Cost Accounting, 10e

Foundations & Evolutions

by Kinney, Raiborn, Dragoo

| ISBN: 978-1-61853-353-1 | Copyright 2021

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Welcome to Cost Accounting: Foundations & Evolutions!

The business world has changed significantly in the years since our last edition was published. Online merchants such as Amazon and Apple have contributed to an explosion of ecommerce. Cloud computing is all the rage as technology companies such as Microsoft and Adobe try to convert their revenue streams to subscription services. The emergence of data analytics, machine learning, and blockchain has altered the role of accountants in most organizations.

In addition to changes in the business world, there have been changes in how students approach learning. Long gone, are the days when students read a chapter of a printed book from beginning to end before attempting the assignments using pen and paper. Online videos, eBooks, learning management systems, and auto-graded homework are now ubiquitous, so in the tenth edition we have made a concerted effort to embrace and harness the power of technology. We attempt to steer away from dense text (which the average student is not reading) and move towards a more active- learning approach where content is delivered in short bursts supported by online demonstration videos and followed by immediate practice.

Cost accounting has been and remains a dynamic discipline that is constantly responding to the evolving needs of managers in a highly competitive, global business world. While the primary use of accounting is to determine product costs for internal management and external financial reporting, managers also need cost accounting information to develop, implement, and evaluate strategy. The tenth edition of Cost Accounting: Foundations & Evolutions, covers the fundamental cost accounting procedures and calculations as well as the more strategic cost management concepts needed for planning and decision making.

We believe a text is valuable only when students find the subject matter applicable to their business or personal lives. Through the use of a straightforward, readable approach, Cost Accounting: Foundations & Evolutions engages students by highlighting the real-world relevance of each topic. The text encourages students to expand their capabilities beyond merely computing answers to critically thinking about a variety of business issues.



Retained and Updated Features

The tenth edition of Cost Accounting: Foundations & Evolutions provides in-depth coverage of current cost management concepts and procedures in a straightforward and reader-friendly framework. The clean, concise presentation of materials and the updated illustrations reinforce and clarify the topics that readers traditionally struggle with most. The following features have been retained and updated in this edition.

Real examples and ethical considerations:  As with previous editions, real examples and ethical coverage are woven into the text so readers immediately see the relevance of the cost accountant's role in managerial decisions and learn to go beyond the numbers to think critically.



High-quality end-of-chapter assignments:  Students practice accounting skills with a wide array of assignment types, including Internet research exercises, group activities, writing assignments, ethical problems, and Excel® template activities. Questions test basic chapter comprehension, exercises offer quick concept checks, and problems delve deeper into the concepts, testing students' application of critical topics and procedures.



Streamlined, student-friendly approach:  Recognized for its unmatched readability, the book's thought-provoking writing keeps concepts intriguing and easy to comprehend. This edition's solid blend of concepts and practices will help students clearly understand how to solve actual business problems.

Relevancy in today's business world:  Updated illustrations and real-world examples appeal to today's students and clearly exemplify the chapters' concepts. These examples are integrated throughout the main body of the text in order to connect today's business world with the classroom experience immediately.

Developing ethical business leaders:  The need for students to analyze business situations and make informed, ethical decisions is essential in today's business world. Cost Accounting: Foundations & Evolutions weaves ethical considerations throughout the chapter so that students learn to think consistently of the ethical implications of their actions. Potential Ethical Issues at the end of the chapter emphasize dilemmas students may encounter in business, and exercises and problems involving ethical considerations are marked with an ethics icon.


Comprehensive Chapter Review:  Comprehensive Chapter Reviews conclude each chapter to ensure your students' mastery of concepts through a list of key chapter terms, succinct chapter summaries, potential ethical issues, solution strategies highlighting key equations and concepts, and demonstration problems that students can use as a framework for solving similar examples in homework assignments or exams. These comprehensive reviews reinforce the critical concepts from the chapter and show how to apply them. For example, refer to pages 9-21 through 9-23.

Solutions Strategies:  Each chapter includes a section with an overview of key strategies for the more complex learning objectives. The strategies reinforce the content of the LO through a key formula, schedule, or an outline of steps. These are just another tool beyond the reviews and videos to assist students in working through the assignments.

Technology That Improves Learning And Complements Faculty Instruction

myBusinessCourse is an online learning and assessment program intended to complement your textbook and faculty instruction. Access to myBusinessCourse is FREE ONLY with the purchase of a new textbook, but can be purchased separately.

MBC is ideal for faculty seeking opportunities to augment their course with an online component. MBC is also a turnkey solution for online courses. The following are some of the features of MBC.

Increase Student Readiness

  • eLectures explain each chapter's learning objectives and in many cases, provide demonstrations. Consistent with the text and created by the authors, these videos are ideal for remediation and online instruction. However, our experiences have shown that students in traditional learning environments utilize these learning tools to master the topics.
  • Guided Examples are narrated video demonstrations created by the authors that show students how to solve the Review problems from the textbook.
  • Immediate feedback with auto-graded homework.
  • Test Bank questions that can be incorporated into your assignments.
  • Instructor gradebook wit immediate grade results.

Make Instruction Needs-Based

  • Identify where your students are struggling and customize your instruction to address their needs.
  • Gauge how your entire class or individual students are performing by viewing the easy-to-use gradebook.
  • Ensure your students are getting the additional reinforcement and direction the need between class meetings.

Provide Instruction and Practice 24/7

  • Assign homework from your Cambridge Business Publishers' textbook and have MBC grade it for you automatically.
  • With our Videos, your students can revisit accounting topics as often as they like or until they master the topic.
  • Make homework due before class to ensure students enter your classroom prepared.
  • For an additional fee, upgrade MBC to include the eBook and you have all the tools needed for an online course.

Integrate with LMS

myBusinessCourse integrates with many learning management systems, including, Canvas, Blackboard, Moodle, D2L, Schoology, and Sakai. Your gradebooks sync automatically.

New to the 10th Edition

New Co-Author:  Amie Dragoo joins us on the tenth edition. Amie brings a wealth of knowledge and experience to the team and has dramatically improved the online assets featured in myBusinessCourse (MBC), our online learning and homework system. Amie developed eLecture, Demonstration, and Guided Example videos that accompany the auto-graded homework in MBC.

Active Learning:  As mentioned above, in the tenth edition we move towards a more active- learning approach where content is delivered in shorter bursts supported by online demonstration videos and followed by immediate practice through in-chapter review problems. Pedagogically, we have revised each chapters objectives to provide students with a demonstration video and review problem for each deliberately selected, key learning objective. In this way, students see the application of concepts through a step-by-step illustration and then have the opportunity to immediately practice similar review problems. This concept overview-illustration-practice approach keeps students engaged and ensures they have mastered one learning objective before proceeding to the next.

Road Maps:  To establish the active-learning approach of the product and highlight its user friendly organization, each chapter opens with a Road Map that identifies each learning objective for the chapter, the related page numbers, the demonstration videos, the review problems (Guided Examples), and the corresponding assignments. This table allows students and faculty to quickly grasp at a glance the chapter contents and to efficiently navigate to the desired topic. The Road Maps also make it easier for students to work backwards from assignment to illustrative video and example in the text.


