Cost Accounting (14th Edition)

Contents
1 The Manager and Management
Accounting 2
iTunes Variable Pricing: Downloads Are Down, but Profits
Are Up
Financial Accounting, Management Accounting, and
Cost Accounting 3
Strategic Decisions and the Management Accountant 5
Value Chain and Supply Chain Analysis and Key
Success Factors 5
Value-Chain Analysis 6
Supply-Chain Analysis 7
Key Success Factors 7
Decision Making, Planning, and Control: The Five-Step
Decision-Making Process 9
Key Management Accounting Guidelines 11
Cost-Benefit Approach 12
Behavioral and Technical Considerations 12
Different Costs for Different Purposes 12
Organization Structure and the Management
Accountant 13
Line and Staff Relationships 13
The Chief Financial Officer and the Controller 13
Professional Ethics 14
Institutional Support 14
Concepts in Action: Management Accounting Beyond
the Numbers
Typical Ethical Challenges 17
Problem for Self-Study 18 | Decision Points 18 | Terms to
Learn 19 | Assignment Material 19 | Questions 19 |
Exercises 20 | Problems 22 | Collaborative Learning
Problem 25
2 An Introduction to Cost Terms and
Purposes 26
GM Collapses Under the Weight of its Fixed Costs
Costs and Cost Terminology 27
Direct Costs and Indirect Costs 28
Challenges in Cost Allocation 29
Factors Affecting Direct/Indirect Cost
Classifications 29
Cost-Behavior Patterns: Variable Costs and Fixed
Costs 30
Cost Drivers 32
Concepts in Action: How Zipcar Helps Reduce
Twitter’s Transportation Costs
Relevant Range 33
Relationships of Types of Costs 34
Total Costs and Unit Costs 35
Unit Costs 35
Use Unit Costs Cautiously 35
Business Sectors, Types of Inventory, Inventoriable
Costs, and Period Costs 36
Manufacturing-, Merchandising-, and Service-Sector
Companies 36
Types of Inventory 37
Commonly Used Classifications of Manufacturing
Costs 37
Inventoriable Costs 37
Period Costs 38
Illustrating the Flow of Inventoriable Costs and Period
Costs 39
Manufacturing-Sector Example 39
Recap of Inventoriable Costs and Period Costs 42
Prime Costs and Conversion Costs 43
Measuring Costs Requires Judgment 44
Measuring Labor Costs 44
Overtime Premium and Idle Time 44
Benefits of Defining Accounting Terms 45
Different Meanings of Product Costs 45
A Framework for Cost Accounting and Cost
Management 47
Calculating the Cost of Products, Services, and Other
Cost Objects 47
Obtaining Information for Planning and Control and
Performance Evaluation 47
Analyzing the Relevant Information for Making
Decisions 47
Problem for Self-Study 48 | Decision Points 50 | Terms to
Learn 51 | Assignment Material 51 | Questions 51 |
Exercises 52 | Problems 56 | Collaborative Learning
Problem 61
3 Cost-Volume-Profit Analysis 62
How the “The Biggest Rock Show Ever” Turned a Big Profit
Essentials of CVP Analysis 63
Contribution Margins 64
Expressing CVP Relationships 66
Cost-Volume-Profit Assumptions 68
Breakeven Point and Target Operating Income 68
Breakeven Point 68
Target Operating Income 69
Target Net Income and Income Taxes 70
Using CVP Analysis for Decision Making 72
Decision to Advertise 72
Decision to Reduce Selling Price 73
iv