Cost Accounting, 11e

by Kinney, Raiborn, Dragoo

| ISBN: 978-1-61853-614-3 | Copyright 2025

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Road Map
LO Learning Objective | Topics Page eLecture Demo Guided Example Assignments

What makes a cost relevant or irrelevant for purposes of decision making?


10, 16, 17, 18, 19, 20, 21, 22, 35, 36, 37, 44, 45, 51, 52, 54


What information is relevant in an outsourcing decision?


11, 16, 23, 24, 25, 38, 39, 40, 42, 43, 53


How can management achieve the highest return from use of a scarce resource?


12, 26, 27, 41, 43, 47, DA5-1


What variables do managers use to manipulate sales mix?


13, 28, 29, 30, 45, 46, 47


How are special prices set, and when are they used?


14, 31, 32, 44, 48, 53, DA5-2


How do managers determine whether a product line should be retained or discontinued?


15, 33, 34, 41, 49, 50, 51, 52, 54


Greater Emphasis on Data Analytics

Guided by skills required of new graduates and those outlined in the Evolution Model Curriculum presented by the AICPA and NASBA, we have expanded our focus on data analytics. New data visualizations are included within the text and new assignments are available in the end-of-chapter assignments.

  • In-Text Descriptive Data Visualizations: In each chapter, we present data in spreadsheets and visualizations that provide students a new perspective and a deeper understanding of the results.

  • In-Text Data Visualization with Analysis Questions: A new question-and-answer section has been added to each chapter. The answers appear at the end of the chapter (following the answers to the Review questions). This allows students to engage in chapter concepts with visual tools allowing for a deeper analysis and improved comprehension of the concepts.
  • Data Analytic and Data Visualization Assignments: New Data Analytics problems have been added to the assignment section in each chapter, requiring students to create and analyze visualizations in Excel and Tableau. Reference to a set of Data Visualization problems can also be found at the end of each chapter. The problems require analysis of (but not creation of) charts. This coverage is added to address requirements in the CPA and CMA exams and to improve the career readiness of students.

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Welcome to Cost Accounting with Data Analytics !

As the title suggests, our new edition is enhanced with an expanded and well-integrated coverage of Data Analytics. This update is in line with the rapid technological advances that we are experiencing in our academic settings and in the global business environment. We believe that the integration of data analytics provides a more meaningful and effective learning platform and better prepares students for their next steps in a career in business. The visual display of data provides students a new way to more deeply grasp accounting concepts that may simply get lost in a paragraph of text. We are also excited about the increased opportunities for critical thinking that the analysis provides for students.

Our market research indicates that students' preferred approach to learning has shifted from reading dense text to a more learn-by-doing approach. In response, we have enhanced our pedagogy this edition by making chapter demonstrations more focused: we now pose specific questions and show step-by-step solutions in demonstration problems for each chapter's learning objectives to facilitate active learning. What has not changed, however, is our unmatched, straightforward, and readable approach.

Cost accounting has been and remains a dynamic discipline that must respond to the evolving needs of managers. Along these lines, we have updated the organization and content of the text. We have rearranged some topics to provide a better progression of material, to highlight more relevant topics, and to provide a more logical grouping of related topics. We have also enhanced the content of the text through additional topics or the expansion of existing topics. Our redesign process resulted in the inclusion of two new chapters: Chapter 3 on cost behavior and estimation and Chapter 14 on pricing, sales variances, and customer profitability. We are excited to share these new changes with our current and future customers.


Greater Emphasis on Data Analytics

See the Data Analytics tab for a detailed description of this new feature.

Active Learning

In this edition, we have pedagogically enhanced our active-learning approach by incorporating at least one demonstration problem in each learning objective. Our research has shown that todays students want to see how concepts are applied. They would prefer to see an application rather than read about a concept in the abstract. Each demonstration problem is supported by an author-prepared video. As in the prior edition, an additional review problem is available to reinforce the concepts presented in each 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 guided lecture videos, the demonstration videos, the review problems, and the corresponding assignments. New to this edition, the Road Map has been enhanced with a list of key terms for each learning objective. This raises students' awareness of key terms and allows faculty to quickly see what key concepts are covered in each learning objective. In addition, the new demonstrations displayed in each chapter are listed on the Road Map. 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.

  • eLecture Videos: Created by the authors, the eLecture videos provide the foundation for students to complete the demonstration problems that follow.

  • New Demonstrations and Accompanying Videos: Within each learning objective, is included at least one demonstration. A key aspect to each demonstration is the positioning of a key question (signaled with a red diamond) that is solved in a step-by-step approach. Our aim with this approach is to actively engage students in the content of the learning objective. Students will better understand (1) the goal of the learning objective and (2) how to solve it. Instead of skimming a section and moving on to the next, we hope to engage students in the topic, before they move on to the assignments.

  • In-Chapter Review Problems: The emphasis in our approach is to provide students with a demonstration problem 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.

Increased Focus on Critical Thinking, Nonmanufacturing Examples, and ESG Implications

As part of our deep dive into the content and organization of the new edition, we thought it was particularly important to highlight, and supplement where needed, the following three areas

  • Critical thinking: Students often fall into the trap of thinking that there is only one correct answer to a problem. To emphasize the reality of open-ended questions in the accounting profession, we started with a brief explanation of how critical thinking skills are used in problem solving in Chapter 1. Also new to this edition, we added a question to each Review of every learning objective that requires students to apply higher-order critical thinking skills. In addition, end-of-chapter assignments that rise to the level of critical thinking are marked with a new critical thinking icon.

  • Environmental, Social, and Governance (ESG): The demand for companies to understand and address the risks and strategies related to ESG considerations is growing. To that end, we have identified and in some cases, supplemented the examples used in text explanations or assignments that touch on ESG issues. To make these connections more transparent to both faculty and students, we have identified these references with a special ESG icon that is used to mark in-text and end-of-chapter assignment examples.

  • Nonmanufacturing Examples: Our text is carefully worded to include the application of cost accounting concepts to industries other than manufacturing. To make these expanded discussions and end-of-chapter problems more visible, we have adopted a new icon to mark the nonmanufacturing examples—primarily that of the service industry.


The eleventh edition of Cost Accounting with Data Analytics 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. Related illustrations and real-world examples appeal to todays students and clearly exemplify the chaptersconcepts. These examples connect todays business world with the classroom experience immediately.
  • 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.

    Many new updates to the end-of-chapter assignments resulted in over 400 new or updated problems over the prior edition. New to this edition is a multiple-choice section, CMA questions from Gleim, and Data Analytic and Data Visualization sections in the end-of-chapter assignment offerings. In addition, all chapters have a varying number of new exercises or problems to supplement the current coverage that are quantitative and autogradable in mBC.

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

  • Developing ethical business leaders: The need for students to analyze business situations and make informed, ethical decisions is essential in todays business world. Cost Accounting with Data Analytics 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 an example, refer to pages 2-23 to 2-25.

  • Solution 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.