Demonstration Videos: Created by the authors, the demonstration videos provide the foundation for students to complete the review problems that follow. The videos provide illustrative examples that are solved in a step-by-step manner.

In-Chapter Review Problems:  The emphasis in our approach is to provide students with a demonstration video and review problem for each deliberately selected, key learning objective. In this way, students see the application of concepts through a step-by-step illustration and then have the opportunity to immediately practice similar review problems. At the conclusion of each learning objective, a review problem is provided with answers included at the end of the chapter. These review problems are presented to reinforce concepts presented in the section and ensure student comprehension. By not providing the review solutions on the same page as the review, we are encouraging students to “learn by doing.” In addition, each review problem is accompanied by a short video clip (typically 3 minutes or less) that walks students through the solution to the review.



Data Analytics, Artificial Intelligence, and Blockchain technology:  Chapter 19 on emerging management practices now includes discussions on data analytics, artificial intelligence, and blockchain. The authors provide a broad introduction to the topics and then describe innovations in a cost accounting context.





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myBusinessCourse is a complete, secure, web-based training and e-Learning solution. There is nothing to download or install; it is accessible through any modern web browser and most mobile devices.

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eLecture Videos

eLecture Videos

  • Created by the authors of the textbook
  • Consistent with the textbook's explanations and approach
  • Cover learning objectives and concepts from each chapter
  • Ideal for remediation
  • Ideal for online and hybrid classrooms

Narrated demonstration videos

Guided Example Videos

  • Created by the authors of the textbook
  • Provide problem solving strategies as well as solutions
  • Offer clear, step-by-step demonstrations of how to solve select problems from the textbook

Auto-graded assignments

Auto-graded Assignments

  • Provides immediate feedback
  • Create assignments using problems from the textbook
  • Additional randomized versions of assignments provide extra practice
  • Ideal for remediation
  • Include select questions from test banks

Detailed Reporting Tools

Detailed Reporting Tools

  • Quickly review the performance of individual students
  • Quickly review the performance of entire class
  • Use reports on student performance to customize your lectures to fit student needs

Enhanced eBook

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  • Includes myBusinessCourse
  • Integrates eLecture and demonstration videos
  • Bookmarking
  • Note taking
  • Highlighting

Third Party Integrations

Third Party Integrations

  • Single sign-on
  • Link to assignments in myBusinessCourse from your third party course
  • Automatically sync gradebooks each night

Flashcards

  • Study, learn and master key terms.
  • With linear-mode, get full control over the deck. Go back and forth between cards, shuffle and auto-play the deck.
  • With certainty-mode, test how well you know each term. If you are not certain you have learned the term, it will display again later in the deck.

Support and Training

Support and Training

  • Technical support for students and faculty available daily
  • Faculty training conducted daily

Example of the Road Map & video features available for each chapter.

Click on a Chapter 3 eLecture or Guided Example to preview the related video.

Road Map
LO Learning Objective | Topics Page eLecture Guided Example Assignments
LO3-1

Why and how are overhead costs allocated to products and services?

3-2

11, 12, 13, 14, 15, 36, 37, 38, 39, 40, 41, 45, 50

LO3-2

What causes underapplied or overapplied overhead, and how is it treated at the end of a period?

3-6

16, 17, 18, 37, 38, 41

LO3-3

What impact do different capacity measures have on setting predetermined overhead rates?

3-8

19, 20, 37, 38, 39, 40

LO3-4

How is the high-low method used in analyzing mixed costs?

3-10

21, 22, 23, 24, 42, 43, 52

LO3-5

How do managers use flexible budgets to set predetermined overhead rates?

3-12

24, 25, 26, 38, 44, 45, 46

LO3-6

How do absorption and variable costing differ?

3-15

27, 28, 29, 30, 31, 32, 33, 47, 48, 49, 50, 51

LO3-7

How do changes in sales or production levels affect net income computed under absorption and variable costing?

3-20

27, 28, 30, 31, 32, 33, 47, 48, 49, 50, 51

LO3-8

(Appendix) How is least squares regression used in analyzing mixed costs?

3-21

34, 35, 43, 52


Click on a Chapter 4 eLecture or Guided Example to preview the related video.

LO Learning Objective | Topics Page eLecture Guided Example Assignments
LO4-1

In an activity-based management system, what are value-added and non-value-added activities?

4-2

13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 52, 53

LO4-2

How do value-added and non-value-added activities affect manufacturing cycle efficiency?

4-5

18, 19, 20, 21, 22, 23, 24, 25

LO4-3

Why must cost drivers be designated in an activity-based costing system?

4-7

26, 27, 28, 29, 30, 31, 32, 41, 42, 52, 53, 54

LO4-4

How are product and service costs computed using an activity-based costing system?

4-12

33, 34, 35, 36, 42, 43, 44, 45, 46, 47, 48, 49, 50, 51, 52, 53, 55, 56

LO4-5

Under what conditions is activity-based costing useful in an organization, and what information do activity-based costing systems provide to management?

