eBook - Management and Cost Accounting Third Edition by Colin Drury

Part One: Introduction to Management and Cost Accounting 1 The scope of management accounting — p. 3 The users of accounting information — p. 3 The meaning of information — p. 4 Measurement theory — p. 5 The communication of information — p. 6 The value of information — p. 7 The decision-making process — p. 9 The management process — p. 13 The role of the management accountant in the management process — p. 15 Behavioural and organizational aspects of management accounting — p. 16 Cost accounting and management accounting — p. 17 Summary of the contents of this book — p. 17 Guidelines for using this book — p. 19 2 Cost and revenue classification — p. 22 Cost objectives — p. 22 Classification of costs — p. 23 Cost accounting: classification of costs for stock valuation and profit measurement — p. 23 Classification for decision-making and planning — p. 27 Classification for control — p. 35 Part Two: Cost Accumulation for Stock Valuation and Profit Measurement 3 Accounting for materials and labour — p. 45 Materials control procedure — p. 45 Pricing the issues of raw materials — p. 49 Treatment of stores losses — p. 53 Treatment of transportation costs — p. 53 Treatment of materials handling costs — p. 54 Just-in-time purchasing — p. 54 Accounting for labour — p. 55 Labour cost accounting — p. 55 Payroll accounting — p. 55 Incentive schemes — p. 56 Accounting treatment of various labour cost items — p. 57 Decision-making and cost control — p. 58 4 Accounting for overhead expenditure — p. 70 An overview of the procedure for allocating overheads to products — p. 71 Blanket overhead rates — p. 73 Procedure for calculating cost centre overhead rates — p. 74 An illustration of the overhead allocation procedure — p. 75 Predetermined overhead rates — p. 79 Under and over recovery of overheads — p. 79 Measuring capacity — p. 80 Significance of volume measures for control — p. 83 Significance of volume measures for product pricing — p. 84 Overhead absorption rates and new manufacturing technology — p. 84 Non-manufacturing overheads — p. 85 Overheads for decision-making — p. 86 Overheads for control — p. 86 5 Accounting entries for a job costing system — p. 106 Control accounts — p. 106 Recording the purchase of raw materials — p. 107 Recording the issue of materials — p. 107 Accounting procedure for labour costs — p. 110 Accounting procedure for manufacturing overheads — p. 111 Non-manufacturing overheads — p. 112 Accounting procedures for jobs completed and products sold — p. 113 Costing profit and loss account — p. 113 Interlocking accounting — p. 113 Contract costing — p. 114 Work in progress valuation and amounts recoverable on contracts — p. 118 6 Process costing — p. 131 Flow of costs in a process costing system — p. 131 Normal and abnormal losses — p. 133 Accounting for the sale of scrap — p. 134 Abnormal gains — p. 135 Opening and closing work in progress — p. 137 Process costing for decision-making and cost control — p. 147 Batch costing — p. 149 7 Joint product and by-product costing — p. 161 Methods of apportioning joint costs to joint products — p. 162 Limitations of joint cost allocations for decision-making — p. 166 Accounting for by-products — p. 169 By-products, scrap and waste — p. 171 Defective units — p. 171 8 Absorption costing and variable costing — p. 182 Problem of terminology — p. 182 External and internal reporting — p. 183 Variable costing and absorption costing: a comparison of their impact on profit — p. 186 The variable costing versus absorption costing debate — p. 189 Relevant costing — p. 190 Internal profit measurement — p. 190 Current cost accounting — p. 193 Part Three: Information for Decision-making 9 Cost-volume-profit analysis — p. 205 The economist's model — p. 206 The accountant's cost-volume-profit model — p. 207 Changes in fixed costs and selling prices — p. 210 A mathematical approach to cost-volume-profit analysis — p. 212 Margin of safety — p. 214 Constructing the break-even chart — p. 215 Cost-volume-profit analysis assumptions — p. 217 Cost-volume-profit analysis and computer applications — p. 220 10 Special studies: measuring relevant costs for decision-making — p. 236 Measuring relevant costs and benefits — p. 237 Quantitative and qualitative factors — p. 239 Deleting a segment — p. 240 Special selling-price decisions — p. 243 Decision-making and the influence of limiting factors — p. 245 Make or buy decisions — p. 247 Replacement of equipment — p. 248 11 Activity-based costing — p. 273 Factors leading to the emergence of activity-based costing — p. 274 Limitations of traditional cost systems — p. 274 Activity-based cost systems — p. 275 Activity-based profitability analysis — p. 280 An evaluation of activity-based costing — p. 283 12 Accounting information for pricing decisions — p. 289 The economist's pricing model — p. 290 Cost-based pricing formulae — p. 295 Decision-relevant costs for pricing decisions — p. 301 Target costing — p. 305 13 Decision-making under conditions of risk and uncertainty — p. 319 A decision-making model — p. 319 Risk and uncertainty — p. 320 Probabilities — p. 321 Decision-tree analysis — p. 327 14 Capital investment decisions: 1 — p. 353 Objectives of capital budgeting — p. 353 A decision-making model for capital investment decisions — p. 354 The concept of net present value — p. 359 15 Capital investment decisions: 2 — p. 389 Capital rationing — p. 392 Taxation and investment decisions — p. 394 The effect of inflation on capital investment appraisal — p. 396 Part Four: Information for Planning and Control 16 The budgeting process — p. 435 Stages in the planning process — p. 435 Why do we produce budgets? — p. 441 Administration of the annual budget — p. 443 17 Operational control and performance measurement — p. 474 Control systems — p. 475 Responsibility accounting and cost control — p. 476 Flexible budgeting — p. 480 18 Standard costing and variance analyses: 1 — p. 509 Operation of a standard costing system — p. 509 Establishing cost standards — p. 512 Variance analysis — p. 516 19 Standard costing: 2. Further aspects — p. 549 Direct materials mix and yield variances — p. 549 Sales mix and sales quantity variances — p. 553 20 Behavioural aspects of accounting control systems — p. 590 The use of budgets as targets — p. 591 Participation in the budgeting and standard setting process — p. 599 Part Five: Manufacturing Systems, Strategies and Technologies 21 Manufacturing systems, strategies and technologies: implications for the design of management accounting systems — p. 617 Alternative production systems — p. 617 Advanced manufacturing technologies — p. 620 Part Six: The Application of Quantitative Methods to Management Accounting 22 Mathematical approaches to cost estimation — p. 639 Non-mathematical techniques — p. 640 Mathematical techniques — p. 642 23 Quantitative models for the planning and control of stocks — p. 671 Determining the economic order quantity — p. 673 24 The application of linear programming to management accounting — p. 695 Linear programming — p. 696 Part Seven: Divisional Performance Evaluation 25 Measuring divisional profitability — p. 729 Profit centres and investment centres — p. 731 26 Transfer pricing in divisionalized companies — p. 758 Objectives of transfer pricing — p. 758 Part Eight: Past, Current and Future Developments in Management Accounting 27 Past, current and future developments in management accounting practice — p. 795