Chapter Specific Changes

Chapter 1:  Introduction to Cost Accounting

  • New content added (some from former Chapter 19) on data analytics, block chain, artificial intelligence, and critical thinking
  • Discussion on balance scorecard moved to Chapter 15
  • Added sample organization chart, reference to the AICPA and CIMA code of ethics, and a section on career opportunities in managerial/cost accounting

Chapter 2:  Cost Terminology and Classification

  • Added service company illustrative examples
  • Added illustration using real company financial statements
  • Moved journal entry presentation to Chapter 6

Chapter 3:  Cost Behavior Analysis

  • New chapter, incorporating new topics such as learning curves and some topics from the former Chapter 3 that are enhanced including and Excel application of least squares regression

Chapter 4:  Cost-Volume-Profit Analysis

  • Formerly Chapter 9
  • Broke out incremental analysis into a separate learning objective
  • Made contribution statement a focal point
  • Simplified the algebraic formula presentations

Chapter 5:  Relevant Information for Decision Making

  • Formerly Chapter 10
  • Updated chapter exhibits
  • Added or emphasized sections on qualitative decision factors

Chapter 6:  Job Order Costing

  • Formerly Chapter 5
  • Merged in discussion on overhead application formerly in Chapter 3
  • Added a discussion section on plant-wide versus departmental overhead rates
  • Added learning objective on job order in the service industry
  • Added section on materiality
  • Changed the main job order illustration to include multiple jobs, individual job cost sheets, and added T-accounts
  • Streamlined discussion of documents used in job order costing
  • Specified the accounting for rework in LO6-7
  • Moved appendix to Chapter 10

Chapter 7:  Process Costing

  • Formerly Chapter 6
  • Incorporated Appendix 3 into the main chapter content
  • Improved the presentation of the production report

Chapter 8:  Activity-Based Management and Activity-Based Costing

  • Formerly Chapter 4
  • Added new learning objective on time-driven activity-based costing
  • Incorporated a process map
  • Improved presentation of allocation schedules

Chapter 9:  The Master Budget

  • Formerly Chapter 8
  • Added a section on general approaches to budgeting
  • Added an application related to generative AI and the budget process
  • Created new learning objective highlighting a service company example
  • Added section on ESG impacts on the master budget
  • Supplement LO8-7 with new examples

Chapter 10:  Flexible Budget, Standard Costing, and Variance Analysis

  • Formerly Chapter 7 and a subtopic of former Chapter 3
  • Incorporated new learning objective on f lexible budgeting and tied to standard cost example
  • Updated main company example to improve topical coverage throughout the chapter
  • Adjusted the content across learning objectives, including the appendix coverage
  • Added appendix formerly in Chapter 6

Chapter 11:  Absorption/Variable Costing and Capacity Analysis

  • Formerly subtopics of Chapter 3
  • Expanded discussion and examples of absorption/variable costing nicluding the connection to volume variance
  • Expanded discussion on capacity to encompass volume variance and profit discussions
  • Added topic of downward demand spira

Chapter 12:  Allocation of Joint Costs and Accounting for By-Product/Scrap

  • Formerly Chapter 11
  • Changed main company example to make more student-friendly
  • Updated demonstrations and graphics throughout the chapter

Chapter 13:  Responsibility Accounting, Support Department Cost Allocations, and Transfer Pricing

  • Added content from former Chapter 12 as LO13-1
  • Revamped some sections and updated examples to show a better f low
  • Streamlined the presentation of transfer pricing

Chapter 14:  Pricing, Sales Variances, and Customer Profitability

  • New chapter and new content
  • Utilized some content from former Chapter 18

Chapter 15:  Performance Measurement, Balanced Scorecards, and Performance Rewards

  • Formerly Chapter 14 and merged in some content from former Chapters 1 and 12
  • Included new content on segment reporting
  • Added content on pay versus performance
  • Added scope-level discussion on greenhouse gas emissions
  • Supplemented the quantitative assignment offerings

Chapter 16:  Approaches to Cost Control and Managing Uncertainty

  • Added some content from the former Chapter 12 and Chapter 19
  • Added quantitative example on the topic of inf lation
  • Added new real company examples
  • Added new ratio examples and other quantitative examples in the chapter and in the assignments

Chapter 17:  Implementing Quality Concepts

  • Reorganized chapter content
  • Expanded the application of statistical process control charts
  • Added new company examples

Chapter 18:  Inventory and Production Management

  • Reorganized and streamlined chapter content, including that of the appendix
  • Added new ratio calculations and discussion
  • Expanded economic order quantity discussion
  • Added calculations for the opportunity cost of inventory