4-17

36, 37, 38, 39, 40, 42, 43, 47, 48, 49, 50, 51, 52, 53, 54, 55, 56, 57, 58, 59

Expand/Collapse All
Preface (pg. iii)
Brief Contents (pg. ix)
Contents (pg. x)
Chapter 1 Introduction to Cost Accounting (pg. 1-1)
Introduction (pg. 1-2)
Comparison of Financial, Management, and Cost Accounting (pg. 1-2)
Financial Accounting (pg. 1-2)
Management Accounting (pg. 1-3)
Cost Accounting (pg. 1-4)
Review 1-1 Financial and Cost Accounting (pg. 1-5)
Organizational Strategy (pg. 1-6)
Organizational Structure Supporting Strategy (pg. 1-7)
Organizational Constraints (pg. 1-8)
Review 1-2 Identification of Organizational Strategy (pg. 1-8)
Value Chain (pg. 1-9)
Review 1-3 Value Chain Activities (pg. 1-10)
Balanced Scorecard (pg. 1-10)
Review 1-4 Balanced Scorecard (pg. 1-13)
Professional Ethics (pg. 1-13)
Ethics in Multinational Corporations (pg. 1-15)
Review 1-5 IMA’s Statements of Ethical Professional Practice (pg. 1-16)
Comprehensive Chapter Review (pg. 1-17)
Key Terms (pg. 1-17)
Chapter Summary (pg. 1-17)
Potential Ethical Issues (pg. 1-18)
Questions (pg. 1-19)
Exercises (pg. 1-19)
Review Solutions (pg. 1-23)
Review 1-1 (pg. 1-23)
Review 1-2 (pg. 1-23)
Review 1-3 (pg. 1-23)
Review 1-4 (pg. 1-23)
Review 1-5 (pg. 1-23)
Chapter 2 Cost Terminology and Cost Behaviors (pg. 2-1)
Introduction (pg. 2-2)
Cost Terminology (pg. 2-2)
Association with Cost Object (pg. 2-2)
Review 2-1 Association with Cost Object (pg. 2-3)
Reaction to Changes in Activity (pg. 2-3)
Review 2-2 Analysis of Cost Behavior (pg. 2-7)
Classification on the Financial Statements (pg. 2-7)
Review 2-3 Financial Statement Classification of Costs (pg. 2-8)
The Conversion Process (pg. 2-8)
Retailers versus Manufacturers/Service Companies (pg. 2-9)
Manufacturers versus Service Companies (pg. 2-12)
Review 2-4 Degree of Conversion (pg. 2-12)
Components of Product Cost (pg. 2-12)
Direct Material (pg. 2-12)
Direct Labor (pg. 2-13)
Overhead (pg. 2-13)
Review 2-5 Classifying Product Costs (pg. 2-14)
Product Cost Flow in a Cost System (pg. 2-15)
Review 2-6 Determining Product Costs and Recording Cost Flow (pg. 2-18)
Cost of Goods Manufactured and Sold (pg. 2-18)
Review 2-7 Determining Product Costs, Including Amounts Allocated for Overhead (pg. 2-20)
Comprehensive Review Module (pg. 2-20)
Key Terms (pg. 2-20)
Chapter Summary (pg. 2-20)
Solution Strategies (pg. 2-22)
Demonstration Problem (pg. 2-22)
Potential Ethical Issues (pg. 2-25)
Questions (pg. 2-25)
Exercises (pg. 2-25)
Problems (pg. 2-32)
Review Solutions (pg. 2-39)
Review 2-1 (pg. 2-39)
Review 2-2 (pg. 2-39)
Review 2-3 (pg. 2-39)
Review 2-4 (pg. 2-40)
Review 2-5 (pg. 2-40)
Review 2-6 (pg. 2-40)
Review 2-7 (pg. 2-41)
Chapter 3 Predetermined Overhead Rates, Flexible Budgets, and Absorption/Variable Costing (pg. 3-1)
Introduction (pg. 3-2)
Normal Costing and Predetermined Overhead (pg. 3-2)
Formula for Predetermined Overhead Rate (pg. 3-3)
Applying Overhead to Productio (pg. 3-4)
Review 3-1 Plantwide vs. Departmental OH Rates (pg. 3-6)
Causes of Underapplied or Overapplied Overhead (pg. 3-6)
Disposition of Underapplied and Overapplied Overhead (pg. 3-6)
Review 3-2 Underapplied or Overapplied Overhead (pg. 3-8)
Alternative Capacity Measures (pg. 3-8)
Review 3-3 Predetermined OH Rates; Capacity Measures (pg. 3-9)
Separating Mixed Costs (pg. 3-10)
High-Low Method (pg. 3-10)
Review 3-4 High-low Method (pg. 3-12)
Flexible Budgets (pg. 3-12)
Plantwide versus Departmental Overhead Rates (pg. 3-13)
Review 3-5 Flexible Budget (pg. 3-14)
Overview of Absorption and Variable Costing (pg. 3-15)
Absorption and Variable Costing Illustrations (pg. 3-17)
Review 3-6 Production Cost; Absorption vs. Variable Costing (pg. 3-20)
Comparison of the Two Approaches (pg. 3-20)
Review 3-7 Net Income; Absorption vs. Variable Costing (pg. 3-21)
Appendix 3: Least Squares Regression Analysis (pg. 3-21)
Review 3-8 Least Squares Regression (pg. 3-23)
Comprehensive Chapter Review (pg. 3-24)
Key Terms (pg. 3-24)
Chapter Summary (pg. 3-24)
Solution Strategies (pg. 3-25)
Demonstration Problem (pg. 3-27)
Potential Ethical Issues (pg. 3-28)
Questions (pg. 3-28)
Exercises (pg. 3-29)
Problems (pg. 3-36)
Review Solutions (pg. 3-45)
Review 3-1 (pg. 3-45)
Review 3-2 (pg. 3-45)
Review 3-3 (pg. 3-45)
Review 3-4 (pg. 3-45)
Review 3-5 (pg. 3-45)
Review 3-6 (pg. 3-46)
Review 3-7 (pg. 3-46)
Review 3-8 (pg. 3-46)
Chapter 4 Activity-Based Management and Activity-Based Costing (pg. 4-1)
Introduction (pg. 4-2)
Activity-Based Management (pg. 4-2)
Value-Added versus Non-Value-Added Activities (pg. 4-2)
Review 4-1 Activity Analysis (pg. 4-5)
Manufacturing Cycle Efficiency (pg. 4-5)
Review 4-2 Manufacturing Cycle Efficiency (pg. 4-6)
Cost Driver Analysis (pg. 4-7)
Levels at Which Costs Are Incurred (pg. 4-8)
Cost-Level Allocations Illustrated (pg. 4-11)
Review 4-3 Cost Drivers (pg. 4-12)
Activity-Based Costing (pg. 4-12)
Two-Step Allocation (pg. 4-12)
Activity-Based Costing Illustrated (pg. 4-14)
Review 4-4 OH Allocation Using Cost Drivers (pg. 4-16)
Determining Whether ABC is Useful (pg. 4-17)
Large Product or Service Variety (pg. 4-17)
High Product/Process Complexity (pg. 4-18)
Lack of Commonality in Overhead Costs (pg. 4-18)
Irrationality of Current Cost Allocations (pg. 4-18)
Changes in Business Environment (pg. 4-19)
Criticisms of Activity-Based Costing (pg. 4-19)
Review 4-5 ABC; Product Profitability (pg. 4-20)
Comprehensive Chapter Review (pg. 4-21)
Key Terms (pg. 4-21)
Chapter Summary (pg. 4-21)
Solution Strategies (pg. 4-23)
Demonstration Problem (pg. 4-23)
Potential Ethical Issues (pg. 4-24)
Questions (pg. 4-25)
Exercises (pg. 4-25)
Problems (pg. 4-33)
Review Solutions (pg. 4-47)
Review 4-1 (pg. 4-47)
Review 4-2 (pg. 4-47)
Review 4-3 (pg. 4-47)
Review 4-4 (pg. 4-47)
Review 4-5 (pg. 4-48)
Chapter 5 Job Order Costing (pg. 5-1)
Introduction (pg. 5-2)
Methods of Product Costing (pg. 5-2)
Cost Accumulation Systems (pg. 5-3)
Valuation Methods (pg. 5-3)
Review 5-1 Costing System Choice (pg. 5-4)
Job Order Costing System (pg. 5-4)
Job Order Costing: Details and Documents (pg. 5-6)
Job Order Cost Sheet (pg. 5-6)
Material Requisitions (pg. 5-6)
