Cost Management: Strategies for Business Decisions,9780072830088

Cost Management: Strategies for Business Decisions

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Edition: 3rd
ISBN13: 9780072830088
ISBN10: 0072830085
Format: Hardcover
Pub. Date: 2004-12-30
Publisher(s): McGraw-Hill/Irwin
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List Price: $304.29

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Summary

Hilton/Maher/Selto (HMS) addresses traditional cost concepts, but makes cost accounting functional by focusing on measuring and managing costs. HMS maintains that, "Costs don't just happen," and with a pro-active approach toward costs, accountants can add value to an organization. The real-world approach of this text, including the use of focus companies and the accompanying focus sites, provides a realistic business environment, and aids in student comprehension and interest in the subject.

Table of Contents

Part One Setting the Strategic Foundation: The Importance of Analyzing and Managing Costs
1(134)
Cost Management and Strategic Decision: Making Evaluating Opportunities and Leading Change
2(32)
Evaluation of Opportunities at Pursuit Data
4(1)
Strategic Role of Cost Management
5(1)
Characteristics of Cost Management
5(1)
Characteristics of Cost-Management Analysts
6(1)
Strategic Decision Making
7(6)
``Where Do We Want to Go?''
8(2)
``How Do We Want to Get There?''
10(3)
Formulation of Strategic Action Plans
13(2)
Eight Elements of Leading and Managing Change
13(2)
Evaluation of Plans and Outcomes
15(3)
Benefit-Cost Analysis
16(1)
Benefit and Cost Variances
16(2)
Chapter Summary
18(1)
Appendix A to Chapter One: Institute of Management Accountants: Standards of Ethical Conduct for Management Accountants
19(1)
Appendix B to Chapter One: Preview of the Remaining Cost Management Chapters
20(2)
Key Terms
22(1)
Meeting the Cost Management Challenges
23(1)
Solutions to You're the Decision Maker
23(1)
Review Questions
24(1)
Critical Analysis
24(1)
Exercises
25(2)
Problems
27(4)
Cases
31(3)
Product Costing Systems: Concepts and Design Issues
34(52)
The Role of Cost Management at CollegePak Company
36(2)
The Meaning of Cost
38(1)
Product Costs, Period Costs, and Expenses
38(1)
Costs Reported in Financial Statements
38(6)
Service Firms
40(1)
Retail Companies
40(1)
Manufacturing Companies
41(3)
Stages of Production and the Flow of Costs
44(4)
Income Statement and Schedule of Cost of Goods Manufactured and Sold
45(2)
Flow of Manufacturing Costs
47(1)
Production Costs in the Service Industry
48(1)
Cost-Management Concepts: Different Costs for Different Purposes
48(10)
Cost Drivers
48(1)
Cost Behavior
49(1)
Variable Costs and Unit-Level Costs
50(2)
Cost of Resources Used versus Resources Supplied
52(2)
Committed Costs, Opportunity Costs, and Sunk Costs
54(2)
Traceability of Resources
56(2)
What Costs Should Be Considered Product Costs?
58(1)
Fixed Manufacturing Overhead: The Key
58(1)
Illustration of Absorption and Variable Costing
59(7)
Absorption-Costing Income Statements
59(1)
Variable-Costing Income Statements
59(2)
Reconciliation of Income under Absorption and Variable Costing
61(1)
Evaluation of Absorption and Variable Costing
62(2)
Throughput Costing
64(1)
Overproduction of Inventory: An Ethical Issue
65(1)
Chapter Summary
66(1)
Key Terms
66(1)
Meeting the Cost Management Challenges
67(1)
Solutions to You're the Decision Maker
67(1)
Review Questions
68(1)
Critical Analysis
68(1)
Exercises
69(6)
Problems
75(9)
Cases
84(2)
Cost Accumulation for Job-Shop and Batch Production Operations
86(49)
Choice among Product-Costing Systems
89(2)
Evaluating Major Types of Product-Costing Systems
89(2)
Basic Cost-Flow Model
91(3)
Cost Flows and Jobs
92(1)
Managing and Using Cost-Flow Information
93(1)
The Process of Tracking Job-Order Costs
94(6)