Chapter 19:  Capital Budgeting

  • Formerly Chapter 15
  • Rearranged some content across learning objectives

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Increase Student Readiness

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Expand/Collapse All
Preface (pg. iii)
Brief Contents (pg. xiii)
Contents (pg. xiv)
Chapter 1: Introduction to Cost Accounting (pg. 1-1)
Introduction (pg. 1-2)
Financial, Management, and Cost Accounting (pg. 1-2)
Financial Accounting (pg. 1-2)
Management Accounting (pg. 1-2)
DEMO 1-1 (pg. 1-3)
Cost Accounting (pg. 1-4)
Review 1-1 (pg. 1-5)
Organizational Strategy (pg. 1-6)
Core Competencies (pg. 1-6)
DEMO 1-2 (pg. 1-7)
Organizational Structure (pg. 1-8)
Management Style and Organizational Structure (pg. 1-9)
Organizational Constraints (pg. 1-9)
Environmental Constraints (pg. 1-9)
Review 1-2 (pg. 1-10)
Value Chain (pg. 1-10)
DEMO 1-3 (pg. 1-10)
Review 1-3 (pg. 1-11)
Data Analytics (pg. 1-12)
DEMO 1-4A (pg. 1-13)
Artificial Intelligence (pg. 1-13)
DEMO 1-4B (pg. 1-14)
Blockchain Technology (pg. 1-16)
Applying Critical Thinking Skills in Problem-Solving (pg. 1-17)
Review 1-4 (pg. 1-19)
Professional Ethics (pg. 1-19)
Unethical Practices (pg. 1-19)
Ethical Standards in Accounting (pg. 1-19)
DEMO 1-5 (pg. 1-21)
Ethics in Multinational Corporations (pg. 1-22)
Review 1-5 (pg. 1-22)
Comprehensive Chapter Review (pg. 1-23)
Key Terms (pg. 1-23)
Chapter Summary (pg. 1-23)
Data Analytics (pg. 1-25)
Data Visualization (pg. 1-25)
Potential Ethical Issues (pg. 1-26)
Questions (pg. 1-26)
Multiple Choice (pg. 1-26)
Exercises (pg. 1-27)
Review Solutions (pg. 1-34)
Data Visualization Solutions (pg. 1-35)
Chapter 2: Cost Terminology and Classification (pg. 2-1)
Introduction (pg. 2-2)
Associating Costs with a Cost Object (pg. 2-2)
DEMO 2-1 (pg. 2-3)
Review 2-1 (pg. 2-3)
Costs Reacting to Changes in Activity (pg. 2-4)
Variable Cost (pg. 2-4)
Fixed Cost (pg. 2-4)
DEMO 2-2A (pg. 2-5)
Mixed Cost (pg. 2-6)
DEMO 2-2B (pg. 2-6)
Step Cost (pg. 2-7)
Relation Between a Cost and a Cost Driver (pg. 2-7)
Review 2-2 (pg. 2-8)
Classifying Costs for Different Purposes (pg. 2-9)
Classification of Costs for Financial Reporting (pg. 2-9)
DEMO 2-3 (pg. 2-9)
Classification of Costs for Managerial Purposes (pg. 2-11)
Review 2-3 (pg. 2-11)
Components of Product Cost (pg. 2-11)
Direct Material (pg. 2-11)
Direct Labor (pg. 2-12)
DEMO 2-4 (pg. 2-12)
Overhead (pg. 2-13)
Review 2-4 (pg. 2-13)
The Conversion Process (pg. 2-14)
DEMO 2-5 (pg. 2-14)
Retailers versus Manufacturers and Service Companies (pg. 2-15)
Manufacturers versus Service Companies (pg. 2-17)
Review 2-5 (pg. 2-18)
Product Cost Flow in a Cost System (pg. 2-18)
Reasons for Allocating Overhead (pg. 2-18)
DEMO 2-6A (pg. 2-19)
Cost Flow in a Perpetual Inventory System of a Manufacturer (pg. 2-19)
DEMO 2-6B (pg. 2-20)
Review 2-6 (pg. 2-21)
Cost of Goods Manufactured and Sold (pg. 2-21)
DEMO 2-7 (pg. 2-21)
Review 2-7 (pg. 2-22)
Comprehensive Review Module (pg. 2-23)
Key Terms (pg. 2-23)
Chapter Summary (pg. 2-23)
Solution Strategies (pg. 2-24)
Chapter Demonstration Problem (pg. 2-25)
Data Analytics (pg. 2-26)
Data Visualization (pg. 2-26)
Potential Ethical Issues (pg. 2-27)
Questions (pg. 2-27)
Multiple Choice (pg. 2-27)
Exercises (pg. 2-28)
Problems (pg. 2-36)
Review Solutions (pg. 2-43)
Data Visualization Solutions (pg. 2-45)
Chapter 3: Cost Behavior and Estimation (pg. 3-1)
Introduction (pg. 3-2)
Cost Behavior Analysis (pg. 3-2)
Linear Total Cost Estimating Equation (pg. 3-3)
DEMO 3-1 (pg. 3-4)
Factors Affecting Cost Behavior Patterns (pg. 3-4)
Review 3-1 (pg. 3-5)
Cost Estimation (pg. 3-5)
Scatter Diagrams (pg. 3-5)
DEMO 3-2 (pg. 3-5)
Review 3-2 (pg. 3-7)
High-Low Cost Estimation (pg. 3-8)
DEMO 3-3A (pg. 3-8)
DEMO 3-3B (pg. 3-9)
Review 3-3 (pg. 3-9)
Least Squares Regression (pg. 3-9)
DEMO 3-4A (pg. 3-10)
DEMO 3-4B (pg. 3-12)
DEMO 3-4C (pg. 3-13)
Using Learning Curves to Estimate Costs (pg. 3-14)
DEMO 3-5A (pg. 3-14)
DEMO 3-5B (pg. 3-15)
Review 3-5 (pg. 3-16)
Additional Issues in Cost Estimation (pg. 3-16)
Changes in Technology or Prices (pg. 3-16)
Matching Activity and Costs (pg. 3-17)
Identifying Relevant Cost Drivers (pg. 3-17)
Ensuring the Reliability of Data (pg. 3-17)
DEMO 3-6 (pg. 3-18)
Review 3-6 (pg. 3-18)
Alternative Cost Driver Classifications (pg. 3-19)
Manufacturing Cost Hierarchy (pg. 3-19)
DEMO 3-7 (pg. 3-19)
Customer Cost Hierarchy (pg. 3-20)
Review 3-7 (pg. 3-21)
Comprehensive Chapter Review (pg. 3-21)
Key Terms (pg. 3-21)
Chapter Summary (pg. 3-22)
Solution Strategies (pg. 3-22)
Chapter Demonstration Problem (pg. 3-23)
Data Analytics (pg. 3-25)
Data Visualization (pg. 3-28)
Potential Ethical Issues (pg. 3-28)
Multiple Choice (pg. 3-29)
Exercises (pg. 3-31)
Problems (pg. 3-39)
Review Solutions (pg. 3-43)
Data Visualization Solutions (pg. 3-45)
Chapter 4: Cost-Volume-Profit Analysis (pg. 4-1)
Introduction (pg. 4-2)
Contribution Margin (pg. 4-2)
DEMO 4-1A (pg. 4-2)
DEMO 4-1B (pg. 4-3)
Review 4-1 (pg. 4-4)
Break-Even Point (pg. 4-4)
CVP Assumptions (pg. 4-4)
Identifying the Break-Even Point (pg. 4-5)
DEMO 4-2D (pg. 4-8)
Contribution Income Statement Proof (pg. 4-8)