Employee Time Sheets (pg. 5-8)
Overhead (pg. 5-9)
Completion of Production (pg. 5-9)
Review 5-2 Job Order Costing Terms (pg. 5-10)
Job Order Costing Illustration (pg. 5-10)
Review 5-3 Journal Entries; Cost Accumulation (pg. 5-13)
Job Order Costing to Assist Managers (pg. 5-14)
Concrete Café (pg. 5-14)
Paul’s Pirogues (pg. 5-15)
Review 5-4 Management Decision-Making (pg. 5-16)
Product and Material Losses in Job Order Costing (pg. 5-16)
Generally Anticipated on All Jobs (pg. 5-16)
Specifically Identified with a Particular Job (pg. 5-17)
Identified as Abnormal (pg. 5-17)
Review 5-5 Job Order Costing; Rework (pg. 5-18)
Appendix 5: Job Order Costing Using Standard Costs (pg. 5-18)
Review 5-6 Standard Costing (pg. 5-20)
Comprehensive Chapter Review (pg. 5-21)
Key Terms (pg. 5-21)
Chapter Summary (pg. 5-21)
Solution Strategies (pg. 5-22)
Demonstration Problem (pg. 5-23)
Potential Ethical Issues (pg. 5-25)
Questions (pg. 5-25)
Exercises (pg. 5-26)
Problems (pg. 5-34)
Review Solutions (pg. 5-45)
Review 5-1 (pg. 5-45)
Review 5-2 (pg. 5-45)
Review 5-3 (pg. 5-45)
Review 5-4 (pg. 5-45)
Review 5-5 (pg. 5-46)
Review 5-6 (pg. 5-46)
Chapter 6 Process Costing (pg. 6-1)
Introduction (pg. 6-2)
Introduction to Process Costing (pg. 6-2)
Production Costs: The Numerator (pg. 6-2)
Production Quantity: The Denominator (pg. 6-4)
Equivalent Units of Production (pg. 6-4)
Review 6-1 Computing Equivalent Units (pg. 6-6)
Weighted Average and First-In, First-Out Process Costing Methods (pg. 6-6)
Weighted Average Method (pg. 6-10)
Review 6-2 Weighted Average Method of Process Costing (pg. 6-13)
FIFO Method (pg. 6-14)
Review 6-3 FIFO Method of Process Costing (pg. 6-17)
Process Costing in a Multidepartment Setting (pg. 6-17)
Review 6-4 Accounting for Second Department (pg. 6-19)
Hybrid Costing Systems (pg. 6-19)
Review 6-5 Hybrid Costing (pg. 6-20)
Appendix 6-1: Alternative Calculations of Weighted Average and FIFO Methods (pg. 6-20)
Review 6-6 Alternative EUP Calculation Methods (pg. 6-21)
Appendix 6-2: Process Costing With Standard Costs (pg. 6-22)
Review 6-7 Standard Process Costing (pg. 6-24)
Appendix 6-3: Spoilage (pg. 6-25)
Review 6-8 FIFO; Normal and Abnormal Loss (pg. 6-27)
Comprehensive Chapter Review (pg. 6-28)
Key Terms (pg. 6-28)
Chapter Summary (pg. 6-28)
Solution Strategies (pg. 6-29)
Demonstration Problem (pg. 6-30)
Potential Ethical Issues (pg. 6-33)
Questions (pg. 6-33)
Exercises (pg. 6-34)
Problems (pg. 6-43)
Review Solutions (pg. 6-53)
Review 6-1 (pg. 6-53)
Review 6-2 (pg. 6-53)
Review 6-3 (pg. 6-53)
Review 6-4 (pg. 6-54)
Review 6-5 (pg. 6-54)
Review 6-6 (pg. 6-54)
Review 6-7 (pg. 6-55)
Review 6-8 (pg. 6-55)
Chapter 7 Standard Costing and Variance Analysis (pg. 7-1)
Introduction (pg. 7-2)
Use of Standard Cost Systems (pg. 7-2)
Motivating (pg. 7-3)
Planning (pg. 7-3)
Controlling (pg. 7-3)
Decision Making (pg. 7-4)
Performance Evaluation (pg. 7-4)
Considerations in Establishing Standards (pg. 7-4)
Appropriateness (pg. 7-5)
Attainability (pg. 7-5)
Review 7-1 Terminology for a Standard Cost System (pg. 7-5)
Development of a Standard Cost System (pg. 7-6)
Material Standards (pg. 7-6)
Labor Standards (pg. 7-8)
Overhead Standards (pg. 7-9)
Review 7-2 Setting Standard Costs (pg. 7-10)
General Variance Analysis Model (pg. 7-10)
Material and Labor Variance Computations (pg. 7-11)
Material Variances (pg. 7-11)
Point-of-Purchase Material Variance Model (pg. 7-13)
Labor Variances (pg. 7-14)
Overhead Variance Calculations (pg. 7-15)
Variable Overhead (pg. 7-15)
Fixed Overhead (pg. 7-16)
Alternative Overhead Variance Approaches (pg. 7-18)
Standard Cost System Journal Entries (pg. 7-20)
Disposition of Standard Cost Variances (pg. 7-22)
Changes in Standards Usage (pg. 7-23)
Use of Ideal Standards and Theoretical Capacity (pg. 7-23)
Adjusting Standards (pg. 7-25)
Material Price Variance Based on Usage Rather Than on Purchases (pg. 7-26)
Decline in Direct Labor (pg. 7-26)
Review 7-3 Comprehensive Variance Analysis (pg. 7-26)
Conversion Cost as an Element in Standard Costing (pg. 7-27)
Review 7-4 Variances and Conversion Cost Category (pg. 7-29)
Appendix 7: Mix and Yield Variances (pg. 7-29)
Material Price, Mix, and Yield Variances (pg. 7-30)
Labor Rate, Mix, and Yield Variances (pg. 7-32)
Review 7-5 Mix and Yield Variances (pg. 7-33)
Comprehensive Chapter Review (pg. 7-33)
Key Terms (pg. 7-33)
Chapter Summary (pg. 7-34)
Solution Strategies (pg. 7-35)
Demonstration Problem (pg. 7-37)
Potential Ethical Issues (pg. 7-39)
Questions (pg. 7-40)
Exercises (pg. 7-40)
Problems (pg. 7-48)
Review Solutions (pg. 7-58)
Review 7-1 (pg. 7-58)
Review 7-2 (pg. 7-58)
Review 7-3 (pg. 7-58)
Review 7-4 (pg. 7-59)
Review 7-5 (pg. 7-59)
Chapter 8 The Master Budget (pg. 8-1)
Introduction (pg. 8-2)
The Budgeting Process (pg. 8-2)
Strategic Planning (pg. 8-2)
Tactical Planning (pg. 8-3)
Review 8-1 Planning and Budgeting (pg. 8-5)
The Master Budget (pg. 8-6)
Review 8-2 Sales Budget (pg. 8-8)
The Master Budget Illustrated (pg. 8-8)
Production Budget (pg. 8-9)
Purchases Budget (pg. 8-10)
Personnel Budget (pg. 8-11)
Direct Labor Budget (pg. 8-11)
Overhead Budget (pg. 8-12)
Selling and Administrative Budget (pg. 8-12)
Capital Budget (pg. 8-12)
Review 8-3 Master Budget (pg. 8-13)
Cash Budget (pg. 8-14)
Review 8-4 Cash Budget (pg. 8-19)
Budgeted Financial Statements (pg. 8-19)
Review 8-5 Operating Income Budget (pg. 8-22)
Using Budgets for Management Control (pg. 8-23)
Review 8-6 Using Budgets for Management Control (pg. 8-26)
Comprehensive Chapter Review (pg. 8-27)
Key Terms (pg. 8-27)
Chapter Summary (pg. 8-27)
Solution Strategies (pg. 8-28)
Demonstration Problem (pg. 8-29)
Potential Ethical Issues (pg. 8-31)
Questions (pg. 8-32)
Exercises (pg. 8-32)
Problems (pg. 8-40)
Review Solutions (pg. 8-53)
Review 8-1 (pg. 8-53)
Review 8-2 (pg. 8-53)
Review 8-3 (pg. 8-53)
Review 8-4 (pg. 8-54)
Review 8-5 (pg. 8-54)
Review 8-6 (pg. 8-55)
Chapter 9 Break-Even Point and Cost-Volume-Profit Analysis (pg. 9-1)
Introduction (pg. 9-2)
Break-Even Point (pg. 9-2)
Review 9-1 Variable Costing Income Statement (pg. 9-4)
Identifying the Break-Even Point (pg. 9-4)