Product-Costing System Design Issues
95(1)
Recording Job-Order Costs
95(5)
Use of Predetermined Overhead Rates
100(6)
Summary of Job-Cost Flows
106(1)
Selling and Administrative Costs
106(1)
Meaning of the Overhead Variance
106(1)
Difference between Actual, Normal, and Standard Costing
107(3)
Choice of Cost Driver for Overhead Application
110(1)
Job-Order Costing in Service Organizations
110(1)
Application of Job-Order Costing to the Value Chain
110(1)
Job and Project Management
111(4)
Project Management
112(1)
Job-Cost and Project Improprieties: An Ethical Issue
113(2)
Use of Job-Order Costing Information for Planning and Decision Making
115(1)
Chapter Summary
115(1)
Key Terms
116(1)
Meeting the Cost Management Challenges
116(1)
Solutions to You're the Decision Maker
117(1)
Review Questions
117(1)
Critical Analysis
118(1)
Exercises
118(5)
Problems
123(10)
Case
133(2)
Part Two Activity-Based Management
135(156)
Activity-Based Costing Systems
136(42)
PMI Background
138(1)
PMI's Competitive Situation
138(2)
PMI's Products and Processes
138(1)
PMI's Costing-System Options
139(1)
PMI's Costing-System Team
140(1)
Traditional Costing System
140(1)
Undercosting and Overcosting Products: Cost of Dinner Example
140(1)
Refining a Traditional Costing System
141(1)
Activity-Based Costing System
141(2)
Step 1: Identify and Classify Activities Related to Products
143(4)
Bakery Example
143(1)
Five-Level Hierarchy of Resources and Activities
143(1)
Classification Objectives
144(1)
Methods for Identifying and Classifying Activities
145(1)
PMI's Activity List
145(2)
Step 2: Estimate the Cost of Activities
147(1)
PMI's Use of the Employee Activity Data Sheet
147(1)
Activity Data Sheet Combined with Accounting Information
147(1)
Step 3: Calculate a Cost-Driver Rate for the Activity
148(3)
Cost-Driver Rates: Bakery Example
148(1)
Practical Capacity Note
148(1)
Assignment of Cost-Driver Rates to PMI's Activities
148(3)
Step 4: Assign Activity Costs to Products
151(2)
Bakery Example
151(1)
PMI Example
151(2)
Product and Customer Profitability
153(2)
Product Profitability
153(1)
Customer Profitability
154(1)
Estimation of Costs of New Products Using ABC
155(1)
MegaBurger Novelty Toy Decision
155(2)
Activity-Based Costing in Service and Merchandising Companies
157(1)
Costs and Benefits of Using Activity-Based Costing
157(1)
Chapter Summary
158(1)
Appendix to Chapter Four: Unit-Level ABC Costing
158(1)
Key Terms
159(1)
Meeting the Cost Management Challenges
159(1)
Solutions to You're the Decision Maker
160(1)
Review Questions
160(1)
Critical Analysis
161(1)
Exercises
162(3)
Problems
165(10)
Cases
175(3)
Activity-Based Management
178(34)
Importance of Activity-Based Information to PMI's Success
180(1)
Activity-Based Costing: Foundation of Process Improvement
180(1)
Combination of ABC and Target Costing
181(2)
Importance of Customer-Perceived Value
183(4)
Eliminating Non-Value-Added Activities: Competitive Necessity
183(1)
Identifying Value-Added Activities
184(2)
Performing PMI's Value-Added Analysis
186(1)
Tasks Required by Activity-Based Management
187(1)
Detailed Activity Analysis
187(1)
Identification of Process-Improvement Opportunities
188(2)
Asking the Question, Why?
189(1)
Identifying the Cost of Saved Resources
190(1)
Capacity Utilization
190(2)
Activity-Based Reporting of Unused Resources
191(1)
Implementation of Activity-Based Costing and Management
192(4)
Should All Organizations Adopt ABC and ABM?
192(1)
Can You Be Sure That ABC and ABM Will Be Successful?
193(3)
PMI's Decision to Keep MegaBurger as a Customer
196(1)
Chapter Summary
197(1)
Key Terms
197(1)
Meeting the Cost Management Challenges
197(1)
Solutions to You're the Decision Maker
197(1)
Review Questions
198(1)
Critical Analysis
198(1)
Exercises
199(4)
Problems
203(4)
Cases
207(5)
Managing Customer Profitability
212(32)
HealthWave, Ltd.