Review 4-2 (pg. 4-9)
Sales at a Fixed Level of Profit (pg. 4-9)
Fixed Amount of Profit (pg. 4-10)
DEMO 4-3A (pg. 4-10)
DEMO 4-3B (pg. 4-11)
Specific Amount of Profit per Unit (pg. 4-11)
DEMO 4-3C (pg. 4-12)
DEMO 4-3D (pg. 4-12)
Review 4-3 LO4-3 Cost Volume Profit Analysis (pg. 4-14)
Incremental Analysis for Short-Run Changes (pg. 4-14)
DEMO 4-4 (pg. 4-14)
Review 4-4 (pg. 4-16)
CVP Analysis in a Multiproduct Environment (pg. 4-16)
Break-Even in a Multiple Product Mix (pg. 4-17)
DEMO 4-5A (pg. 4-17)
Analysis Considering a Shift in Sales Mix (pg. 4-18)
DEMO 4-5B (pg. 4-18)
Review 4-5 (pg. 4-19)
Managing Risks of CVP Relationships (pg. 4-19)
Margin of Safety (pg. 4-19)
DEMO 4-6A (pg. 4-20)
Operating Leverage (pg. 4-20)
DEMO 4-6B (pg. 4-20)
Review 4-6 (pg. 4-22)
Underlying Assumptions of CVP Analysis (pg. 4-22)
DEMO 4-7 (pg. 4-22)
Review 4-7 (pg. 4-23)
Comprehensive Chapter Review (pg. 4-24)
Key Terms (pg. 4-24)
Chapter Summary (pg. 4-24)
Solution Strategies (pg. 4-25)
Chapter Demonstration Problem (pg. 4-26)
Data Analytics (pg. 4-27)
Data Visualization (pg. 4-29)
Potential Ethical Issues (pg. 4-29)
Questions (pg. 4-30)
Multiple Choice (pg. 4-30)
Exercises (pg. 4-31)
Problems (pg. 4-37)
Review Solutions (pg. 4-43)
Data Visualization Solutions (pg. 4-46)
Chapter 5: Relevant Information for Decision Making (pg. 5-1)
Introduction (pg. 5-2)
The Concept of Relevance (pg. 5-2)
Association with Decision (pg. 5-2)
Importance to Decision Maker (pg. 5-3)
Bearing on the Future (pg. 5-3)
DEMO 5-1 (pg. 5-4)
Review 5-1 (pg. 5-5)
Relevant Costs for Specific Decisions (pg. 5-5)
Outsourcing Decisions (pg. 5-6)
DEMO 5-2 (pg. 5-8)
Review 5-2 (pg. 5-11)
Scarce Resource Decisions (pg. 5-11)
DEMO 5-3 (pg. 5-12)
Review 5-3 (pg. 5-14)
Sales Mix Decisions (pg. 5-14)
DEMO 5-4A (pg. 5-15)
DEMO 5-4B (pg. 5-17)
DEMO 5-4C (pg. 5-18)
Review 5-4 (pg. 5-19)
Special Order Decisions (pg. 5-19)
DEMO 5-5 (pg. 5-20)
Review 5-5 (pg. 5-21)
Product Line and Segment Decisions (pg. 5-22)
DEMO 5-6 (pg. 5-22)
Review 5-6 (pg. 5-24)
Comprehensive Chapter Review (pg. 5-24)
Key Terms (pg. 5-24)
Chapter Summary (pg. 5-25)
Solution Strategies (pg. 5-26)
Chapter Demonstration Problem (pg. 5-26)
Data Analytics (pg. 5-27)
Data Visualization (pg. 5-28)
Potential Ethical Issues (pg. 5-28)
Questions (pg. 5-29)
Multiple Choice (pg. 5-29)
Exercises (pg. 5-31)
Problems (pg. 5-37)
Review Solutions (pg. 5-48)
Data Visualization Solutions (pg. 5-50)
Chapter 6: Job Order Costing (pg. 6-1)
Introduction (pg. 6-2)
Systems and Methods of Product Costing (pg. 6-2)
DEMO 6-1 (pg. 6-3)
Valuation Methods (pg. 6-4)
Review 6-1 (pg. 6-5)
Applying Overhead in a Normal Costing System (pg. 6-6)
Calculating Predetermined OH Rate (pg. 6-6)
Applying Overhead to Production (pg. 6-6)
DEMO 6-2A (pg. 6-7)
DEMO 6-2B (pg. 6-8)
Review 6-2 (pg. 6-9)
Underapplied or Overapplied Overhead (pg. 6-10)
Causes of Underapplied or Overapplied Overhead (pg. 6-10)
Disposition of Underapplied and Overapplied Overhead (pg. 6-10)
DEMO 6-3A (pg. 6-11)
DEMO 6-3B (pg. 6-11)
Review 6-3 (pg. 6-12)
Job Order Costing System (pg. 6-12)
DEMO 6-4 (pg. 6-13)
Review 6-4 (pg. 6-18)
Job Costing in Service Organizations (pg. 6-18)
DEMO 6-5 (pg. 6-19)
Review 6-5 (pg. 6-21)
Job Order Costing to Assist Managers (pg. 6-22)
Managing Profitability Across Jobs (pg. 6-22)
Review 6-6 (pg. 6-23)
Product and Material Losses in Job Order Costing (pg. 6-24)
Normal Loss Accounted for in Predetermined OH Rate (pg. 6-24)
DEMO 6-7A (pg. 6-24)
Normal Loss Applied to a Specific Job (pg. 6-25)
DEMO 6-7B (pg. 6-25)
DEMO 6-7C (pg. 6-26)
Review 6-7 (pg. 6-26)
Comprehensive Chapter Review (pg. 6-27)
Key Terms (pg. 6-27)
Chapter Summary (pg. 6-27)
Solution Strategies (pg. 6-28)
Chapter Demonstration Problem (pg. 6-29)
Data Analytics (pg. 6-31)
Data Visualization (pg. 6-31)
Potential Ethical Issues (pg. 6-31)
Questions (pg. 6-32)
Multiple Choice (pg. 6-32)
Exercises (pg. 6-33)
Problems (pg. 6-44)
Review Solutions (pg. 6-56)
Data Visualization Solutions (pg. 6-59)
Chapter 7: Process Costing (pg. 7-1)
Introduction (pg. 7-2)
Unit Cost Calculation in Process Costing (pg. 7-2)
Production Costs: The Numerator (pg. 7-3)
Equivalent Units of Production: The Denominator (pg. 7-4)
DEMO 7-1A (pg. 7-4)
DEMO 7-1B (pg. 7-5)
Review 7-1 (pg. 7-6)
Weighted Average Costing Method (pg. 7-6)
Steps in the Process Costing System (pg. 7-7)
DEMO 7-2 (pg. 7-8)
Review 7-2 (pg. 7-13)
FIFO Method (pg. 7-13)
DEMO 7-3 (pg. 7-13)
Review 7-3 (pg. 7-17)
Process Costing in a Multidepartment Setting (pg. 7-18)
DEMO 7-4 (pg. 7-18)
Review 7-4 (pg. 7-19)
Hybrid Costing Systems (pg. 7-20)
DEMO 7-5 (pg. 7-20)
Review 7-5 (pg. 7-21)
Spoilage (pg. 7-21)
DEMO 7-6 (pg. 7-22)
Review 7-6 (pg. 7-24)
Appendix 7-1: Alternative Calculations of Weighted Average and FIFO Methods (pg. 7-24)
DEMO 7-7 (pg. 7-25)
Review 7-7 (pg. 7-25)
Appendix 7-2: Process Costing With Standard Costs (pg. 7-26)
DEMO 7-8 (pg. 7-26)
Review 7-8 (pg. 7-28)
Comprehensive Chapter Review (pg. 7-29)
Key Terms (pg. 7-29)
Chapter Summary (pg. 7-29)
Solution Strategies (pg. 7-30)
Chapter Demonstration Problem (pg. 7-31)
Data Analytics (pg. 7-34)