Formula Approach to Breakeven (pg. 9-4)
Graphing Approach to Breakeven (pg. 9-5)
Income Statement Approach (pg. 9-7)
Review 9-2 Break-Even Point (pg. 9-8)
CVP Analysis (pg. 9-8)
Fixed Amount of Profit (pg. 9-9)
Specific Amount of Profit per Unit (pg. 9-10)
Incremental Analysis for Short-Run Changes (pg. 9-12)
Review 9-3 Cost Volume Profit Analysis (pg. 9-15)
CVP Analysis in a Multiproduct Environment (pg. 9-15)
Review 9-4 Cost Volume Profit Analysis-Multiproduct (pg. 9-17)
Managing Risks of CVP Relationships (pg. 9-17)
Margin of Safety (pg. 9-17)
Operating Leverage (pg. 9-18)
Review 9-5 Operating Leverage and Margin of Safety (pg. 9-19)
Underlying Assumptions of CVP Analysis (pg. 9-20)
Review 9-6 Assumptions of CVP Analysis (pg. 9-21)
Comprehensive Chapter Review (pg. 9-21)
Key Terms (pg. 9-21)
Chapter Summary (pg. 9-21)
Solution Strategies (pg. 9-23)
Demonstration Problem (pg. 9-23)
Potential Ethical Issues (pg. 9-25)
Questions (pg. 9-25)
Exercises (pg. 9-25)
Problems (pg. 9-31)
Review Solutions (pg. 9-39)
Review 9-1 (pg. 9-39)
Review 9-2 (pg. 9-39)
Review 9-3 (pg. 9-39)
Review 9-4 (pg. 9-39)
Review 9-5 (pg. 9-40)
Review 9-6 (pg. 9-40)
Chapter 10 Relevant Information for Decision Making (pg. 10-1)
Introduction (pg. 10-2)
The Concept of Relevance (pg. 10-2)
Association with Decision (pg. 10-2)
Importance to Decision Maker (pg. 10-3)
Bearing on the Future (pg. 10-3)
Sunk Costs (pg. 10-3)
Relevant Costs for Specific Decisions (pg. 10-5)
Review 10-1 Determination of Relevant Costs (pg. 10-5)
Outsourcing Decisions (pg. 10-6)
Review 10-2 Outsourcing Decisions (pg. 10-10)
Scarce Resource Decisions (pg. 10-11)
Review 10-3 Scarce Resource Decision (pg. 10-12)
Sales Mix Decisions (pg. 10-13)
Review 10-4 Sales Mix (pg. 10-17)
Special Order Decisions (pg. 10-17)
Review 10-5 Special Order (pg. 10-19)
Product Line and Segment Decisions (pg. 10-20)
Review 10-6 Product Line (pg. 10-22)
Comprehensive Chapter Review (pg. 10-23)
Key Terms (pg. 10-23)
Chapter Summary (pg. 10-23)
Solution Strategies (pg. 10-24)
Demonstration Problem (pg. 10-25)
Potential Ethical Issues (pg. 10-26)
Questions (pg. 10-26)
Exercises (pg. 10-26)
Problems (pg. 10-32)
Review Solutions (pg. 10-43)
Review 10-1 (pg. 10-43)
Review 10-2 (pg. 10-43)
Review 10-3 (pg. 10-44)
Review 10-4 (pg. 10-44)
Review 10-5 (pg. 10-44)
Review 10-6 (pg. 10-45)
Chapter 11 Allocation of Joint Costs and Accounting for ByProduct/Scrap (pg. 11-1)
Introduction (pg. 11-2)
Outputs of a Joint Process (pg. 11-2)
The Joint Process (pg. 11-3)
The Joint Process Decision (pg. 11-6)
Question #1: Will revenue from selling the joint output exceed costs? (pg. 11-6)
Question #2: Is the joint process the best use of facilities? (pg. 11-6)
Question #3: How are joint process outputs classified? (pg. 11-6)
Question #4: Should joint output be sold or processed further? (pg. 11-6)
Review 11-1 Classification of Output from a Joint Process (pg. 11-8)
Allocation of Joint Cost (pg. 11-8)
Physical Measure Allocation (pg. 11-9)
Monetary Measure Allocation (pg. 11-10)
Review 11-2 Allocation of Joint Costs and Decision on Processing Further (pg. 11-14)
Accounting for ByProduct and Scrap (pg. 11-15)
Net Realizable Value Approach (pg. 11-15)
Realized Value Approach (pg. 11-17)
ByProduct and Scrap in Job Order Costing (pg. 11-18)
Review 11-3 Accounting for ByProducts (pg. 11-19)
Joint Costs in NonManufacturing Businesses and NotforProfit Organizations (pg. 11-19)
Review 11-4 Retail Organization Joint Cost (pg. 11-21)
Comprehensive Chapter Review (pg. 11-21)
Key Terms (pg. 11-21)
Chapter Summary (pg. 11-21)
Solution Strategies (pg. 11-22)
Demonstration Problem (pg. 11-23)
Potential Ethical Issues (pg. 11-25)
Questions (pg. 11-26)
Exercises (pg. 11-26)
Problems (pg. 11-34)
Review Solutions (pg. 11-41)
Review 11-1 (pg. 11-41)
Review 11-2 (pg. 11-42)
Review 11-3 (pg. 11-43)
Review 11-4 (pg. 11-43)
Chapter 12 Introduction to Cost Management Systems (pg. 12-1)
Introduction (pg. 12-2)
Introduction to Management Information and Control Systems (pg. 12-2)
Review 12-1 Management Control System (pg. 12-4)
Defining A Cost Management System (pg. 12-4)
The Roles Of A Cost Management System (pg. 12-6)
Develop accurate product/service costs (pg. 12-6)
Assess product/service life cycle performance (pg. 12-7)
Improve understanding of processes/activities (pg. 12-7)
Control costs (pg. 12-7)
Measure performance (pg. 12-8)
Support organizational strategy (pg. 12-8)
Review 12-2 Cost Management System Roles in an Organization (pg. 12-8)
Designing a Cost Management System (pg. 12-8)
Organizational Form, Structure, and Culture (pg. 12-8)
Organizational Mission and Core Competencies (pg. 12-11)
Operations and Competitive Environment and Strategies (pg. 12-12)
Review 12-3 Factors Influencing Cost Management System Design (pg. 12-15)
Determine Desired Components of CMS (pg. 12-15)
Motivational Elements (pg. 12-15)
Informational Elements (pg. 12-18)
Reporting Elements (pg. 12-19)
Review 12-4 Elements Comprising a Cost Management System (pg. 12-20)
Perform Gap Analysis and Assess Improvements (pg. 12-21)
Review 12-5 Cost Management System Gap Analysis (pg. 12-21)
Comprehensive Chapter Review (pg. 12-22)
Key Terms (pg. 12-22)
Chapter Summary (pg. 12-22)
Potential Ethical Issues (pg. 12-23)
Questions (pg. 12-23)
Exercises (pg. 12-23)
Problems (pg. 12-25)
Review Solutions (pg. 12-29)
Review 12-1 (pg. 12-29)
Review 12-2 (pg. 12-29)
Review 12-3 (pg. 12-29)
Review 12-4 (pg. 12-30)
Review 12-5 (pg. 12-30)
Chapter 13 Responsibility Accounting, Support Department Cost Allocations, and Transfer Pricing (pg. 13-1)
Introduction (pg. 13-2)
Decentralization (pg. 13-2)
Review 13-1 Centralization vs. Decentralization (pg. 13-4)
Responsibility Accounting Systems (pg. 13-5)
Review 13-2 Responsibility Report (pg. 13-7)
Types of Responsibility Centers (pg. 13-7)
Cost Center (pg. 13-8)
Revenue Center (pg. 13-8)
Profit Center (pg. 13-9)
Investment Center (pg. 13-9)
Review 13-3 Responsibility Centers (pg. 13-10)
Revenue Variances (pg. 13-10)
Review 13-4 Revenue Variances (pg. 13-10)
Support Department Cost Allocation (pg. 13-11)
Allocation Bases (pg. 13-12)
