave; decision making and relevant information; pricing decisions and cost management; strategy, balanced scorecard, and strategic profitability analysis; cost allocation, customer-profitability analysis, and sales-variance analysis; allocation of support department costs, common costs and revenues; cost allocation: joint products and byproducts; process costing; spoilage, rework, and scrap; quality, time, and the theory of constraints; inventory management, just-in-time, and backflush costing; capital budgeting and cost analysis; management control systems, transfer pricing, and multinational considerations; and performance measurement, compensation, and multinational considerations. For future accountant who want to enhance their understanding of--and ability to--solve cost accounting problems.

Table of Contents

Preface xvii
PART ONE Cost Accounting Fundamentals
The Accountant's Role in the Organization
1(28)
Management Accounting, Financial Accounting, and Cost Accounting
2(1)
Cost Management and Accounting Systems
3(1)
Strategic Decisions and the Management Accountant
3(3)
Developing a Strategy
4(1)
Building Resources and Capabilities
4(2)
The Management Accountant's Role in Implementing Strategy
6(3)
Feedback: Linking Planning and Control
6(1)
An Example: Planning and Control and the Management Accountant
6(2)
Problem-Solving, Scorekeeping, and Attention-Directing Roles
8(1)
Enhancing the Value of Management Accounting Systems
9(2)
Surveys of Company Practice: ``A Day in the Life'' of a Management Accountant
11(2)
Key Management Accounting Guidelines
13(1)
Cost-Benefit Approach
13(1)
Behavioral and Technical Considerations
13(1)
Different Costs for Different Purposes
13(1)
Concepts in Action: E-Business Strategies and the Management Accountant
14(1)
Organization Structure and the Management Accountant
15(1)
Line and Staff Relationships
15(1)
The Chief Financial Officer and the Controller
15(1)
Professional Ethics
16(13)
Ethical Guidelines
17(1)
Typical Ethical Challenges
17(2)
Problem for Self-Study
19(1)
Summary
20(1)
Terms to Learn
20(1)
Assignment Material
21(5)
Video Case: Regal Marine
26(3)
An Introduction to Cost Terms and Purposes
29(32)
Costs and Cost Terminology
30(1)
Direct Costs and Indirect Costs
31(1)
Cost Tracing and Cost Allocation
31(1)
Factors Affecting Direct/Indirect Cost Classifications
32(1)
Cost-Behavior Patterns: Variable Costs and Fixed Costs
32(2)
Surveys of Company Practice: Purposes for Companies Distinguishing Between Variable Costs and Fixed Costs
34(1)
Cost Drivers
34(1)
Concepts in Action: How Application Service Providers (ASPs) Influence Cost Structures
35(1)
Relevant Range
35(1)
Relationships of Types of Costs
36(1)
Total Costs and Unit Costs
36(2)
Unit Costs and Average Costs
36(1)
Use Unit Costs Cautiously
37(1)
Manufacturing-, Merchandising-, and Service-Sector Companies
38(1)
Financial Statements, Inventoriable Costs, and Period Costs
38(2)
Types of Inventory
38(1)
Commonly Used Classifications of Manufacturing Costs
39(1)
Inventoriable Costs
39(1)
Period Costs
39(1)
Illustrating the Flow of Inventoriable Costs and Period Costs
40(3)
Manufacturing-Sector Example
40(2)
Recap of Inventoriable Costs and Period Costs
42(1)
Prime Costs and Conversion Costs
43(1)
Measuring Costs Requires Judgment
43(3)
Measuring Labor Costs
43(1)
Overtime Premium
44(1)
Benefits of Defining Accounting Terms
45(1)
The Many Meanings of Product Costs
45(1)
A Framework for Cost Management
46(15)
Problem for Self-Study
48(2)
Summary
50(1)
Terms to Learn
51(1)
Assignment Material
51(9)
Video Case: Three Dog Bakery
60(1)
Cost-Volume-Profit Analysis
61(34)
Cost-Volume-Profit Assumptions and Terminology
62(1)
Essentials of CVP Analysis
63(1)
The Breakeven Point
64(5)
Equation Method
65(1)
Contribution Margin Method
65(1)
Graph Method
66(1)
Target Operating Income
67(1)
Target Net Income and Income Taxes
67(2)
Using CVP Analysis for Decision Making
69(1)
Decision to Advertise
69(1)
Decision to Reduce Selling Price
69(1)
Sensitivity Analysis and Uncertainty
70(1)
Cost Planning and CVP
71(2)