Data Visualization (pg. 7-34)
Potential Ethical Issues (pg. 7-35)
Questions (pg. 7-35)
Multiple Choice (pg. 7-35)
Exercises (pg. 7-37)
Problems (pg. 7-46)
Review Solutions (pg. 7-56)
Data Visualization Solutions (pg. 7-59)
Chapter 8: Activity-Based Management and Activity-Based Costing (pg. 8-1)
Introduction (pg. 8-2)
Activity Analysis (pg. 8-3)
DEMO 8-1 (pg. 8-4)
Minimizing NVA Activities (pg. 8-5)
Review 8-1 (pg. 8-6)
Manufacturing Cycle Efficiency (pg. 8-6)
DEMO 8-2 (pg. 8-6)
Service Cycle Efficiency (pg. 8-7)
Improving Manufacturing (Service) Cycle Efficiency (pg. 8-7)
Review 8-2 (pg. 8-7)
Cost Driver Analysis (pg. 8-8)
Levels at Which Costs Are Incurred (pg. 8-9)
DEMO 8-3A (pg. 8-10)
DEMO 8-3B (pg. 8-10)
Product Profitability Analysis (pg. 8-11)
DEMO 8-3C (pg. 8-12)
Review 8-3 (pg. 8-13)
Activity-Based Costing (pg. 8-14)
Two-Stage Allocation Method (pg. 8-14)
DEMO 8-4 (pg. 8-16)
Review 8-4 (pg. 8-18)
Determining Whether ABC is Useful (pg. 8-18)
Large Product or Service Variety (pg. 8-19)
High Product/Process Complexity (pg. 8-19)
Lack of Commonality in Overhead Costs (pg. 8-20)
Irrationality of Current Cost Allocations (pg. 8-21)
Changes in Business Environment (pg. 8-21)
DEMO 8-5 (pg. 8-21)
Criticisms of Activity-Based Costing (pg. 8-22)
Review 8-5 (pg. 8-23)
Time-Driven Activity-Based Costing (pg. 8-23)
DEMO 8-6 (pg. 8-24)
Review 8-6 (pg. 8-25)
Comprehensive Chapter Review (pg. 8-25)
Key Terms (pg. 8-25)
Chapter Summary (pg. 8-25)
Solution Strategies (pg. 8-27)
Chapter Demonstration Problem (pg. 8-28)
Data Analytics (pg. 8-29)
Data Visualization (pg. 8-30)
Potential Ethical Issues (pg. 8-30)
Questions (pg. 8-31)
Multiple Choice (pg. 8-31)
Exercises (pg. 8-32)
Problems (pg. 8-41)
Review Solutions (pg. 8-55)
Data Visualization Solutions (pg. 8-57)
Chapter 9: The Master Budget (pg. 9-1)
Introduction (pg. 9-2)
The Budgeting Process (pg. 9-2)
Long-Term Strategic Planning (pg. 9-2)
Short-Term Tactical Planning (pg. 9-3)
General Approaches to Budgeting (pg. 9-5)
DEMO 9-1A (pg. 9-5)
DEMO 9-1B (pg. 9-5)
DEMO 9-1C (pg. 9-6)
DEMO 9-1D (pg. 9-6)
Review 9-1 (pg. 9-7)
The Master Budget (pg. 9-7)
Sales Budget (pg. 9-9)
DEMO 9-2 (pg. 9-10)
Review 9-2 (pg. 9-11)
Production Budget (pg. 9-12)
DEMO 9-3A (pg. 9-12)
Purchases Budget (pg. 9-13)
DEMO 9-3B (pg. 9-13)
Direct Labor Budget (pg. 9-14)
DEMO 9-3C (pg. 9-14)
Overhead Budget (pg. 9-14)
DEMO 9-3D (pg. 9-15)
Selling and Administrative Expense Budget (pg. 9-15)
DEMO 9-3E (pg. 9-15)
Review 9-3 (pg. 9-16)
Capital Budget (pg. 9-17)
DEMO 9-4A (pg. 9-17)
Cash Budget (pg. 9-17)
DEMO 9-4B (pg. 9-18)
DEMO 9-4C (pg. 9-20)
DEMO 9-4D (pg. 9-21)
Review 9-4 (pg. 9-23)
Budgeted Financial Statements (pg. 9-23)
DEMO 9-5A (pg. 9-23)
Impact of Environmental Considerations on the Budgeting Process (pg. 9-27)
DEMO 9-5B (pg. 9-28)
Review 9-5 (pg. 9-28)
Master Budget for a Service Provider (pg. 9-29)
DEMO 9-6 (pg. 9-29)
Review 9-6 (pg. 9-31)
Quality of the Master Budget (pg. 9-31)
Accuracy of Sales Forecasts (pg. 9-32)
Policy on Budget Revisions (pg. 9-33)
Level of Employee Participation (pg. 9-33)
Ethical Behavior (pg. 9-34)
DEMO 9-7 (pg. 9-34)
Review 9-7 (pg. 9-35)
Comprehensive Chapter Review (pg. 9-36)
Key Terms (pg. 9-36)
Chapter Summary (pg. 9-36)
Solution Strategies (pg. 9-37)
Chapter Demonstration Problem (pg. 9-39)
Data Analytics (pg. 9-40)
Data Visualization (pg. 9-41)
Potential Ethical Issues (pg. 9-42)
Questions (pg. 9-42)
Multiple Choice (pg. 9-43)
Exercises (pg. 9-44)
Problems (pg. 9-54)
Review Solutions (pg. 9-67)
Data Visualization Solutions (pg. 9-70)
Chapter 10: Flexible Budget, Standard Costing, and Variance Analysis (pg. 10-1)
Introduction (pg. 10-2)
Flexible Budgets (pg. 10-2)
Flexible Budgets for Planning (pg. 10-2)
DEMO 10-1A (pg. 10-2)
Flexible Budgets for Performance Measurement (pg. 10-3)
DEMO 10-1B (pg. 10-3)
Review 10-1 (pg. 10-4)
Developing a Standard Cost System (pg. 10-5)
Benefits of a Standard Cost System (pg. 10-5)
Establishing Standards (pg. 10-8)
Considerations in Establishing Standards (pg. 10-7)
Establishing Standards (pg. 10-8)
Material and Labor Variances (pg. 10-10)
General Variance Analysis Model (pg. 10-11)
DEMO 10-3A (pg. 10-12)
DEMO 10-3B (pg. 10-13)
Material Variances: Point-of-Purchase Model (pg. 10-14)
DEMO 10-3C (pg. 10-14)
Labor Variances (pg. 10-14)
DEMO 10-3D (pg. 10-15)
DEMO 10-3E (pg. 10-16)
Review 10-3 (pg. 10-16)
Overhead Variances (pg. 10-16)
Variable Overhead (Four-Variance Approach) (pg. 10-17)
DEMO 10-4A (pg. 10-17)
Fixed Overhead (Four-Variance Approach) (pg. 10-18)
DEMO 10-4B (pg. 10-18)
DEMO 10-4C (pg. 10-20)
Alternative Overhead Variance Approaches (pg. 10-21)
Disposition of Standard Cost Variances (pg. 10-24)
DEMO 10-5 (pg. 10-24)
Adjusting Standards (pg. 10-25)
Review 10-5 (pg. 10-26)
Mix and Yield Variances (pg. 10-27)
Material Price, Mix, and Yield Variances (pg. 10-27)
DEMO 10-6A (pg. 10-27)
Labor Rate, Mix, and Yield Variances (pg. 10-29)
DEMO 10-6B (pg. 10-29)
Review 10-6 (pg. 10-30)
Appendix 10A: Job Order Costing Using Standard Costs (pg. 10-31)
DEMO 10-7A (pg. 10-31)
DEMO 10-7B (pg. 10-32)
Review 10-7 (pg. 10-33)