Methods of Allocating Support Department Costs (pg. 13-12)
Service Department Cost Allocation Illustration (pg. 13-13)
Direct Method Allocation (pg. 13-14)
Step Method Allocation (pg. 13-15)
Algebraic Method Allocation (pg. 13-16)
Determining Overhead Application Rates (pg. 13-19)
Review 13-5 Comprehensive Support Department Allocations (pg. 13-19)
Transfer Pricing (pg. 13-20)
Types of Transfer Prices (pg. 13-21)
Selecting a Transfer Pricing System (pg. 13-24)
Transfer Prices in Multinational Settings (pg. 13-24)
Review 13-6 Transfer Pricing (pg. 13-27)
Comprehensive Chapter Review (pg. 13-27)
Key Terms (pg. 13-27)
Chapter Summary (pg. 13-28)
Solution Strategies (pg. 13-29)
Demonstration Problem (pg. 13-30)
Potential Ethical Issues (pg. 13-32)
Questions (pg. 13-32)
Exercises (pg. 13-33)
Problems (pg. 13-38)
Review Solutions (pg. 13-51)
Review 13-1 (pg. 13-51)
Review 13-2 (pg. 13-51)
Review 13-3 (pg. 13-51)
Review 13-4 (pg. 13-51)
Review 13-6 (pg. 13-53)
Chapter 14 Performance Measurement, Balanced Scorecards, and Performance Rewards (pg. 14-1)
Introduction (pg. 14-2)
Organization Mission Statements (pg. 14-2)
Critical Elements for Performance Measurement (pg. 14-2)
Internal Performance Measures (pg. 14-3)
External Performance Measures (pg. 14-4)
Performance Measurement System Criteria (pg. 14-5)
Assess Progress toward Mission (pg. 14-5)
Awareness of/Participation in Performance Measures (pg. 14-5)
Appropriate Tools for Performance (pg. 14-6)
Need for Feedback and Adjustment (pg. 14-6)
Review 14-1 Performance Measures (pg. 14-6)
Short-Term Financial Performance Measures (pg. 14-7)
Divisional Profits (pg. 14-7)
Cash Flow (pg. 14-8)
Return on Investment (pg. 14-8)
Residual Income (pg. 14-11)
Economic Value Added (pg. 14-11)
Limitations of Return on Investment, Residual Income, and Economic Value Added (pg. 14-12)
Lagging Indicators vs. Leading Indicators (pg. 14-13)
Review 14-2 Short-Term Measurements (pg. 14-14)
Nonfinancial Performance Measures (pg. 14-15)
Selection of Nonfinancial Measures (pg. 14-15)
Establishment of Comparison Bases (pg. 14-18)
Review 14-3 Calculating Throughput (pg. 14-19)
Using a Balanced Scorecard for Measuring Performance (pg. 14-19)
Need for Multiple Performance Measures (pg. 14-19)
Balanced Scorecard Approach (pg. 14-20)
Performance Evaluation in Multinational Settings (pg. 14-23)
Review 14-4 Balanced Scorecard (pg. 14-23)
Compensation Strategy (pg. 14-24)
Pay-for-Performance Plans (pg. 14-25)
Links Between Performance Measures and Rewards (pg. 14-27)
Degree of Control over Performance Output (pg. 14-27)
Incentives Relative to Organizational Level (pg. 14-27)
Performance Plans and Feedback (pg. 14-27)
Worker Pay and Performance Links (pg. 14-27)
Promoting Overall Success (pg. 14-28)
Nonfinancial Incentives (pg. 14-28)
Tax Implications of Compensation Elements (pg. 14-29)
Global Compensation (pg. 14-29)
Ethical Considerations of Compensation (pg. 14-30)
Review 14-5 Compensation (pg. 14-30)
Comprehensive Chapter Review (pg. 14-30)
Key Terms (pg. 14-30)
Chapter Summary (pg. 14-31)
Solution Strategies (pg. 14-32)
Demonstration Problem 1 (pg. 14-33)
Demonstration Problem 2 (pg. 14-35)
Potential Ethical Issues (pg. 14-35)
Questions (pg. 14-36)
Exercises (pg. 14-37)
Problems (pg. 14-40)
Review Solutions (pg. 14-51)
Review 14-1 (pg. 14-51)
Review 14-2 (pg. 14-51)
Review 14-3 (pg. 14-51)
Review 14-4 (pg. 14-51)
Review 14-5 (pg. 14-51)
Chapter 15 Capital Budgeting (pg. 15-1)
Introduction (pg. 15-2)
Capital Asset Acquisition (pg. 15-2)
Use of Cash Flows in Capital Budgeting (pg. 15-3)
Cash Flows Illustrated (pg. 15-3)
Time Lines (pg. 15-4)
Review 15-1 Cash Flows vs. Accounting Accruals (pg. 15-4)
Payback Period (pg. 15-5)
Review 15-2 Payback Method (pg. 15-6)
Discounting Future Cash Flows (pg. 15-6)
Net Present Value Method (pg. 15-7)
Profitability Index (pg. 15-9)
Internal Rate of Return (pg. 15-9)
Review 15-3 Net Present Value, Profitability Index, Internal Rate of Return (pg. 15-12)
Effect of Depreciation on After-Tax Cash Flows (pg. 15-12)
Review 15-4 After-Tax Net Present Value (pg. 15-15)
Assumptions and Limitations of Methods (pg. 15-15)
Investment Decision (pg. 15-16)
Is the Activity Worthy of an Investment? (pg. 15-16)
Which Assets Can Be Used for the Activity? (pg. 15-16)
Of the Available Assets for Each Activity, Which Is the Best Investment? (pg. 15-17)
Of the “Best Investments” for All Worthwhile Activities, in Which Ones Should the Company Invest? (pg. 15-18)
Review 15-5 Comparing Capital Budgeting Methods (pg. 15-19)
Ranking Multiple Capital Projects (pg. 15-19)
Review 15-6 Ranking Capital Projects (pg. 15-20)
Compensating for Risk in Capital Project Evaluation (pg. 15-20)
Judgmental Method (pg. 15-20)
Risk-Adjusted Discount Rate Method (pg. 15-21)
Sensitivity Analysis (pg. 15-22)
Review 15-7 Sensitivity Analysis (pg. 15-23)
Postinvestment Audit (pg. 15-24)
Review 15-8 Postinvestment Audit (pg. 15-25)
Appendix 15-1: Time Value Of Money (pg. 15-26)
Present Value of a Single Cash Flow (pg. 15-26)
Present Value of an Annuity (pg. 15-27)
Review 15-9 Present Value Computations (pg. 15-27)
Appendix 15-2: Accounting Rate of Return (pg. 15-28)
Review 15-10 Accounting Rate of Return (pg. 15-28)
Comprehensive Chapter Review (pg. 15-29)
Key Terms (pg. 15-29)
Chapter Summary (pg. 15-29)
Solution Strategies (pg. 15-31)
Demonstration Problem (pg. 15-32)
Potential Ethical Issues (pg. 15-33)
Questions (pg. 15-34)
Exercises (pg. 15-34)
Problems (pg. 15-39)
Review Solutions (pg. 15-45)
Review 15-1 (pg. 15-45)
Review 15-2 (pg. 15-46)
Review 15-3 (pg. 15-46)
Review 15-4 (pg. 15-46)
Review 15-5 (pg. 15-46)
Review 15-6 (pg. 15-47)
Review 15-7 (pg. 15-48)
Review 15-8 (pg. 15-48)
Review 15-9 (pg. 15-49)
Review 15-10 (pg. 15-49)
Chapter 16 Managing Costs and Uncertainty (pg. 16-1)
Introduction (pg. 16-2)
Cost Control Systems (pg. 16-2)
Review 16-1 Cost Control System (pg. 16-3)
Understanding Cost Changes (pg. 16-3)
Cost Changes Because of Volume Changes (pg. 16-4)
Cost Changes Because of Inflation/Deflation (pg. 16-4)
Cost Changes Because of Supply/Supplier Cost Adjustments (pg. 16-4)