214(1)
HealthWave's Products
214(1)
HealthWave's Customers
214(1)
Importance of Customer Profitability
214(3)
Measurement of Customer Profitability
215(1)
Identification of Effective and Ineffective Customer-Related Activities
216(1)
HealthWave's Traditional Profitability Analysis by Product Line
217(2)
Customer Sales Analysis
219(1)
HealthWave Customer Profile
219(1)
Analysis of Customer Sales Patterns
219(1)
Sales and Administrative Cost Analysis
220(6)
Customer Selling Costs
221(1)
Customer Marketing Costs
222(1)
Customer Distribution Costs
223(1)
Customer General and Administration Costs
224(2)
Customer Profitability Analysis
226(2)
Identification of Alternative Actions and Choice of Appropriate One
228(6)
Common-Size Profit Statements
228(1)
Continue the Status Quo; Do Nothing
229(1)
Drop Pharmacy Customers
229(3)
Increase the Efficiency of Serving Pharmacy Customers
232(1)
Decrease Operating Activity Costs for All Customers
233(1)
Chapter Summary
234(1)
Key Terms
234(1)
Meeting the Cost Management Challenges
234(1)
Solutions to You're the Decision Maker
235(1)
Review Questions
236(1)
Critical Analysis
236(1)
Exercises
237(1)
Problems
238(4)
Cases
242(2)
Managing Quality and Time to Create Value
244(47)
Importance of Quality
246(1)
Costs of Improving Quality
247(2)
Total Quality Management (TQM)
247(1)
Return on Quality (ROQ)
247(1)
Comparison of the Views of Quality
248(1)
Conflict between TQM and ROQ
248(1)
Dimensions of Quality
249(1)
Product and Service Attributes
249(1)
Customer Service before and after the Sale
249(1)
How Organizations Measure Quality
250(7)
Indicators of Quality
250(2)
Diagnostic Information
252(4)
Customer Satisfaction
256(1)
Trade-offs between Quality and Price
257(3)
Identifying Costs of Quality
257(1)
Controlling Quality
257(1)
Failing to Control Quality
258(1)
Measuring Costs of Quality
259(1)
Reporting Costs of Quality
259(1)
Corporate Integrity and Quality
260(1)
Quality Awards and Certificates
261(1)
Importance of Managing Time in a Competitive Environment
261(2)
New Product (or Service) Development Time
261(1)
Customer-Response Time and Cycle Time
262(1)
Costs of Time
262(1)
Management of Process Productivity and Efficiency
263(8)
Measuring Productivity
263(1)
Measuring Cycle Time
264(1)
Measuring Throughput Efficiency
264(1)
Managing Process Capacity
265(1)
Measuring Capacity
266(1)
Managing Quality + Time + Productivity + Capacity = JIT
266(1)
JIT Manufacturing
267(1)
JIT Success Factors
268(3)
Chapter Summary
271(1)
Appendix to Chapter Seven: Construction and Use of Control Charts
271(3)
Key Terms
274(1)
Meeting the Cost Management Challenges
275(1)
Solutions to You're the Decision Maker
275(1)
Review Questions
276(1)
Critical Analysis
276(1)
Exercises
277(5)
Problems
282(5)
Cases
287(4)
Part Three Process Costing and Cost Allocation
291(116)
Process-Costing Systems
292(40)
Introduction to Process Costing
294(1)
Importance of Process Cost Information
295(1)
Assignment of Costs to Products
295(1)
Example 1: Department with No Beginning or Ending WIP Inventory
295(1)
Example 2: Department with Ending WIP Inventory
296(2)
Step 1. Summarize the Flow of Physical Units
296(1)
Step 2. Compute the Equivalent Number of Units Produced
296(1)
Steps 3, 4, and 5. Cost Analysis
297(1)
Example 3: Department with Beginning and Ending WIP Inventory
298(5)
The Basic Idea: Applying the Basic Cost-Flow Model
299(1)
Five Key Steps
299(4)
Managerial Use of the Production Cost Report
303(1)
Sections 1 and 2: Managing the Physical Flow of Units
304(1)
Sections 3, 4, and 5: Managing Costs
304(1)
Example 4: Department with Costs Transferred in from Prior Departments
304(1)
Accounting for Transferred-In Costs
304(1)
Responsibility for Costs Transferred in from Prior Departments
305(1)
Example 5: Department with Spoilage Costs
305(3)
Normal versus Abnormal Spoilage: Is Spoilage Ever Normal?