Alternative Fixed-Cost/Variable-Cost Structures
71(2)
Concepts in Action: Influencing Cost Structures to Manage the Risk-Return Trade-off at Amazon.com
73(1)
Effect of Time Horizon
73(1)
Effects of Sales Mix on Income
74(1)
CVP Analysis in Service and Nonprofit Organizations
75(1)
Multiple Cost Drivers
76(1)
Contribution Margin Versus Gross Margin
77(3)
Merchandising Sector
77(1)
Manufacturing Sector
77(1)
Problem for Self-Study
78(1)
Summary
79(1)
Appendix: Decision Models and Uncertainty
80(15)
Coping with Uncertainty
80(3)
Terms to Learn
83(1)
Assignment Material
83(10)
Video Case: Store 24
93(2)
Job Costing
95(40)
Building-Block Concepts of Costing Systems
96(2)
Two Major Cost Objects: Products and Departments
97(1)
Job-Costing and Process-Costing Systems
98(1)
Job Costing in Manufacturing
99(1)
General Approach to Job Costing
99(1)
Surveys of Company Practice: Cost-Allocation Bases Used for Manufacturing Overhead
100(4)
Source Documents
101(2)
The Role of Technology
103(1)
Concepts in Action: Pricing and Efficiency Gains from Job Costing at Colorscope
104(1)
Time Period Used to Compute Indirect-Cost Rates
105(1)
Normal Costing
106(1)
A Normal Job-Costing System in Manufacturing
107(7)
General Ledger and Subsidiary Ledgers
107(1)
Explanations of Transactions
107(7)
Nonmanufacturing Costs and Job Costing
114(1)
Budgeted Indirect Costs and End-of-Period Adjustments
114(4)
Adjusted Allocation-Rate Approach
115(1)
Proration Approach
116(1)
Write-Off to Cost of Goods Sold Approach
117(1)
Choice Among Approaches
117(1)
Multiple Overhead Cost Pools
118(1)
Variations from Normal Costing: A Service-Sector Example
118(17)
Problem for Self-Study
119(2)
Summary
121(1)
Terms to Learn
122(1)
Assignment Material
122(11)
Video Case: Dell Computer
133(2)
Activity-Based Costing and Activity-Based Management
135(40)
Broad Averaging via Peanut-Butter Costing Approaches
136(1)
Undercosting and Overcosting
136(1)
Product-Cost Cross-Subsidization
136(1)
Costing System at Plastim Corporation
137(3)
Design, Production, and Distribution Processes
137(1)
Existing Single Indirect-Cost Pool System
138(2)
Refining a Costing System
140(1)
Activity-Based Costing Systems
141(3)
Cost Hierarchies
143(1)
Implementing Activity-Based Costing at Plastim
144(4)
Comparing Alternative Costing Systems
148(1)
Using ABC Systems for Improving Cost Management and Profitability
148(3)
Activity-Based Costing and Department-Costing Systems
151(1)
Implementing ABC Systems
151(1)
ABC in Service and Merchandising Companies
152(1)
Surveys of Company Practice: Growing Interest in Activity-Based Costing
153(1)
Concepts in Action: Measuring and Managing E-Retailing with Activity-Based Costing
154(21)
Problem for Self-Study
155(2)
Summary
157(1)
Terms to Learn
158(1)
Assignment Material
158(15)
Video Case: Dell Computer
173(2)
PART TWO Tools for Planning and Control
Master Budget and Responsibility Accounting
175(40)
Budgets and the Budgeting Cycle
176(1)
Advantages of Budgets
177(2)
Strategic Planning and Implementation of Plans
177(1)
Framework for Judging Performance
178(1)
Motivating Managers and Employees
178(1)
Coordination and Communication
178(1)
Administration of Budgets
179(1)
Surveys of Company Practice: Budget Practices Around the Globe
179(1)
Time Coverage of Budgets
180(1)
Steps in Developing an Operating Budget
180(7)
Stylistic Furniture
181(6)
Computer-Based Financial Planning Models
187(1)
Concepts in Action: Putting Budgeting on the Fast Track with Web Technology
188(1)
Kaizen Budgeting
189(1)
Activity-Based Budgeting
189(2)
Budgeting and Responsibility Accounting
191(1)
Organization Structure and Responsibility
191(1)
Feedback
192(1)
Responsibility and Controllability
192(1)
Definition of Controllability
192(1)
Emphasis on Information and Behavior
193(1)
Human Aspects of Budgeting
193(2)
Problem for Self-Study
194(1)
Summary
195(1)
Appendix: The Cash Budget
195(20)
Preparation of Budgets
197(3)
Sensitivity Analysis and Cash Flows
200(1)
Terms to Learn
200(1)
Assignment Material
200(14)
Video Case: Ritz-Carlton Hotel Company
214(1)
Flexible Budgets, Variances, and Management Control: I