Cost Changes Because of Quantity Purchased (pg. 16-5)
Review 16-2 Factors Causing Cost Changes (pg. 16-5)
Cost Containment (pg. 16-6)
Cost Avoidance and Cost Reduction (pg. 16-6)
Review 16-3 Approaches to Cost Control (pg. 16-8)
Committed Fixed Costs (pg. 16-8)
Discretionary Costs (pg. 16-9)
Review 16-4 Identifying Committed and Discretionary Fixed Costs (pg. 16-9)
Controlling Discretionary Costs (pg. 16-10)
Review 16-5 Controlling Discretionary Costs (pg. 16-16)
Cash Management (pg. 16-17)
What Variables Influence the Optimal Level of Cash? (pg. 16-17)
What Are the Sources of Cash? (pg. 16-17)
What Variables Influence the Cost of Carrying Cash? (pg. 16-19)
Banking Relationships (pg. 16-19)
Review 16-6 Cash Management (pg. 16-20)
Coping with Uncertainty (pg. 16-20)
The Nature and Causes of Uncertainty (pg. 16-21)
Four Strategies for Dealing with Uncertainty (pg. 16-22)
Review 16-7 Uncertainty in Estimating Costs (pg. 16-25)
Comprehensive Chapter Review (pg. 16-26)
Key Terms (pg. 16-26)
Chapter Summary (pg. 16-26)
Solution Strategies (pg. 16-27)
Demonstration Problem (pg. 16-28)
Potential Ethical Issues (pg. 16-28)
Questions (pg. 16-29)
Exercises (pg. 16-29)
Problems (pg. 16-33)
Review Solutions (pg. 16-42)
Review 16-1 (pg. 16-42)
Review 16-2 (pg. 16-42)
Review 16-3 (pg. 16-42)
Review 16-4 (pg. 16-42)
Review 16-5 (pg. 16-42)
Review 16-6 (pg. 16-42)
Review 16-7 (pg. 16-42)
Chapter 17 Implementing Quality Concepts (pg. 17-1)
Introduction (pg. 17-2)
What is Quality? (pg. 17-2)
Production View of Quality (pg. 17-2)
Consumer View of Quality (pg. 17-4)
Review 17-1 Views of Quality (pg. 17-6)
Benchmarking (pg. 17-6)
Review 17-2 Benchmarking (pg. 17-9)
Total Quality Management (pg. 17-9)
Quality System (pg. 17-9)
Employee Involvement (pg. 17-10)
Product/Service Improvement (pg. 17-10)
Long-Term Supplier Relationships (pg. 17-11)
Review 17-3 Total Quality Management (pg. 17-12)
The Baldrige Award (pg. 17-12)
Review 17-4 Baldrige Award (pg. 17-15)
Types of Quality Costs (pg. 17-15)
Review 17-5 Identifying Quality Costs (pg. 17-18)
Measuring the Cost of Quality (pg. 17-18)
Reporting Information on Quality (pg. 17-22)
Review 17-6 Measuring Cost of Quality (pg. 17-24)
Quality as an Organizational Culture (pg. 17-24)
Review 17-7 Quality in Organizational Culture (pg. 17-26)
Comprehensive Chapter Review (pg. 17-26)
Key Terms (pg. 17-26)
Chapter Summary (pg. 17-26)
Solution Strategies (pg. 17-28)
Demonstration Problem (pg. 17-29)
Potential Ethical Issues (pg. 17-30)
Questions (pg. 17-30)
Exercises (pg. 17-31)
Problems (pg. 17-36)
Review Solutions (pg. 17-41)
Review 17-1 (pg. 17-41)
Review 17-2 (pg. 17-41)
Review 17-3 (pg. 17-42)
Review 17-4 (pg. 17-42)
Review 17-5 (pg. 17-42)
Review 17-6 (pg. 17-42)
Review 17-7 (pg. 17-42)
Chapter 18 Inventory and Production Management (pg. 18-1)
Introduction (pg. 18-2)
Important Relationships in the Value Chain (pg. 18-2)
Buying or Producing and Carrying Inventory (pg. 18-3)
Review 18-1 Inventory Cost Management (pg. 18-4)
Inventory and Production Management Philosophies (pg. 18-4)
Review 18-2 Push vs. Pull Systems (pg. 18-5)
Understanding and Managing Production Activities and Costs (pg. 18-5)
Product Life Cycles (pg. 18-5)
Review 18-3 Product Life Cycle (pg. 18-6)
Life Cycle and Target Costing (pg. 18-6)
Review 18-4 Target Costing (pg. 18-10)
Just-In-Time Systems (pg. 18-10)
Changes Needed to Implement JIT Manufacturing (pg. 18-12)
Logistics of the JIT Environment (pg. 18-16)
Accounting Implications of JIT (pg. 18-17)
Review 18-5 Just in Time Accounting (pg. 18-22)
Manufacturing Systems (pg. 18-22)
Review 18-6 Lean Manufacturing and Flexible Manufacturing (pg. 18-24)
Theory of Constraints (pg. 18-24)
Review 18-7 Theory of Constraints (pg. 18-25)
Appendix 18-1: Economic Order Quantity and Related Issues (pg. 18-25)
Economic Order Quantity (pg. 18-26)
Economic Production Run (pg. 18-26)
Order Point and Safety Stock (pg. 18-27)
Pareto Inventory Analysis (pg. 18-27)
Review 18-8 Economic Order Quantity and Economic Production Run (pg. 18-28)
Comprehensive Chapter Review (pg. 18-29)
Key Terms (pg. 18-29)
Chapter Summary (pg. 18-29)
Solution Strategies (pg. 18-31)
Demonstration Problem 1 (pg. 18-31)
Demonstration Problem 2 (pg. 18-32)
Potential Ethical Issues (pg. 18-34)
Questions (pg. 18-34)
Exercises (pg. 18-34)
Problems (pg. 18-40)
Review Solutions (pg. 18-45)
Review 18-1 (pg. 18-45)
Review 18-2 (pg. 18-45)
Review 18-3 (pg. 18-45)
Review 18-4 (pg. 18-45)
Review 18-5 (pg. 18-45)
Review 18-6 (pg. 18-46)
Review 18-7 (pg. 18-46)
Review 18-8 (pg. 18-46)
Chapter 19 Emerging Management Practices (pg. 19-1)
Introduction (pg. 19-2)
Enterprise Resource Planning Systems (pg. 19-2)
Review 19-1 Enterprise Resource Planning Systems (pg. 19-5)
Data Analytics (pg. 19-6)
Types of Data Analytics (pg. 19-6)
Review 19-2 Data Analytics (pg. 19-9)
Artificial Intelligence (pg. 19-9)
Review 19-3 Artificial Intelligence (pg. 19-11)
Blockchain Technology (pg. 19-12)
Continuous Financial Reporting (pg. 19-13)
Connection of ERP Systems with External Sources (pg. 19-13)
Efficiencies with Transfer Pricing (pg. 19-13)
Review 19-4 Blockchains (pg. 19-13)
Empowering Employees (pg. 19-14)
Sharing of Financial and Operational Information (pg. 19-14)
Review 19-5 Open-Book Management (pg. 19-16)
Workforce Diversity (pg. 19-17)
Review 19-6 Workforce Diversity (pg. 19-18)
Sustainable Organizations (pg. 19-18)
Review 19-7 Environmental Management Systems (pg. 19-21)
Strategic Alliances (pg. 19-21)
Review 19-8 Strategic Alliances (pg. 19-22)
Downsizing, Layoffs, and Restructuring (pg. 19-22)
Review 19-9 Company Downsizing (pg. 19-24)
Comprehensive Chapter Review (pg. 19-24)
Key Terms (pg. 19-24)
Chapter Summary (pg. 19-25)
Potential Ethical Issues (pg. 19-26)
Questions (pg. 19-26)
Exercises (pg. 19-27)
Problems (pg. 19-30)
Review Solutions (pg. 19-35)
Review 19-1 (pg. 19-35)
Review 19-2 (pg. 19-35)
Review 19-3 (pg. 19-35)
Review 19-4 (pg. 19-35)
Review 19-5 (pg. 19-35)
Review 19-6 (pg. 19-35)
Review 19-7 (pg. 19-35)
Review 19-8 (pg. 19-35)
Review 19-9 (pg. 19-35)
Glossary (pg. G-1)
Index (pg. I-1)

