Cost Accounting (14th Edition)

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XVIII PREFACE Chapter 5 has been reorganized to clearly distinguish design choices, implementation challenges, and managerial applications of ABC systems. The presentation of the ideas has been simplified and streamlined to focus on the core issues. Chapter 6 now includes ideas from relevant applied research on the usefulness of budgets and the circumstances in which they add the greatest value, as well as the challenges in administering them. It incorporates new material on the Beyond Budgeting movement, and in particular the trend towards the use of rolling forecasts. Chapters 7 and 8 present a streamlined discussion of direct-cost and overhead variances, respectively. The separate sections on ABC and variance analysis in Chapters 7 and 8 have now been combined into a single integrated example at the end of Chapter 8. A new appendix to Chapter 7 now addresses more detailed revenue variances using the existing Webb Company example. The use of potentially confusing terms such as 2-variance analysis and 1-variance analysis has been eliminated. We have rewritten Chapter 9 as a single integrated chapter with the same running example rather than as two distinct sub-parts on inventory costing and capacity analysis. The material on the tax and financial reporting implications of various capacity concepts has also been fully revised. Chapter 10 has been revised to provide a more linear progression through the ideas of cost estimation and the choice of cost drivers, culminating in the use of quantitative analysis (regression analysis, in particular) for managerial decision-making. Chapter 11 now includes more discussion of global issues such as foreign currency considerations in international outsourcing decisions. There is also greater emphasis on strategy and decision-making. Chapter 12 has been reorganized to more sharply delineate short-run from long-run costing and pricing and to bring together the various considerations other than costs that affect pricing decisions. This reorganization has helped streamline several sections in the chapter. Chapter 13 has been substantially rewritten. Strategy maps are presented as a way to link strategic objectives and as a useful first step in developing balanced scorecard measures. The section on strategic analysis of operating income has been significantly simplified by focusing on only one indirect cost and eliminating most of the technical details. Finally, the section on engineered and discretionary costs has been considerably shortened to focus on only the key ideas. Chapter 14 now discusses the use of “whale curves” to depict the outcome of customer profitability analysis. The last part of the chapter has been rationalized to focus on the decomposition of sales volume variances into quantity and mix variances; and the calculation of sales mix variances has also been simplified. Chapter 15 has been completely revised and uses a simple, unified conceptual framework to discuss various cost allocation methods (single-rate versus dual-rate, actual costs versus budgeted costs, etc.). Chapter 16 now provides a more in-depth discussion of the rationale underlying joint cost allocation as well as the reasons why some firms do not allocate costs (along with real-world examples). Chapters 17 and 18 have been reorganized, with the material on standard costing moved to the appendix in both chapters. This reorganization has made the chapters easier to navigate and fully consistent (since all sections in the body of the chapter now use actual costing). The material on multiple inspection points from the appendix to Chapter 18 has been moved into the body of the chapter, but using a variant of the existing example involving Anzio Corp. Chapter 19 introduces the idea of Six Sigma quality. It also integrates design quality, conformance quality, and financial and nonfinancial measures of quality. The discussion of queues, delays, and costs of time has been significantly streamlined. Chapter 20’s discussion of EOQ has been substantially revised and the ideas of lean accounting further developed. The section on backflush costing has been completely rewritten. Chapter 21 has been revised to incorporate the payback period method with discounting, and also now includes survey evidence on the use of various capital budgeting methods. The discussion of goal congruence and performance measurement has been simplified and combined, making the latter half of the chapter easier to follow.