215(36)
The Use of Variances
216(1)
Static Budgets and Flexible Budgets
216(1)
Accounting System at Webb
217(1)
Static-Budget Variances
217(1)
Steps in Developing a Flexible Budget
218(1)
Flexible-Budget Variances and Sales-Volume Variances
219(2)
Sales-Volume Variances
220(1)
Flexible-Budget Variances
221(1)
Price Variances and Efficiency Variances for Direct-Cost Inputs
221(2)
Obtaining Budgeted Input Prices and Budgeted Input Quantities
222(1)
Surveys of Company Practice: The Widespread Use of Standard Costs
223(3)
Data for Calculating Webb's Price Variances and Efficiency Variances
223(1)
Price Variances
224(1)
Efficiency Variance
225(1)
Concepts in Action: Comparing Efficiency Variances and Yield Improvements at Analog Devices
226(2)
Summary of Variances
226(1)
Impact of Inventories
227(1)
Management Uses of Variances
228(2)
Performance Measurement Using Variances
228(1)
Multiple Causes of Variances and Organization Learning
228(1)
When to Investigate Variances
229(1)
Continuous Improvement
230(1)
Financial and Nonfinancial Performance Measures
230(1)
Journal Entries Using Standard Costs
230(2)
Standard Costing and Information Technology
232(1)
Wide Applicability of Standard Costing Systems
232(1)
Flexible Budgeting and Activity-Based Costing
232(2)
Relating Batch Costs to Product Output
232(1)
Price and Efficiency Variances
233(1)
Focus on Hierarchy
234(1)
Benchmarking and Variance Analysis
234(17)
Problem for Self-Study
235(2)
Summary
237(1)
Terms to Learn
237(1)
Assignment Material
238(10)
Video Case: McDonald's Corporation
248(3)
Flexible Budgets, Variances, and Management Control: II
251(34)
Planning of Variable and Fixed Overhead Costs
252(1)
Planning Variable Overhead Costs
252(1)
Planning Fixed Overhead Costs
252(1)
Standard Costing at Webb Company
253(1)
Developing Budgeted Variable Overhead Cost-Allocation Rates
253(1)
Variable Overhead Cost Variances
254(1)
Flexible-Budget Analysis
254(1)
Variable Overhead Efficiency Variance
255(2)
Variable Overhead Spending Variance
255(2)
Developing Budgeted Fixed Overhead Cost-Allocation Rates
257(1)
Fixed Overhead Cost Variances
258(1)
Production-Volume Variance
258(2)
Computation of Production-Volume Variance
258(1)
Interpreting the Production-Volume Variance
259(1)
Integrated Analysis of Overhead Cost Variances
260(1)
Concepts in Action: Standard Costing and Variance Analysis at Polysar
261(2)
4-,3-,2-, and 1-Variance Analysis
262(1)
Different Purposes of Manufacturing Overhead Cost Analysis
263(1)
Variable Manufacturing Overhead Costs
263(1)
Fixed Manufacturing Overhead Costs
264(1)
Journal Entries for Overhead Costs and Variances
264(1)
Recording Overhead Costs
264(1)
Surveys of Company Practice: Variance Analysis and Control Decisions
265(2)
Financial and Nonfinancial Performance
267(1)
Overhead Cost Variances in Nonmanufacturing and Service Settings
267(1)
Activity-Based Costing and Variance Analysis
268(17)
Flexible Budget and Variance Analysis for Variable Setup Overhead Costs
268(2)
Flexible Budget and Variance Analysis for Fixed Setup Overhead Costs
270(1)
Problem for Self-Study
271(2)
Summary
273(1)
Terms to Learn
274(1)
Assignment Material
274(9)
Video Case: Teva Sport Sandals
283(2)
Inventory Costing and Capacity Analysis
285(38)
Inventory Costing for Manufacturing Companies
286(1)
Variable Costing and Absorption Costing
286(3)
Data for One-Year Example
286(2)
Comparing Income Statements
288(1)
Explaining Differences in Operating Income
289(4)
Data for Three-Year Example
289(1)
Comparing Income Statements
290(2)
Effect of Sales and Production on Operating Income
292(1)
Performance Measures and Absorption Costing
293(2)
Undesirable Buildup of Inventories
293(2)
Proposals for Revising Performance Evaluation
295(1)
Throughput Costing
295(1)
Capsule Comparison of Inventory-Costing Methods
296(1)
Concepts in Action: Yield Improvements and the Production-Volume Variance at Analog Devices
297(1)
Surveys of Company Practice: Usage of Variable Costing by Companies
298(1)
Problem for Self-Study
299(1)
Denominator-Level Capacity Concepts and Fixed-Cost Capacity Analysis