306(2)
Accounting for Spoilage Costs
308(1)
Management of Spirit Beverages' Costs
308(1)
Choice between Job and Process Costing
309(1)
Chapter Summary
310(1)
Appendix A to Chapter Eight: Cost Assignment to Products Using First-In, First-Out Costing
311(6)
Appendix B to Chapter Eight: Operation Costing
317(3)
Key Terms
320(1)
Meeting the Cost Management Challenges
320(1)
Solutions to You're the Decision Maker
320(1)
Review Questions
321(1)
Critical Analysis
321(1)
Exercises
322(3)
Problems
325(4)
Cases
329(3)
Joint-Process Costing
332(30)
Joint Product Processes
334(1)
The Importance of Split Off
334(1)
One Input---More Than One Output
334(1)
The Decision Challenge: Which Joint Products to Produce
335(3)
Estimation of Profits from Joint Products
335(2)
Decision to Sell Products at Split Off or Process Them Further
337(1)
Profit Maximization of Joint-Product Processes
337(1)
Profit Analysis of Option 1: Grade A Standard Lumber
337(1)
Profit Analysis of Option 2: Grade A Specialty Lumber and Grade B Standard Lumber
337(1)
Most Profitable Products
337(1)
Reasons for Allocating Joint Costs
338(3)
Measuring Performance
338(1)
Estimating Casualty Losses
339(1)
Determining and Responding to Regulated Rates
339(1)
Specifying and Resolving Contractual Interests and Obligations
340(1)
Joint-Cost Implications in Contracts
340(1)
Joint Cost-Allocation Methods
341(4)
Distinguishing between Main and By-Products
342(1)
Using the Net Realizable Value Method
342(1)
Using the Physical-Measures Method
343(2)
Choosing among Joint-Cost Allocation Methods
345(1)
Basics of Accounting for By-Products
345(1)
Disposal of Scrap and Waste
346(1)
Chapter Summary
347(1)
Appendix to Chapter Nine: Other Economic Value Methods
347(1)
Key Terms
348(1)
Meeting the Cost Management Challenges
349(1)
Solutions to You're the Decision Maker
349(1)
Review Questions
350(1)
Critical Analysis
350(1)
Exercises
351(3)
Problems
354(4)
Cases
358(4)
Managing and Allocating Support-Service Costs
362(45)
Service-Cost Challenge
364(1)
Internal or Outsourced Support Services?
364(1)
Management of Internal Support-Service Costs
365(2)
Distinguishing between Support-Services and Production Departments
366(1)
Deciding Who Pays for Internal Support-Service Costs
367(1)
Reasons for Allocating Service Costs
367(2)
Decision Making and Cost Allocations
367(1)
Other Uses of Cost Allocations
368(1)
Cost-Management Implications for Internal Support Services
369(1)
Cost Allocation from Support-Service Departments to Internal Customers
369(16)
Step 1: Identify the Costs to Be Allocated to Internal Customers
370(1)
Step 2: Choose the Appropriate Cost-Allocation Base(s) and Rate(s)
371(2)
Step 3: Select and Use a Cost-Allocation Method
373(9)
Step 4: Determine Whether the Cost Allocations Achieve the Desired Results
382(2)
Ethical Issues
384(1)
Chapter Summary
385(1)
Appendix to Chapter Ten: Reciprocal Method
385(4)
Key Terms
389(1)
Meeting the Cost Management Challenges
389(1)
Solutions to You're the Decision Maker
390(1)
Review Questions
391(1)
Critical Analysis
392(1)
Exercises
393(3)
Problems
396(5)
Cases
401(6)
Part Four Planning and Decision Making
407(238)
Cost Estimation
408(50)
Cost Estimation
410(1)
Costs Do Not Just Happen
410(1)
Reasons for Estimating Costs
411(1)
Cost Management
411(1)
Decision Making
411(1)
Planning and Standard Setting
412(1)
A Simple Model: One Cost Driver and Fixed/Variable Cost Behavior
412(1)
A More Complex Model: Multiple Cost Drivers and Complex Cost Behavior
413(2)
Cost-Benefit Test
413(1)
Step Costs
413(2)
Mixed Costs
415(1)
Nonlinear Cost Behavior
415(1)
Cost-Estimation Methods
415(1)
Statistical Cost Estimation Using Simple Regression Analysis
416(5)
Simple Model for Regression Analysis
416(1)
Application of Simple Regression Analysis to C.C. Catering
417(3)
Use of the Regression Results
420(1)
High-Low Method
421(1)
Application of the High-Low Method to C.C. Catering
421(1)
Use of Multiple Regression Analysis to Estimate Cost-Driver Rates
422(5)
Application of Multiple Regression Analysis to C.C. Catering
422(4)
Cautionary Note about Using Regression
426(1)
Account Analysis Method
427(2)
Application of Account Analysis to C.C. Catering
427(2)
Engineering Method
429(1)
Application of the Engineering Method to C.C. Catering