Appendix 10B: Conversion Cost as an Element in Standard Costing (pg. 10-33)
DEMO 10-8 (pg. 10-34)
Review 10-8 (pg. 10-35)
Comprehensive Chapter Review (pg. 10-35)
Key Terms (pg. 10-35)
Chapter Summary (pg. 10-36)
Solution Strategies (pg. 10-37)
Chapter Demonstration Problem (pg. 10-39)
Data Analytics (pg. 10-41)
Data Visualization (pg. 10-43)
Potential Ethical Issues (pg. 10-43)
Questions (pg. 10-43)
Multiple Choice (pg. 10-44)
Exercises (pg. 10-45)
Problems (pg. 10-56)
Review Solutions (pg. 10-67)
Data Visualization Solutions (pg. 10-72)
Chapter 11: Absorption/Variable Costing and Capacity Analysis (pg. 11-1)
Introduction (pg. 11-2)
Overview of Absorption and Variable Costing (pg. 11-2)
Absorption Costing (pg. 11-2)
Variable Costing (pg. 11-3)
DEMO 11-1 (pg. 11-4)
Review 11-1 (pg. 11-5)
Income Under Absorption and Variable Costing (pg. 11-5)
DEMO 11-2 (pg. 11-6)
Review 11-2 (pg. 11-11)
Income statement impact of a volume variance (pg. 11-11)
DEMO 11-3 (pg. 11-11)
Reconciliation of Variable and Absorption Costing Before-Tax Profit (pg. 11-13)
Review 11-3 (pg. 11-14)
Implications of Capacity Measurements (pg. 11-14)
Alternative Capacity Measures (pg. 11-15)
Capacity Measurement Effect on Absorption Income (pg. 11-16)
DEMO 11-4 (pg. 11-16)
Comprehensive Chapter Review (pg. 11-18)
Key Terms (pg. 11-18)
Chapter Summary (pg. 11-18)
Solution Strategies (pg. 11-19)
Chapter Demonstration Problem (pg. 11-19)
Data Analytics (pg. 11-21)
Data Visualization (pg. 11-21)
Potential Ethical Issues (pg. 11-22)
Questions (pg. 11-22)
Multiple Choice (pg. 11-22)
Exercises (pg. 11-24)
Problems (pg. 11-29)
Review Solutions (pg. 11-36)
Data Visualization Solutions (pg. 11-38)
Chapter 12: Allocation of Joint Costs and Accounting for ByProduct/Scrap (pg. 12-1)
Introduction (pg. 12-2)
The Joint Process (pg. 12-2)
Decisions in the Joint Process (pg. 12-4)
The Decision to Sell or Process Further (pg. 12-5)
DEMO 12-1 (pg. 12-6)
Review 12-1 (pg. 12-7)
Outputs of a Joint Process (pg. 12-7)
Output with a Sales Value (pg. 12-7)
Output with No Sales Value (pg. 12-7)
Reclassification of Outputs of a Joint Process (pg. 12-7)
Management Judgment Required in Classification (pg. 12-8)
DEMO 12-2 (pg. 12-8)
Review 122 (pg. 12-8)
Allocation of Joint Cost (pg. 12-9)
Physical Measure Allocation (pg. 12-10)
DEMO 12-3A (pg. 12-10)
Monetary Measure Allocation (pg. 12-11)
DEMO 12-3B (pg. 12-11)
DEMO 12-3C (pg. 12-12)
DEMO 12-3D (pg. 12-13)
Comparison of Four Methods of Joint Cost Allocation (pg. 12-15)
Review 123 (pg. 12-16)
Accounting for ByProduct and Scrap (pg. 12-16)
Net Realizable Value Approach (pg. 12-16)
DEMO 12-4A (pg. 12-17)
Realized Value Approach (pg. 12-19)
DEMO 12-4B (pg. 12-19)
ByProduct and Scrap in Job Order Costing (pg. 12-20)
DEMO 12-4C (pg. 12-21)
Review 124 (pg. 12-21)
Joint Costs in NonManufacturing Businesses and NotforProfit Organizations (pg. 12-22)
DEMO 12-5 (pg. 12-22)
Review 125 (pg. 12-23)
Comprehensive Chapter Review (pg. 12-23)
Key Terms (pg. 12-23)
Chapter Summary (pg. 12-23)
Solution Strategies (pg. 12-25)
Chapter Demonstration Problem (pg. 12-25)
Data Analytics (pg. 12-27)
Data Visualization (pg. 12-28)
Potential Ethical Issues (pg. 12-28)
Questions (pg. 12-28)
Multiple Choice (pg. 12-28)
Exercises (pg. 12-30)
Problems (pg. 12-37)
Review Solutions (pg. 12-45)
Data Visualization Solutions (pg. 12-47)
Chapter 13: Responsibility Accounting, Support Department Cost Allocations, and Transfer Pricing (pg. 13-1)
Introduction (pg. 13-2)
Management Information and Control Systems (pg. 13-2)
Components of a Management Control System (pg. 13-3)
DEMO 13-1 (pg. 13-3)
Defining a Cost Management System (pg. 13-4)
Review 13-1 (pg. 13-6)
Decentralization (pg. 13-7)
DEMO 13-2 (pg. 13-8)
Shared Services (pg. 13-8)
Review 13-2 (pg. 13-9)
Responsibility Accounting Systems (pg. 13-10)
Control Activities in a Responsibility Accounting System (pg. 13-10)
DEMO 13-3 (pg. 13-11)
Review 13-3 (pg. 13-13)
Types of Responsibility Centers (pg. 13-13)
Cost Center (pg. 13-13)
Revenue Center (pg. 13-14)
Profit Center (pg. 13-14)
Investment Center (pg. 13-14)
DEMO 13-4 (pg. 13-15)
Review 13-4 (pg. 13-15)
Support Department Cost Allocation (pg. 13-15)
Allocation Bases (pg. 13-16)
Methods of Allocating Support Department Costs (pg. 13-17)
DEMO 13-5A (pg. 13-19)
DEMO 13-5B (pg. 13-20)
DEMO 13-5C (pg. 13-22)
Determining Overhead Application Rates (pg. 13-24)
Review 13-5 (pg. 13-25)
Transfer Pricing (pg. 13-26)
DEMO 13-6 (pg. 13-27)
Types of Transfer Prices (pg. 13-28)
Selecting a Transfer Pricing System (pg. 13-30)
Transfer Prices in Multinational Settings (pg. 13-30)
Review 13-6 (pg. 13-31)
Comprehensive Chapter Review (pg. 13-32)
Key Terms (pg. 13-32)
Chapter Summary (pg. 13-32)
Solution Strategies (pg. 13-34)
Chapter Demonstration Problem (pg. 13-34)
Data Analytics (pg. 13-36)
Data Visualization (pg. 13-36)
Potential Ethical Issues (pg. 13-37)
Questions (pg. 13-37)
Multiple Choice (pg. 13-38)
Exercises (pg. 13-39)
Problems (pg. 13-46)
Review Solutions (pg. 13-58)
Data Visualization Solutions (pg. 13-62)
Chapter 14: Pricing, Sales Variances, and Customer Profitability (pg. 14-1)