300(1)
Alternative Denominator-Level Capacity Concepts for Absorption Costing
300(1)
Theoretical Capacity and Practical Capacity
300(1)
Normal Capacity Utilization and Master-Budget Capacity Utilization
300(1)
Effect on Budgeted Fixed Manufacturing Overhead Cost Rate
301(1)
Choosing a Capacity Level
301(5)
Effect on Product Costing and Capacity Management
302(1)
Pricing Decisions and the Downward Demand Spiral
303(1)
Effect on Performance Evaluation
303(1)
Effect on Financial Statements
304(2)
Regulatory Requirements
306(1)
Difficulties in Forecasting Chosen Denominator-Level Concept
306(1)
Capacity Costs and Denominator-Level Issues
306(3)
Problem for Self-Study
307(1)
Summary
308(1)
Appendix: Breakeven Points in Variable Costing and Absorption Costing
309(14)
Terms to Learn
311(1)
Assignment Material
311(9)
Video Case: Wheeled Coach
320(3)
PART THREE Cost Information for Decisions
Determining How Costs Behave
323(46)
General Issues in Estimating Cost Functions
324(3)
Basic Assumptions and Examples of Cost Functions
324(2)
Brief Review of Cost Classification
326(1)
Cost Estimation
326(1)
The Cause-and-Effect Criterion in Choosing Cost Drivers
327(1)
Surveys of Company Practice: International Comparison of Cost Classification by Companies
328(1)
Cost Estimation Methods
328(2)
Industrial Engineering Method
329(1)
Conference Method
329(1)
Account Analysis Method
329(1)
Quantitative Analysis Methods
330(1)
Steps in Estimating a Cost Function Using Quantitative Analysis
330(5)
High-Low Method
332(1)
Regression Analysis Method
333(2)
Evaluating Cost Drivers of the Estimated Cost Function
335(2)
Cost Drivers and Activity-Based Costing
337(1)
Nonlinearity and Cost Functions
337(1)
Concepts in Action: Activity-Based Costing, Cost Drivers, and Revenue Drivers
338(1)
Learning Curves and Nonlinear Cost Functions
339(4)
Cumulative Average-Time Learning Model
340(1)
Incremental Unit-Time Learning Model
340(2)
Setting Prices, Budgets, and Standards
342(1)
Data Collection and Adjustment Issues
343(4)
Problem for Self-Study
345(1)
Summary
346(1)
Appendix: Regression Analysis
347(22)
Estimating the Regression Line
347(1)
Goodness of Fit
347(1)
Significance of Independent Variables
348(1)
Specification Analysis of Estimation Assumptions
349(2)
Using Regression Output to Choose Cost Drivers of Cost Functions
351(1)
Multiple Regression and Cost Hierarchies
351(2)
Multicollinearity
353(1)
Terms to Learn
354(1)
Assignment Material
354(13)
Case: U.S. Brewing Industry
367(2)
Decision Making and Relevant Information
369(40)
Information and The Decision Process
370(1)
The Concept of Relevance
370(2)
Relevant Costs and Relevant Revenues
370(2)
Qualitative and Quantitative Relevant Information
372(1)
An Illustration of Relevance: Choosing Output Levels
372(3)
One-Time-Only Special Orders
373(1)
Potential Problems in Relevant-Cost Analysis
374(1)
Insourcing-Versus-Outsourcing and Make-Versus Buy Decisions
375(2)
Outsourcing and Idle Facilities
375(2)
Strategic and Qualitative Factors
377(1)
Opportunity Costs, Outsourcing, and Capacity Constraints
377(1)
Concepts in Action: VW Takes Outsourcing to the Limit
378(3)
Carrying Costs of Inventory
380(1)
Concepts in Action: American Airlines, the Internet, and Opportunity Costs
381(1)
Product-Mix Decisions Under Capacity Constraints
382(1)
Customer Profitability, Activity-Based Costing, and Relevant Costs
383(3)
Relevant-Revenue and Relevant-Cost Analysis of Discontinuing a Customer
384(1)
Relevant-Revenue and Relevant-Cost-Analysis of Adding a Customer
385(1)
Relevant-Revenue and Relevant-Cost Analysis of Discontinuing or Adding Branches or Segments
386(1)
Irrelevance of Past Costs and Equipment-Replacement Decisions
386(2)
Decisions and Performance Evaluation
388(3)
Problem for Self-Study
389(2)
Summary
391(1)
Appendix: Linear Programming
391(18)
Steps in Solving an LP Problem
392(2)
Sensitivity Analysis
394(1)
Terms to Learn
395(1)
Assignment Material
395(12)
Video Case: Store 24
407(2)
Pricing Decisions and Cost Management
409(36)
Major Influences on Pricing Decisions