429(1)
Comparison of the Methods and Estimates
430(3)
Relevance of Data Inputs
430(1)
Costs and Benefits of More Sophisticated and Detailed Methods
431(1)
Choice of Cost Equation
431(1)
Application of the Methods to C.C. Catering
431(1)
C.C. Catering's Hybrid Cost-Estimation Model
432(1)
Use of the Results
433(2)
Forecasting
433(2)
Outsourcing Decision
435(1)
Costs and Benefits of Product Variety
435(1)
Ethical Issues
436(1)
Chapter Summary
437(1)
Appendix A to Chapter Eleven: Technical Notes on Regression
437(3)
Appendix B to Chapter Eleven: Learning Curves
440(3)
Key Terms
443(1)
Meeting the Cost Management Challenges
443(1)
Solutions to You're the Decision Maker
443(1)
Review Questions
444(1)
Critical Analysis
444(1)
Exercises
445(6)
Problems
451(5)
Cases
456(2)
Financial and Cost-Volume-Profit Models
458(48)
Introducing Financial Modeling
460(2)
Definition of Financial Models
460(1)
Objectives of Financial Modeling
461(1)
Using Cost-Volume-Profit (CVP) Planning Models
462(5)
Basic Cost-Volume-Profit Model
463(1)
Cost-Volume-Profit Model and the Break-Even Point
463(2)
Basic CVP Model in Graphical Format
465(1)
CVP and Target Income
465(1)
Operating Leverage
466(1)
Identifying Elements of a Financial Model
467(2)
Relations among Revenues and Costs
467(1)
Manual versus Computer Models
467(1)
Set Up of Computer Spreadsheet Models
467(2)
Modeling Taxes
469(1)
Modeling Multiple Products
470(3)
Multiproduct Profit-Planning Model
472(1)
Modeling Multiple Cost Drivers
473(3)
Drivers of Profits
473(1)
Profit-Planning Models with Multiple Cost Drivers
474(1)
Use of ABC in Financial Modeling
475(1)
Using Sensitivity and Scenario Analyses
476(4)
Sensitivity Analysis: What If?
477(2)
Scenario Analysis (Best, Worst, and Most Likely Cases)
479(1)
Modeling Scarce Resources
480(1)
Profit from a Single Scarce Resource Maximization
480(1)
Chapter Summary
481(1)
Appendix A to Chapter Twelve: Theory of Constraints
482(3)
Appendix B to Chapter Twelve: Linear Programming
485(4)
Key Terms
489(1)
Meeting the Cost Management Challenges
489(1)
Solutions to You're the Decision Maker
489(1)
Review Questions
490(1)
Critical Analysis
491(1)
Exercises
491(5)
Problems
496(5)
Cases
501(5)
Cost Management and Decision Making
506(46)
Decision-Making Process
508(1)
Stage I: Setting Goals and Objectives
509(2)
Selecting Goals
509(1)
Specifying Tangible Objectives
509(1)
Setting Tangible Objectives
510(1)
Stage II: Gathering Information
511(5)
Objectivity versus Subjectivity
512(1)
Accuracy
512(1)
Timeliness
512(1)
Relevance
512(1)
Identification of Relevant Costs and Benefits
513(1)
Impact on the Future
514(1)
Trade-Off between Information Cost and Quality
515(1)
Stage III: Evaluating Alternatives
516(3)
The Decision Tree: A Helpful Decision Aid
516(1)
Anticipation of the Future Outcome(s) of Each Action
516(1)
Choice of the Best Alternative: Estimated Benefits and Costs
517(2)
Choice of the Best Alternative Using Both Quantitative and Qualitative Information
519(1)
Examples of Common Decisions: Outsource, or Add or Drop a Product, or Service, or Business Unit
519(6)
Outsourcing or Make-or-Buy Decision
519(2)
Decision to Add or Drop a Product, Service, or Business Unit
521(2)
Relevant Costs of Replacing Equipment
523(2)
Pricing Decisions
525(8)
Influences on Prices
525(5)
Special-Order Price Decisions
530(3)
Chapter Summary
533(1)
Key Terms
533(1)
Meeting the Cost Management Challenges
533(1)
Solutions to You're the Decision Maker
534(1)
Review Questions
535(1)
Critical Analysis
535(1)
Exercises
536(2)
Problems
538(10)
Cases
548(4)
Strategic Issues in Making Investment Decisions
552(42)
Investment Decisions
554(1)
Strategic Investments
554(10)
Uncontrollable External Factors
555(1)
Information about External Events
556(1)
Identification of Uncontrollable Future Events
556(2)
Likelihood of the Occurrence of Future Events
558(1)
Expected Value Analysis
559(1)
Internal Information
560(1)
Forecasts of ShadeTree's Investment Information
561(3)
Future Actions of Competitors
564(2)
Real Option Value Analysis
566(5)
Value of Deferring Irreversible Decisions
567(3)
Value of the Option to Wait
570(1)
Legal and Ethical Issues in Strategic Investment Analysis
571(2)
World Demands Ethical Investment Practice, but What Is It?