Michael R. Kinney

Texas A&M University

Dr. Kinney began his career at Texas A&M University in 1989 after completing the Ph.D. program at the University of Arizona.  In the 31 years following, Dr. Kinney has been involved in teaching courses at all program levels including undergraduate, masters and Ph.D.  In these programs Dr. Kinney has taught courses that span the content areas of management accounting, cost accounting, management control systems, management consulting, corporate taxation, partnership taxation, tax policy, and corporate tax strategies.  In the past twelve years, Dr. Kinney has been teaching exclusively in the Mays (Texas A&M business school) MBA programs in College Station and Houston.   In addition to teaching management accounting in these programs, Dr. Kinney has a substantial role as subject matter expert in the required capstone projects undertaken by all MBA students in their final year of the program.  Also, from 2007 through 2016, Dr. Kinney was Coordinator of the Ph.D. Program in Accounting.  Dr. Kinney retired as a full-time member of the Texas A&M faculty in August of 2018.  He continues to teach management accounting courses in the MBA programs at Texas A&M.

Professor Kinney has been the recipient of several college and departmental teaching awards, an international research award, and a research award from the Academy of Marketing Studies.  He has co-authored numerous academic articles and textbooks in managerial and cost accounting.  In 2015 Dr. Kinney received the Texas A&M Association of Former Students Distinguished Service Award for mentoring graduate students.  In 2018 Dr. Kinney was chosen as the Outstanding Faculty member by the Texas A&M EMBA program.

On a personal note, Dr. Kinney owns and manages a beef cattle operation in Texas with his wife and family.


Cecily A. Raiborn

Dr. Cecily A. Raiborn is Professor Emeritus of Accounting at Texas State University.

Dr. Raiborn received her Ph.D. from Louisiana State University in 1975. She has taught a wide variety of classes at both the undergraduate level including cost, managerial, intermediate, and advanced accounting as well as graduate courses in accounting policy and fraud prevention and detection. Her research interests include financial accounting, cost management, international, ethics, and fraud. Dr. Raiborn has published articles in accounting, law, and ethics journals including Strategic Finance, Advances in Management Accounting, Journal of Accounting Case Research, Research on Professional Responsibility and Ethics in Accounting, Labor Law Journal, and Journal of Business Ethics. In 1991, she received the AICPA/Louisiana CPA Society Outstanding Educator Award. Her interests outside the classroom include traveling, reading, water activities, decorating, and cooking.


Amie L. Dragoo

Amie L. Dragoo

Professor of Accounting and Educational Consultant

Former Accounting Department Chair at Edgewood College, Professor Dragoo earned her BA and MBA from Michigan State University, and her doctorate from Edgewood College. She holds a CPA license, and for nearly 15 years has been a Becker Professional Education faculty instructor. Prior to her experiences in higher education, Professor Dragoo was a senior business assurance associate with PricewaterhouseCoopers LLP (formerly Coopers & Lybrand L.L.P.). Professor Dragoo has extensive teaching experiences, including courses in Intermediate Accounting I and II, Cost Accounting, Advanced Cost Management, Strategic Financial Management, and other advanced courses in financial and managerial accounting. She has received a number of teaching awards including the School of Business Outstanding Faculty Award and the Estervig-Beaubien Excellence in Teaching and Mentoring Award. She has also worked as an independent consultant, including projects in higher education, and has worked with several corporate clients. Professor Dragoo’s research has been published in the Journal of Education for Business and the Journal of Continuing Higher Education and she has contributed to numerous articles published by organizations affiliated with the AICPA. She has been involved in many community-oriented programs including the Volunteer Income Tax Assistance (VITA) program.


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