410(1)
Customers, Competitors, and Costs
410(1)
Time Horizon of Pricing Decisions
411(1)
Cost and Pricing for the Short Run
411(2)
Relevant Costs for Pricing a Special Order
411(1)
Strategic and Other Factors in Pricing a Special Order
412(1)
Costing and Pricing for The Long Run
413(2)
Calculating Product Costs
413(1)
Alternative Long-Run Pricing Approaches
414(1)
Target Costing for Target Pricing
415(4)
Implementing Target Pricing and Target Costing
416(1)
Value Engineering, Cost Incurrence, and Locked-In Costs
417(2)
Achieving the Target Cost Per Unit for Provalue
419(2)
Cost-Plus Pricing
421(3)
Cost-Plus Target Rate of Return on Investment
421(1)
Alternative Cost-Plus Methods
422(1)
Cost-Plus Pricing and Target Pricing
423(1)
Surveys of Company Practice: Differences in Pricing Practices and Cost Management Methods in Various Countries
424(1)
Life-Cycle Product Budgeting and Costing
425(2)
Life-Cycle Budgeting and Pricing Decisions
425(1)
Uses of Life-Cycle Budgeting and Costing
426(1)
Considerations Other Than Costs in Pricing Decisions
427(3)
Effects of Antitrust Laws on Pricing
428(2)
Concepts in Action: Pricing and the Internet
430(15)
Problem for Self-Study
430(1)
Summary
431(1)
Terms to Learn
432(1)
Assignment Material
432(11)
Video Case: Grand Canyon Railway
443(2)
PART FOUR Cost Allocation and Revenues
Strategy, Balanced Scorecard, and Strategic Profitability Analysis
445(36)
What Is Strategy?
446(1)
Implementation of Strategy and the Balanced Scorecard
447(6)
The Balanced Scorecard
447(1)
Quality Improvement and Reengineering at Chipset
448(1)
The Four Perspectives of the Balanced Scorecard
449(2)
Aligning the Balanced Scorecard to Strategy
451(1)
Implementing a Balanced Scorecard
451(1)
Features of a Good Balanced Scorecard
452(1)
Pitfalls in Implementing a Balanced Scorecard
453(1)
Evaluating the Success of a Strategy
453(1)
Surveys of Company Practice: Widening the Performance Measurement Lens Using the Balanced Scorecard
454(1)
Strategic Analysis of Operating Income
454(6)
Growth Component
456(1)
Price-Recovery Component
457(1)
Productivity Component
458(1)
Further Analysis of Growth, Price-Recovery, and Productivity Components
459(1)
Downsizing and the Management of Capacity
460(1)
Concepts in Action: Growth Versus Profitability Choices of Dot-com Companies
461(7)
Relationships Between Inputs and Outputs
462(1)
Identifying Unused Capacity for Engineered and Discretionary Overhead Costs
463(1)
Managing Unused Capacity
464(1)
Problem for Self-Study
464(3)
Summary
467(1)
Appendix: Productivity Measurement
468(13)
Partial Productivity Measures
468(1)
Evaluating Changes in Partial Productivities
469(1)
Total Factor Productivity
470(1)
Calculating and Comparing Total Factor Productivity
470(1)
Using Partial and Total Factor Productivity Measures
471(1)
Terms to Learn
471(1)
Assignment Material
471(8)
Video Case: McDonald's Corporation
479(2)
Cost Allocation, Customer-Profitability Analysis, and Sales-Variance Analysis
481(40)
Purposes of Cost Allocation
482(2)
Criteria to Guide Cost-Allocation Decisions
484(1)
Role of Dominant Criteria
484(1)
Cost-Benefit Approach
485(1)
Cost Allocation and Costing Systems
485(3)
Allocating Corporate Costs to Divisions and Products
486(2)
Surveys of Company Practice: Why Allocate Corporate and Other Support Costs to Divisions and Departments
488(2)
Implementing Corporate Cost Allocations
489(1)
Customer Revenues and Customer Costs
490(3)
Customer Revenue Analysis
491(1)
Customer Cost Analysis
491(1)
Customer-Level Costs
492(1)
Concepts in Action: Customer Profitability at PHH and Federal Express
493(1)
Customer-Profitability Profiles
494(2)
Assessing Customer Value
495(1)
Sales Variances
496(2)
Static-Budget Variance
497(1)
Flexible-Budget Variance and Sales-Volume Variance
497(1)
Sales-Mix and Sales-Quantity Variances
498(2)
Sales-Mix Variance
498(1)
Sales-Quantity Variance
499(1)
Market-Share and Market-Size Variances
500(4)
Market-Share Variance
500(1)
Market-Size Variance
501(1)
Problem for Self-Study
502(2)
Summary
504(1)
Appendix: Mix and Yield Variances for Substitutable Inputs