571(1)
Internal Ethical Pressures
572(1)
Roles of Internal Controls and Audits
572(1)
Chapter Summary
573(1)
Appendix A to Chapter Fourteen: Discounted Cash Flow Analysis
573(6)
Appendix B to Chapter Fourteen: Analysis of ShadeTree Roasters' Decision to Invest Now, Years 1--6
579(1)
Key Terms
580(1)
Meeting the Cost Management Challenges
581(1)
Solutions to You're the Decision Maker
581(2)
Review Questions
583(1)
Critical Analysis
584(1)
Exercises
584(3)
Problems
587(3)
Cases
590(4)
Budgeting and Financial Planning
594(51)
Strategic Planning: Achieving and Maintaining a Competitive Advantage
596(1)
What Is a Strategic Long-Range Plan?
596(1)
What Are the Key Purposes of Budgeting Systems?
597(1)
Planning
597(1)
Facilitating Communication and Coordination
597(1)
Allocating Resources
597(1)
Managing Financial and Operational Performance
598(1)
Evaluating Performance and Providing Incentives
598(1)
Organizations Use Many Types of Budgets
598(1)
Master Budget as a Planning Tool
598(4)
Sales Budget: The Starting Point
598(3)
Operational Budgets: Meeting the Demand for Goods and Services
601(1)
Budgeted Financial Statements: Completing the Master Budget
601(1)
Master Budget for Nonprofit Organizations
601(1)
International Aspects of Budgeting
602(1)
Activity-Based Budgeting
603(1)
Illustrating the Master Budget
604(13)
Sales Budget
604(1)
Production Budget
604(2)
Direct-Material Budget
606(1)
Direct-Labor Budget
607(1)
Manufacturing-Overhead Budget
607(2)
Selling, General, and Administrative (SG&A) Expense Budget
609(1)
Cash Receipts Budget
610(1)
Cash Disbursements Budget
611(1)
Cash Budget: Combining Receipts and Disbursements
612(1)
Budgeted Schedule of Cost of Goods Manufactured and Sold
613(1)
Budgeted Income Statement
614(1)
Budgeted Balance Sheet
614(1)
Assumptions and Predictions Underlying the Master Budget
614(2)
Financial Planning Models
616(1)
Responsibility for Budget Administration
617(1)
Behavioral Implications of Budgets
618(2)
Budgetary Slack: Padding the Budget
618(1)
Participative Budgeting
619(1)
Ethical Issues in Budgeting
619(1)
Zero-Base Budgeting for Discretionary Costs
620(1)
Base Budgeting
620(1)
Contemporary Trends in Budgeting and Financial Planning
620(1)
Chapter Summary
621(1)
Appendix to Chapter Fifteen: Inventory Management
621(4)
Key Terms
625(1)
Meeting the Cost Management Challenges
626(1)
Solutions to You're the Decision Maker
626(1)
Review Questions
627(1)
Critical Analysis
627(1)
Exercises
628(4)
Problems
632(8)
Cases
640(5)
Part Five Evaluating and Managing Performance Creating and Managing Value-Added Effort
645(230)
Standard Costing, Variance Analysis, and Kaizen Costing
646(42)
Use of Standard-Costing Systems for Control
648(4)
Management by Exception
648(1)
Setting Standards
649(1)
Perfection versus Practical Standards: A Behavioral Issue
650(1)
Use of Standards by Nonmanufacturing Organizations
651(1)
Costs and Benefits of Standard-Costing Systems
652(1)
Cost Variance Analysis
652(6)
Direct-Material Standards
652(1)
Direct-Labor Standards
653(1)
Standard Costs Given Actual Output
653(1)
Analysis of Cost Variances
653(1)
Direct-Material Variances
654(1)
Direct-Labor Variances
655(2)
Multiple Types of Direct Material and Direct Labor
657(1)
Allowance for Defects or Spoilage
657(1)
Significance of Cost Variances: When to Follow Up
658(3)
Size of Variances
658(1)
Recurring Variances
658(1)
Trends
659(1)
Controllability
659(1)
Favorable Variances
659(1)
Costs and Benefits of Investigation
659(1)
Statistical Analysis
660(1)
Behavioral Effects of Standard Costing
661(1)
Controllability of Variances
661(3)
Which Managers Influence Cost Variances?