Introduction (pg. 14-2)
Cost-Based Approaches to Pricing (pg. 14-2)
Comparing Economic Pricing to Cost-Based Pricing (pg. 14-2)
Cost-Based Pricing Approaches (pg. 14-2)
DEMO 14-1A (pg. 14-3)
DEMO 14-1B (pg. 14-4)
DEMO 14-1C (pg. 14-6)
Review 14-1 (pg. 14-7)
Life Cycle and Target Costing (pg. 14-9)
Product Life Cycles (pg. 14-9)
Target Costing (pg. 14-9)
DEMO 14-2 (pg. 14-11)
Advantages of Target Costing (pg. 14-11)
Disadvantages of Target Costing (pg. 14-12)
Continuous Improvement Costing (pg. 14-13)
DEMO 14-3 (pg. 14-14)
Review 14-3 (pg. 14-15)
Revenue Variance (pg. 14-15)
DEMO 14-4 (pg. 14-16)
Review 14-4 (pg. 14-17)
Contribution Margin Variance (pg. 14-17)
DEMO 14-5A (pg. 14-18)
Contribution Margin Volume Variance (pg. 14-19)
DEMO 14-5B (pg. 14-20)
Sales Quantity Variance (pg. 14-21)
DEMO 14-5C (pg. 14-21)
Review 14-5 (pg. 14-22)
Customer Profitability Analysis (pg. 14-23)
Customer Profitability Profile (pg. 14-23)
DEMO 14-6 (pg. 14-23)
Review 14-6 (pg. 14-26)
Comprehensive Chapter Review (pg. 14-27)
Key Terms (pg. 14-27)
Chapter Summary (pg. 14-27)
Solution Strategies (pg. 14-28)
Chapter Demonstration Problem (pg. 14-29)
Data Analytics (pg. 14-30)
Data Visualization (pg. 14-31)
Potential Ethical Issues (pg. 14-31)
Questions (pg. 14-31)
Multiple Choice (pg. 14-32)
Exercises (pg. 14-33)
Problems (pg. 14-39)
Review Solutions (pg. 14-47)
Data Visualization Solutions (pg. 14-50)
Chapter 15: Performance Measurement, Balanced Scorecards, and Performance Rewards (pg. 15-1)
Introduction (pg. 15-2)
Designing Performance Measurement Systems (pg. 15-2)
Organization Mission Statements (pg. 15-2)
Critical Elements for Performance Measurement (pg. 15-3)
DEMO 15-1 (pg. 15-5)
Performance Measurement System Criteria (pg. 15-5)
Financial Performance Measures (pg. 15-7)
Segment Margin (pg. 15-7)
DEMO 15-2 (pg. 15-9)
Statement of Cash Flows (pg. 15-11)
Review 15-2 (pg. 15-11)
Return on Investment (pg. 15-12)
Residual Income (pg. 15-15)
DEMO 15-3B (pg. 15-15)
Economic Value Added (pg. 15-15)
DEMO 15-3C (pg. 15-16)
Limitations of Return on Investment, Residual Income, and Economic Value Added (pg. 15-16)
DEMO 15-3D (pg. 15-17)
Multi-Year Financial Performance Measures (pg. 15-17)
Review 15-3 (pg. 15-18)
Nonfinancial, Quantitative Performance Measures (pg. 15-18)
Selection of Nonfinancial Quantitative Measures (pg. 15-19)
Types of Nonfinancial Performance Measures (pg. 15-20)
DEMO 15-4 (pg. 15-21)
Establishment of Comparison Bases (pg. 15-23)
Review 15-4 (pg. 15-24)
Using a Balanced Scorecard for Measuring Performance (pg. 15-24)
Leading and Lagging Indicators (pg. 15-24)
Need for Multiple Performance Measures (pg. 15-25)
Balanced Scorecard Approach (pg. 15-26)
DEMO 15-5 (pg. 15-26)
Performance Evaluation in Multinational Settings (pg. 15-30)
Review 15-5 (pg. 15-31)
Compensation Strategy (pg. 15-32)
Pay-for-Performance Plans (pg. 15-32)
DEMO 15-6 (pg. 15-33)
Pay Versus Performance (pg. 15-35)
Links Between Performance Measures and Rewards (pg. 15-36)
Degree of Control over Performance Output (pg. 15-36)
Incentives Relative to Organizational Level (pg. 15-36)
Performance Plans and Feedback (pg. 15-37)
Worker Pay and Performance Links (pg. 15-37)
Promoting Overall Success (pg. 15-37)
Nonfinancial Incentives (pg. 15-37)
Tax Implications of Compensation Elements (pg. 15-38)
Global Compensation (pg. 15-38)
Ethical Considerations of Compensation (pg. 15-39)
Review 15-6 (pg. 15-39)
Comprehensive Chapter Review (pg. 15-39)
Key Terms (pg. 15-39)
Chapter Summary (pg. 15-40)
Solution Strategies (pg. 15-41)
Chapter Demonstration Problem 1 (pg. 15-43)
Chapter Demonstration Problem 2 (pg. 15-44)
Data Analytics (pg. 15-45)
Data Visualization (pg. 15-46)
Potential Ethical Issues (pg. 15-47)
Questions (pg. 15-47)
Multiple Choice (pg. 15-48)
Exercises (pg. 15-49)
Problems (pg. 15-55)
Review Solutions (pg. 15-65)
Data Visualization Solutions (pg. 15-67)
Chapter 16: Approaches to Cost Control and Managing Uncertainty (pg. 16-1)
Introduction (pg. 16-2)
Functions of a Cost Control System (pg. 16-2)
DEMO 16-1 (pg. 16-2)
Cost Control Implications in the Planning Phase (pg. 16-3)
Reducing Time to Market (pg. 16-3)
Other Preventive Actions (pg. 16-4)
Supplier Strategic Alliances (pg. 16-4)
Review 16-1 (pg. 16-5)
Cost Consciousness Attitude (pg. 16-5)
Understanding Cost Changes (pg. 16-6)
DEMO 16-2 (pg. 16-8)
Review 16-2 (pg. 16-9)
Cost Containment (pg. 16-9)
Cost Avoidance and Cost Reduction (pg. 16-10)
DEMO 16-3 (pg. 16-11)
Review 16-3 (pg. 16-13)
Classifying Fixed Costs (pg. 16-13)
Committed Fixed Costs (pg. 16-13)
Discretionary Fixed Costs (pg. 16-14)
DEMO 16-4 (pg. 16-14)
Review 16-4 (pg. 16-14)
Planning and Controlling Discretionary Fixed Costs (pg. 16-15)
Planning for Discretionary Costs (pg. 16-15)
Controlling Discretionary Activities (pg. 16-16)
DEMO 16-5A (pg. 16-17)
DEMO 16-5B (pg. 16-18)
DEMO 16-5C (pg. 16-20)
Review 16-5 (pg. 16-22)
Cash Management (pg. 16-23)
What Variables Influence the Optimal Level of Cash? (pg. 16-23)
What Are the Sources of Cash? (pg. 16-24)
DEMO 16-6 (pg. 16-25)
What Variables Influence the Cost of Carrying Cash? (pg. 16-27)
Review 16-6 (pg. 16-28)