504(17)
Direct Materials Price and Efficiency Variances
505(1)
Direct Materials Mix and Materials Yield Variances
505(2)
Terms to Learn
507(1)
Assignment Material
508(11)
Video Case: Nantucket Nectars
519(2)
Allocation of Support Department Costs, Common Costs, and Revenues
521(34)
Allocating Costs of a Support Department to Operating Divisions
522(4)
Single-Rate and Dual-Rate Methods
522(2)
Budgeted Versus Actual Rates
524(1)
Budgeted Usage, Actual Usage, and Capacity-Level Allocation Bases
525(1)
Allocating Costs of Multiple Support Departments
526(7)
Operating and Support Departments
526(1)
Direct Allocation Method
527(1)
Step-Down Allocation Method
528(1)
Reciprocal Allocation Method
529(3)
Overview of Methods
532(1)
Surveys of Company Practice: Allocation of Support Department Costs
533(1)
Allocating Common Costs
533(2)
Stand-Alone Cost-Allocation Method
533(1)
Incremental Cost-Allocation Method
534(1)
Cost Allocations and Contracts
535(1)
Contracting with the U.S. Government
535(1)
Fairness of Pricing
535(1)
Concepts in Action: Contract Disputes over Reimbursable Costs for U.S. Government Agencies
536(1)
Revenue Allocation and Bundled Products
537(1)
Revenue-Allocation Methods
537(18)
Stand-Alone Revenue-Allocation Method
538(1)
Incremental Revenue-Allocation Method
539(1)
Other Revenue-Allocation Methods
540(1)
Problem for Self-Study
540(2)
Summary
542(1)
Terms to Learn
543(1)
Assignment Material
543(10)
Case: Stanford University
553(2)
Cost Allocation: Joint Products and Byproducts
555(30)
Joint-Cost Basics
556(2)
Why Allocate Joint Costs?
558(1)
Approaches to Allocating Joint Costs
558(8)
Sales Value at Splitoff Method
560(1)
Physical-Measure Method
560(1)
Net Realizable Value (NRV) Method
561(2)
Constant Gross-Margin Percentage NRV Method
563(1)
Choosing a Method
564(1)
Not Allocating Joint Costs
565(1)
Surveys of Company Practice: Joint-Cost Allocation in the Oil Patch
566(1)
Irrelevance of Joint Costs for Decision Making
566(2)
Sell or Process Further
567(1)
Joint-Cost Allocation and Performance Evaluation
567(1)
Accounting for Byproducts
568(2)
Method A: Byproducts Recognized at Time Production Is Completed
569(1)
Concepts in Action: Chicken Processing: Costing of Joint Products and Byproducts
570(15)
Method B: Byproducts Recognized at Time of Sale
570(1)
Problem for Self-Study
571(2)
Summary
573(1)
Terms to Learn
573(1)
Assignment Material
573(11)
Case: Memory Manufacturing Company
584(1)
Process Costing
585(40)
Illustrating Process Costing
586(1)
Surveys of Company Practice: Process Costing in Different Industries
587(1)
Process Costing with Zero Beginning and Zero Ending Work-in-Process Inventory
588(1)
Process Costing with Zero Beginning but Some Ending Work-in-Process Inventory
588(4)
Physical Units and Equivalent Units (Steps 1 and 2)
589(1)
Calculation of Product Costs (Steps 3,4, and5)
590(1)
Journal Entries
591(1)
Process Costing with Some Beginning and Some Ending Work-in-Process Inventory
592(1)
Weighted-Average Method
593(3)
First-in, First-Out Method
596(3)
Comparison of Weighted-Average and FIFO Methods
599(1)
Standard-Costing Method of Process Costing
600(3)
Computations under Standard Costing
600(1)
Accounting for Variances
601(2)
Transferred-in-Costs in Process Costing
603(5)
Transferred-In Costs and the Weighted-Average Method
604(2)
Transferred-In Costs and the FIFO Method
606(1)
Points to Remember about Transferred-In Costs
607(1)
Concepts in Action: Hybrid Costing for Customized Products at Levi Strauss
608(1)
Hybrid-Costing Systems
608(4)
Problem for Self-Study
609(2)
Summary
611(1)
Appendix: Operation Costing
612(13)
Overview of Operation-Costing Systems
612(1)
Illustration of an Operation-Costing System
612(1)
Journal Entries
613(1)
Terms to Learn
614(1)
Assignment Material
614(9)
Video Case: Nantucket Nectars
623(2)
PART FIVE Quality and JIT
Spoilage, Rework, and Scrap
625(28)
Terminology
626(1)
Different Types of Spoilage
626(1)
Surveys of Company Practice: Rejection in the Electronics Industry
627(1)
Normal Spoilage
628(1)
Abnormal Spoilage
628(1)
Process Costing and Spoilage