662(1)
Interaction among Variances
662(2)
Use of Standard Costs for Product Costing
664(2)
Journal Entries under Standard Costing
664(1)
Cost Flows under Standard Costing
665(1)
Impact of Information Technology on Standard Costing
666(1)
Use of Bar Codes
666(1)
Computer-Aided Design
666(1)
Standard Costing: Its Traditional Advantages
667(1)
Changing Role of Standard-Costing Systems in Today's Manufacturing Environment
667(3)
Criticisms of Standard Costing in Today's Manufacturing Environment
668(1)
Adaptation of Standard-Costing Systems
668(2)
Kaizen Costing
670(1)
Chapter Summary
671(1)
Appendix to Chapter Sixteen: Production Mix and Yield Variances
671(4)
Key Terms
675(1)
Meeting the Cost-Management Challenges
675(1)
Solution to You're the Decision Maker
676(1)
Review Questions
677(1)
Critical Analysis
677(1)
Exercises
678(3)
Problems
681(5)
Cases
686(2)
Flexible Budgets, Overhead Cost Management, and Activity-Based Budgeting
688(54)
Definition of Flexible-Overhead Budgets
690(7)
Advantages of Flexible Budgets
691(1)
Activity Measure: Based on Input or Output?
691(2)
Flexible-Overhead Budget Illustrated
693(1)
Overhead Application in a Standard-Costing System
694(1)
Choice of Activity Measure
695(1)
Impact of Information Technology
696(1)
Overhead Cost Variances
697(7)
Flexible Budget: Basis for Management of Overhead Cost
697(1)
Variable-Overhead Variances
697(3)
Fixed-Overhead Variances
700(3)
What Do Four-Way, Three-Way, and Two-Way Variance Analyses Tell the Cost Manager?
703(1)
Using the Overhead Cost Performance Report In Cost Management
704(1)
Using Standard Costs in Product Costing
705(1)
Journal Entries under Standard Costing
705(1)
Disposition of Variances
706(1)
Activity-Based Flexible Budget
706(3)
How Does ABC Affect Performance Reporting?
707(2)
Other Issues in Variance Analysis
709(1)
Standard Costing in a Just-in-Time Environment
709(1)
Sales-Variance Analysis
709(1)
Chapter Summary
709(1)
Appendix A to Chapter Seventeen: Proration of Cost Variances
709(3)
Appendix B to Chapter Seventeen: Standard Costing in a Just-in-Time Environment
712(2)
Appendix C to Chapter Seventeen: Sales Variance Analysis
714(7)
Key Terms
721(1)
Meeting the Cost-Management Challenges
721(1)
Solution to You're the Decision Maker
722(2)
Review Questions
724(1)
Critical Analysis
724(1)
Exercises
724(5)
Problems
729(8)
Cases
737(5)
Organizational Design, Responsibility Accounting, and Evaluation of Divisional Performance
742(46)
Decentralized Organizations and Responsibility Accounting
744(2)
Centralization versus Decentralization
744(1)
Benefits and Costs of a Decentralized Organization Structure
744(2)
Responsibility Accounting
746(1)
Cost Center
746(1)
Discretionary Cost Center
746(1)
Revenue Center
746(1)
Profit Center
746(1)
Investment Center
747(1)
Illustration of Responsibility Accounting
747(3)
Corporate Level
747(1)
Division Level
748(1)
Plant Level
749(1)
Department Level
749(1)
Work Center Level
750(1)
Performance Reports
750(2)
Budgets, Variance Analysis, and Responsibility Accounting
752(1)
Activity-Based Responsibility Accounting
752(1)
How Responsibility Accounting Affects Behavior
752(2)
Does It Provide Information or Place Blame?
753(1)
Is There Really Cost or Revenue Controllability?
753(1)
How Can Desired Behavior Be Motivated?