Coping with Uncertainty (pg. 16-29)
The Nature and Causes of Uncertainty (pg. 16-29)
Four Strategies for Dealing with Uncertainty (pg. 16-30)
DEMO 16-7 (pg. 16-31)
Review 16-7 (pg. 16-33)
Comprehensive Chapter Review (pg. 16-34)
Key Terms (pg. 16-34)
Chapter Summary (pg. 16-34)
Solution Strategies (pg. 16-35)
Chapter Demonstration Problem (pg. 16-36)
Data Analytics (pg. 16-37)
Data Visualization (pg. 16-37)
Potential Ethical Issues (pg. 16-37)
Questions (pg. 16-38)
Multiple Choice (pg. 16-38)
Exercises (pg. 16-39)
Problems (pg. 16-47)
Review Solutions (pg. 16-54)
Data Visualization Solutions (pg. 16-55)
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)
DEMO 17-1 (pg. 17-4)
Consumer View of Quality (pg. 17-5)
Review 17-1 (pg. 17-7)
Benchmarking (pg. 17-8)
Types of Benchmarking (pg. 17-8)
DEMO 17-2 (pg. 17-10)
Benchmarking Steps (pg. 17-11)
Review 17-2 (pg. 17-11)
Total Quality Management (pg. 17-12)
Tenets of TQM (pg. 17-12)
DEMO 17-3 (pg. 17-15)
Quality as an Organizational Culture (pg. 17-15)
Review 17-3 (pg. 17-16)
Types of Quality Costs (pg. 17-16)
DEMO 17-4 (pg. 17-17)
Review 17-4 (pg. 17-19)
Measuring the Cost of Quality (pg. 17-19)
Identifying and Tracking Quality Costs (pg. 17-19)
Preparing a Cost of Quality Report (pg. 17-20)
Calculating the Total Cost of Quality (pg. 17-22)
DEMO 17-5 (pg. 17-23)
Review 17-5 (pg. 17-26)
Comprehensive Chapter Review (pg. 17-27)
Key Terms (pg. 17-27)
Chapter Summary (pg. 17-27)
Solution Strategies (pg. 17-29)
Chapter Demonstration Problem (pg. 17-29)
Data Analytics (pg. 17-30)
Data Visualization (pg. 17-31)
Potential Ethical Issues (pg. 17-31)
Questions (pg. 17-32)
Multiple Choice (pg. 17-32)
Exercises (pg. 17-34)
Problems (pg. 17-42)
Review Solutions (pg. 17-47)
Data Visualization Solutions (pg. 17-48)
Chapter 18: Inventory and Production Management (pg. 18-1)
Introduction (pg. 18-2)
Buying/Producing and Carrying Inventory (pg. 18-2)
Financial Statement Presentation of Inventory Costs (pg. 18-2)
Primary Inventory Costs (pg. 18-3)
DEMO 18-1 (pg. 18-4)
Review 18-1 (pg. 18-4)
Economic Order Quantity in a Push System (pg. 18-4)
Push System Versus a Pull System (pg. 18-4)
Economic Order Quantity (pg. 18-5)
DEMO 18-2A (pg. 18-6)
Economic Production Run (pg. 18-7)
DEMO 18-2B (pg. 18-7)
Order Point and Safety Stock (pg. 18-8)
DEMO 18-2C (pg. 18-8)
DEMO 18-2D (pg. 18-9)
Pareto Inventory Analysis (pg. 18-9)
Review 18-2 (pg. 18-10)
Just-In-Time in a PULL SYSTEM (pg. 18-10)
Changes Needed to Implement JIT Manufacturing (pg. 18-11)
Performance Measures Under JIT (pg. 18-13)
DEMO 18-3 (pg. 18-14)
Flexible and Lean Manufacturing Systems (pg. 18-15)
Review 18-3 (pg. 18-16)
Backflush Costing used in Just-in-time Systems (pg. 18-17)
DEMO 18-4 (pg. 18-17)
Review 18-4 (pg. 18-20)
Theory of Constraints (pg. 18-20)
DEMO 18-5 (pg. 18-20)
Review 18-5 (pg. 18-22)
Comprehensive Chapter Review (pg. 18-22)
Key Terms (pg. 18-22)
Chapter Summary (pg. 18-23)
Solution Strategies (pg. 18-24)
Chapter Demonstration Problem (pg. 18-25)
Data Analytics (pg. 18-26)
Data Visualization (pg. 18-27)
Potential Ethical Issues (pg. 18-27)
Questions (pg. 18-27)
Multiple Choice (pg. 18-28)
Exercises (pg. 18-29)
Problems (pg. 18-35)
Review Solutions (pg. 18-39)
Data Visualization Solutions (pg. 18-40)
Chapter 19: Capital Budgeting (pg. 19-1)
Introduction (pg. 19-2)
Payback Period (pg. 19-2)
Identifying Cash Flows (pg. 19-2)
DEMO 19-1A (pg. 19-3)
Calculating the Payback Period (pg. 19-4)
DEMO 19-1B (pg. 19-4)
DEMO 19-1C (pg. 19-5)
Review 19-1 (pg. 19-5)
Discounted Cash Flow Methods (pg. 19-5)
Net Present Value Method (pg. 19-6)
DEMO 19-2A (pg. 19-6)
Profitability Index (pg. 19-8)
DEMO 19-2B (pg. 19-9)
Internal Rate of Return (pg. 19-9)
DEMO 19-2C (pg. 19-10)
Review 19-2 (pg. 19-12)
Relevant After-Tax Cash Flows (pg. 19-12)
DEMO 19-3 (pg. 19-13)
Review 19-3 (pg. 19-15)
Evaluating and Ranking Projects Using Different Methods (pg. 19-15)
Investment Decision (pg. 19-15)
Ranking Multiple Capital Projects (pg. 19-19)
DEMO 19-4 (pg. 19-19)
Review 19-4 (pg. 19-20)
Compensating for Risk in Capital Project Evaluation (pg. 19-20)
Judgmental Method (pg. 19-20)
Risk-Adjusted Discount Rate Method (pg. 19-21)
DEMO 19-5A (pg. 19-21)
Sensitivity Analysis (pg. 19-22)
DEMO 19-5B (pg. 19-22)
DEMO 19-5C (pg. 19-23)
DEMO 19-5D (pg. 19-24)
Review 19-5 (pg. 19-24)
Appendix 19-1: Time Value of Money (pg. 19-26)
DEMO 19-7A (pg. 19-27)
DEMO 19-7B (pg. 19-28)
Review 19-7 (pg. 19-28)
Appendix 19-2: Accounting Rate of Return (pg. 19-28)
DEMO 19-8 (pg. 19-29)
Review 19-8 (pg. 19-29)
Comprehensive Chapter Review (pg. 19-30)
Key Terms (pg. 19-30)
Chapter Summary (pg. 19-30)
Solution Strategies (pg. 19-32)
Chapter Demonstration Problem (pg. 19-33)
Data Analytics (pg. 19-34)
Data Visualization (pg. 19-35)
Potential Ethical Issues (pg. 19-35)
Questions (pg. 19-35)
Multiple Choice (pg. 19-36)
Exercises (pg. 19-37)
Problems (pg. 19-43)
Review Solutions (pg. 19-49)
Data Visualization Solutions (pg. 19-53)
Appendix A Compound Interest Tables (pg. A-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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