628(8)
Count All Spoilage
629(1)
The Five-Step Procedure for Process Costing with Spoilage
630(1)
Weighted-Average Method and Spoilage
631(1)
FIFO Method and Spoilage
631(1)
Standard-Costing Method and Spoilage
631(3)
Journal Entries
634(1)
Inspection Points and Allocating Costs of Normal Spoilage
634(2)
Job Costing and Spoilage
636(1)
Rework
637(1)
Accounting for Scrap
638(2)
Recognizing Scrap at the Time of Its Sale
638(1)
Recognizing Scrap at the Time of Its Production
639(1)
Concepts in Action: Managing Waste and Environmental Costs at the DuPont Corporation
640(2)
Problem for Self-Study
641(1)
Summary
641(1)
Appendix: Inspection and Spoilage at Intermediate Stages of Completion in Process Costing
642(11)
Terms to Learn
644(1)
Assignment Material
644(7)
Case: The United Libbey-Nippon Plant
651(2)
Quality, Time, and the Theory of Constraints
653(32)
Quality as a Competitive Tool
654(1)
Costs of Quality
655(2)
Techniques Used to Analyze Quality Problems
657(2)
Control Charts
657(1)
Pareto Diagrams
658(1)
Cause-and-Effect Diagrams
659(1)
Relevant Costs and Benefits of Quality Improvement
659(2)
Costs of Design Quality
661(1)
Nonfinancial Measures of Quality and Customer Satisfaction
661(1)
Nonfinancial Measures of Customer Satisfaction
661(1)
Nonfinancial Measures of Internal Performance
662(1)
Concepts in Action: Dell Computer's Quest
662(1)
Evaluating Quality Performance
663(1)
Advantages of COQ Measures
663(1)
Advantages of Nonfinancial Measures of Quality
663(1)
Time as a Competitive Tool
663(1)
Customer-Response Time
664(1)
On-Time Performance
664(1)
Time Drivers and Costs of Time
664(1)
Uncertainty and Bottlenecks as Drivers of Time
665(1)
Concepts in Action: Overcoming Bottlenecks on the Internet
665(3)
Relevant Revenues and Costs of Time
667(1)
Theory of Constraints and Throughput Contribution Analysis
668(17)
Problem for Self-Study
671(1)
Summary
672(1)
Terms to Learn
673(1)
Assignment Material
673(10)
Video Case: Ritz-Carlton Hotel Company
683(2)
Inventory Management, Just-in-Time, and Backflush Costing
685(32)
Inventory Management in Retail Organizations
686(1)
Costs Associated with Goods for Sale
686(1)
Economic-Order-Quantity Decision Model
687(4)
When to Order, Assuming Certainty
688(1)
Safety Stock
689(2)
Estimating Inventory-Related Costs and Their Effects
691(1)
Considerations in Obtaining Estimates of Relevant Costs
691(1)
Cost of a Prediction Error
691(1)
Evaluating Managers and Goal-Congruence Issues
692(1)
Just-in-Time Purchasing
692(3)
JIT Purchasing and EOQ Model Parameters
692(1)
Relevant Benefits and Relevant Costs of JIT Purchasing
693(1)
Supplier Evaluation and Relevant Costs of Quality and Timely Deliveries
693(2)
Inventory Management and Supply-Chain Analysis
695(1)
Surveys of Company Practice: Challenges in Obtaining the Benefits from a Supply-Chain Analysis
696(1)
Inventory Management and MRP
696(1)
Inventory Management and JIT Production
697(1)
Concepts in Action: Writing a Book Is as Easy as Making a Cup of Latte
698(2)
Enterprise Resource Planning (ERP) Systems
698(1)
Financial Benefits of JIT and Relevant Costs
699(1)
Performance Measures and Control in JIT Production
699(1)
JIT's Effect on Costing Systems
700(1)
Backflush Costing
700(17)
Simplified Normal or Standard Job Costing
700(3)
Accounting for Variances
703(3)
Special Consideration in Backflush Costing
706(1)
Problems for Self-Study
707(1)
Summary
708(1)
Terms to Learn
709(1)
Assignment Material
709(7)
Video Case: Regal Marine
716(1)
PART SIX Investment Decisions and Management Control Systems
Capital Budgeting and Cost Analysis
717(36)
Two Dimensions of Cost Analysis
718(1)
Stages of Capital Budgeting
719(1)
Discounted Cash Flow
720(4)
Net Present Value Method
720(2)
Internal Rate-of-Return Method
722(1)
Comparison of Net Present Value and Internal Rate-of-Return Methods
723(1)
Sensitivity Analysis
724(1)
Payback Method
724(2)
Uniform Cash Flows
724(1)
Nonuniform Cash Flows
725(1)
Accrual Accounting Rate-of-Return Method
726(1)
Surveys of Company Practice: International Comparison of Capital Budgeting Methods