753(1)
Performance Measurement in Investment Centers
754(7)
Return on Investment as a Performance Measure
755(2)
Residual Income as a Performance Measure
757(3)
Economic Value Added (EVA) as a Performance Measure
760(1)
Measuring Invested Capital and Income
761(5)
Measuring Invested Capital
761(3)
Measuring Investment-Center Income
764(1)
Determining the Impact of Inflation and Deflation: Current Value versus Historical-Cost Accounting
765(1)
Measuring Income and Invested Capital: Summary
766(1)
Use of Investment Center Performance Measures to Provide Managerial Incentives
766(5)
Return on Investment (ROI)
766(1)
Residual Income or Economic Value Added
767(1)
Stock-Price Performance
768(1)
Nonfinancial Performance Measures
768(2)
Viewing an Investment Center as a Collection of Investments
770(1)
Performance Measurement in Nonprofit Organizations
770(1)
Chapter Summary
771(1)
Key Terms
771(1)
Meeting the Cost Management Challenges
771(1)
Solutions to You're the Decision Maker
772(1)
Review Questions
772(1)
Critical Analysis
773(1)
Exercises
773(3)
Problems
776(7)
Cases
783(5)
Transfer Pricing
788(30)
Impact of Transfer Pricing on Organizations
790(10)
Goal and Behavioral Congruence
791(1)
General Transfer-Pricing Rule
791(3)
Transfers Based on the External Market Price
794(1)
Negotiated Transfer Prices
795(1)
Cost-Based Transfer Prices
796(2)
Standard versus Actual Costs
798(1)
Activity-Based Costing
798(1)
Remedy for Motivational Problems of Transfer-Pricing Policies
798(1)
Undermining of Divisional Autonomy
798(1)
Dual Transfer Prices
799(1)
Global Transfer-Pricing Practices
800(2)
Multinational Transfer Pricing
800(2)
Segment Reporting and Transfer Pricing
802(1)
Transfer Pricing in the Service Industry
803(1)
Chapter Summary
803(1)
Key Terms
803(1)
Meeting the Cost-Management Challenges
803(1)
Solutions to You're the Decision Maker
804(1)
Review Questions
804(1)
Critical Analysis
805(1)
Exercises
805(3)
Problems
808(6)
Cases
814(4)
Strategy, Balanced Scorecards, and Incentive Systems
818(57)
Valley Commercial Bank: Ahead of the Competition
820(1)
Using Leading and Lagging Indicators in Balanced Scorecards to Communicate, Motivate, and Evaluate
820(4)
Leading and Lagging Indicators
820(1)
Communicating Strategy to Employees
821(1)
Motivating Employees and Evaluating Performance
821(1)
Modern Origin and Use of Balanced Scorecards
822(1)
Balanced Scorecard's Strategic Performance Measures
822(2)
Implementation of a Balanced Scorecard
824(7)
Organizational Learning and Growth
824(2)
Business and Production Process Performance
826(2)
Customer Performance
828(2)
Financial Performance
830(1)
Benefits and Costs of a Balanced Scorecard
831(2)
Benefits of a Balanced Scorecard
831(1)
Costs of a Balanced Scorecard
832(1)
Unanswered Balanced Scorecard Questions
833(1)
Balanced Scorecard Implementation at Valley Commercial Bank
833(2)
Fundamental Principles of Incentive Systems
835(3)
Unintended Consequences of Incentive Systems
836(1)
Desired Behavior---It's Where to Begin
837(1)
Reality Intrudes
837(1)
Role for Theories of Incentives and Behavior
837(1)
Features of Performance-Based Incentive Systems
838(9)
Absolute or Relative Performance
838(2)
Formula-Based or Subjective Performance
840(1)
Financial or Nonfinancial Performance
841(2)
Narrow or Broad Responsibility of Performance
843(1)
Current or Deferred Rewards
844(1)
Salary, Bonus, or Stock Rewards
845(2)
Ethical Aspects of Incentives and Compensation
847(3)
Incentive Plans in Nonprofit Organizations
848(1)
Summary of Valley Commercial Bank's Incentive System
849(1)
Balanced Scorecard-Based Incentives
849(1)
Chapter Summary
850(1)
Appendix to Chapter Twenty: Theories of Incentives and Behavior
851(4)
Key Terms
855(1)
Meeting the Cost Management Challenges
856(1)
Solutions to You're the Decision Maker
856(1)
Review Questions
857(1)
Critical Analysis
857(1)
Exercises
858(3)
Problems
861(6)
Cases
867(8)
Glossary 875(10)
Photo Credits 885(2)
Bibliography 887(6)
Company Name Index 893(4)
Subject Index 897

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