PREFACE XIX Chapter 22 has been fully rewritten with a new section on the use of hybrid pricing methods. The chapter also now includes a fuller description (and a variety of examples) of the use of transfer pricing for tax minimization, and incorporates such developments as the recent tax changes proposed by the Obama administration. Chapter 23 includes a more thorough description of Residual Income and EVA, as well as a more streamlined discussion of the various choices of accounting-based performance measures. Resources In addition to this textbook and My<strong>Accounting</strong>Lab, the following resources are available for students: Student Study Guide—self study aid full of review features. Student Solutions Manual—solutions and assistance for even numbered problems. Excel Manual—workbook designed for Excel practice. Companion website—www.pearsonhighered.com/horngren. The following resources are available for Instructors: Solutions Manual Test Gen Instructors Manual PowerPoint Presentations Image Library Instructors Resource Center—www.pearsonhighered.com/horngren Acknowledgments We are indebted to many people for their ideas and assistance. Our primary thanks go to the many academics and practitioners who have advanced our knowledge of cost accounting. The package of teaching materials we present is the work of skillful and valued team members developing some excellent end-of-chapter assignment material. Tommy Goodwin, Ian Gow (Northwestern), Richard Saouma (UCLA) and Shalin Shah (Berkeley) provided outstanding research assistance on technical issues and current developments. We would also like to thank the dedicated and hard working supplement author team and GEX Publishing Services. The book is much better because of the efforts of these colleagues. In shaping this edition, we would like to thank a group of colleagues who worked closely with us and the editorial team. This group provided detailed feedback and participated in focus groups that guided the direction of this edition: Wagdy Abdallah Seton Hall University David Alldredge Salt Lake Community College Felicia Baldwin Richard J. Daley College Molly Brown James Madison University Shannon Charles Brigham Young University David Franz San Francisco State University Anna Jensen Indiana University Donna McGovern Custom Business Results, Inc. Cindy Nye Bellevue University Glenn Pate Florida Atlantic University Kelly Pope DePaul University Jenice Prather-Kinsey University of Missouri Melvin Roush Pitt State University Karen Shastri Pitt University Frank Stangota Rutgers University Patrick Stegman College of Lake County
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3 Cost-Volume-Profit Analysis Lear
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4 Job Costing Learning Objectives
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100 CHAPTER 4 JOB COSTING refers t
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102 CHAPTER 4 JOB COSTING Learning
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104 CHAPTER 4 JOB COSTING Decision
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108 CHAPTER 4 JOB COSTING Concepts
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120 CHAPTER 4 JOB COSTING proporti
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124 CHAPTER 4 JOB COSTING Required
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126 CHAPTER 4 JOB COSTING 6. How a
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130 CHAPTER 4 JOB COSTING Material
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132 CHAPTER 4 JOB COSTING Budgeted
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134 CHAPTER 4 JOB COSTING 3. Compu
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5 Activity-Based Costing and Activi
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140 CHAPTER 5 ACTIVITY-BASED COSTI
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6 Master Budget and Responsibility
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184 CHAPTER 6 MASTER BUDGET AND RE
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7 Flexible Budgets, Direct-Cost Var
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228 CHAPTER 7 FLEXIBLE BUDGETS, DI
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8 Flexible Budgets, Overhead Cost V
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264 CHAPTER 8 FLEXIBLE BUDGETS, OV
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9 Inventory Costing and Capacity An
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302 CHAPTER 9 INVENTORY COSTING AN
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10 Determining How Costs Behave Le
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342 CHAPTER 10 DETERMINING HOW COS
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11 Decision Making and Relevant Inf
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392 CHAPTER 11 DECISION MAKING AND
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12 Pricing Decisions and Cost Manag
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434 CHAPTER 12 PRICING DECISIONS A
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13 Strategy, Balanced Scorecard, an
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468 CHAPTER 13 STRATEGY, BALANCED
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14 Cost Allocation, Customer-Profit
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504 CHAPTER 14 COST ALLOCATION, CU
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15 Allocation of Support-Department
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544 CHAPTER 15 ALLOCATION OF SUPPO
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16 Cost Allocation: Joint Products
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578 CHAPTER 16 COST ALLOCATION: JO
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17 Process Costing Learning Object
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608 CHAPTER 17 PROCESS COSTING Con
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18 Spoilage, Rework, and Scrap Lea
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19 Balanced Scorecard: Quality, Tim
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672 CHAPTER 19 BALANCED SCORECARD:
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20 Inventory Management, Just-in-Ti
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704 CHAPTER 20 INVENTORY MANAGEMEN
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21 Capital Budgeting and Cost Analy
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22 Management Control Systems, Tran
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776 CHAPTER 22 MANAGEMENT CONTROL
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23 Performance Measurement, Compens
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808 CHAPTER 23 PERFORMANCE MEASURE
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840 APPENDIX A NOTES ON COMPOUND I
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842 Table 1 Compound Amount of $1.0
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844 Table 3 Compound Amount of Annu
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Glossary Abnormal spoilage. Spoilag
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848 GLOSSARY Cost estimation. The
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850 GLOSSARY Flexible budget. Budg
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852 GLOSSARY Merchandising-sector
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854 GLOSSARY Real rate of return.
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856 GLOSSARY Time driver. Any fact
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858 INDEX N Nahmias, S., 416n Nara
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860 INDEX Wells Fargo, 474 Wendy
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862 INDEX Costing systems ABC, 146
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864 INDEX Graph method, in CVP ana
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866 INDEX Ordering costs, 704 Orga
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868 INDEX for process costing, 632
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Cost Accounting (14th Edition)

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