727(1)
Evaluating Managers and Goal-Congruence Issues
727(1)
Relevant Cash Flows in Discounted Cash Flow Analysis
728(5)
Relevant After-Tax Flows
729(4)
Managing the Project
733(1)
Management Control of Investment Activity
733(1)
Management Control of the Project---Postinvestment Audit
733(1)
Strategic Considerations in Capital Budgeting
734(1)
Intangible Assets and Capital Budgeting
734(1)
Concepts in Action: Capital Budgeting for Pollution Prevention
735(4)
Problem for Self-Study
736(2)
Summary
738(1)
Appendix: Capital Budgeting and Inflation
739(14)
Net Present Value Method and Inflation
739(2)
Terms to Learn
741(1)
Assignment Material
741(10)
Video Case: Deer Valley Resort
751(2)
Management Control Systems, Transfer Pricing, and Multinational Considerations
753(32)
Management Control Systems
754(1)
Evaluating Management Control Systems
755(1)
Organization Structure and Decentralization
755(3)
Benefits of Decentralization
756(1)
Costs of Decentralization
756(1)
Comparison of Benefits and Costs
757(1)
Decentralization in Multinational Companies
757(1)
Choices About Responsibility Centers
758(1)
Transfer Pricing
758(1)
Transfer-Pricing Methods
759(1)
An Illustration of Transfer Pricing
759(3)
Market-Based Transfer Prices
762(1)
Perfectly Competitive Market Case
762(1)
Distress Prices
762(1)
Cost-Based Transfer Prices
763(3)
Full-Cost Bases
763(2)
Variable Cost Bases
765(1)
Prorating the Difference Between Maximum and Minimum Transfer Prices
765(1)
Dual Pricing
765(1)
Negotiated Transfer Prices
766(1)
Surveys of Company Practice: Domestic and Multinational Transfer-Pricing Practices
767(1)
A General Guideline for Transfer-Pricing Situations
768(1)
Multinational Transfer Pricing and Tax Considerations
769(2)
Concepts in Action: U.S. Internal Revenue Service, Japanese National Tax Agency, and Transfer-Pricing Games
771(14)
Problem for Self-Study
772(1)
Summary
773(1)
Terms to Learn
774(1)
Assignment Material
774(9)
Case: Information Systems Corporation
783(2)
Performance Measurement, Compensation, and Multinational Considerations
785(34)
Financial and Nonfinancial Performance Measures
786(1)
Choosing Among Different Performance Measures: Step 1
787(5)
Return on Investment
788(1)
Residual Income
789(1)
Economic Value Added
790(1)
Return on Sales
791(1)
Comparing Performance Measures
792(1)
Surveys of Company Practice: Examples of Key Financial Performance Measures in Different Companies Around the Globe
792(1)
Choosing the Time Horizon of the Performance Measures: Step 2
793(1)
Choosing Alternative Definitions for Performance Measures: Step 3
794(1)
Choosing Measurement Alternatives for Performance Measures: Step 4
794(3)
Current Cost
794(1)
Long-Term Assets: Gross or Net Book Value?
795(2)
Choosing Target Levels of Performance: Step 5
797(1)
Choosing the Timing of Feedback: Step 6
797(1)
Performance Measurement in Multinational Companies
797(2)
Calculating the Foreign Division's ROI in the Foreign Currency
798(1)
Calculating the Foreign Division's ROI in U.S. Dollars
798(1)
Distinction Between Managers and Organization Units
799(3)
The Basic Trade-Off: Creating Incentives Versus Imposing Risk
800(1)
Intensity of Incentives and Financial and Nonfinancial Measurements
800(1)
Benchmarks and Relative Performance Evaluation
801(1)
Concepts in Action: Should Companies Force Rank Employees?
802(1)
Performance Measures at the Individual Activity Level
802(1)
Performing Multiple Tasks
803(1)
Team-Based Compensation Arrangements
803(1)
Executive Performance Measures and Compensation
803(2)
Intrinsic Motivation and Organization Culture
805(1)
Environmental and Ethical Responsibilities
805(14)
Problem for Self-Study
806(1)
Summary
807(1)
Terms to Learn
808(1)
Assignment Material
808(11)
Appendix A: Surveys of Company Practice 819(3)
Appendix B: Recommended Readings 822(3)
Appendix C: Notes on Compound Interest and Interest Tables 825(7)
Appendix D: Cost Accounting in Professional Examinations 832(3)
Glossary 835(11)
Author Index 846(1)
Company Index 847(2)
Subject Index 849

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