MANAGEMENT and COST ACCOUNTING Fourth Edition by Alnoor Bhimani, Charles T. Horngren, Srikant M. Datar

PART I Management and cost accounting fundamentals CHAPTER 1 The accountant’s role in the organisation — p. 4 Accounting, costing and strategy — p. 5 Accounting systems and management controls — p. 8 Costs, benefits and context — p. 13 Themes in the design of management accounting systems — p. 15 Forces of change in management accounting — p. 21 CHAPTER 2 An introduction to cost terms and purposes — p. 37 Costs in general — p. 38 Direct costs and indirect costs — p. 39 Cost drivers and cost management — p. 40 Two types of cost behaviour pattern: variable costs and fixed costs — p. 41 Total costs and unit costs — p. 44 Financial statements and cost terminology — p. 48 Service-sector companies — p. 48 Merchandising- and manufacturing-sector companies — p. 49 The many meanings of product costs — p. 52 Classifications of costs — p. 53 CHAPTER 3 Job-costing systems — p. 64 The building block concept of costing systems — p. 65 Job-costing and process-costing systems — p. 65 Job costing in service organisations using actual costing — p. 67 Normal costing — p. 69 Job costing in manufacturing — p. 71 An illustration of a job-costing system in manufacturing — p. 75 Budgeted indirect costs and end-of-period adjustments — p. 80 CHAPTER 4 Process-costing systems — p. 95 Illustrating process costing — p. 96 Weighted-average method — p. 103 First-in, first-out method — p. 106 Comparison of weighted-average and FIFO methods — p. 110 Standard-costing method of process costing — p. 112 Transferred-in costs in process costing — p. 116 Hybrid-costing systems — p. 123 CHAPTER 5 Cost allocation — p. 137 Purposes of cost allocation — p. 138 Cost–benefit issues and other contextual factors — p. 139 Cost allocation and costing systems — p. 140 Indirect cost pools and cost allocation — p. 142 Allocating costs from one department to another — p. 144 Allocating costs of support departments — p. 147 Support department cost-allocation methods — p. 148 Allocating common costs — p. 154 Cost-allocation bases and cost hierarchies — p. 156 Is the product-costing system broken? — p. 158 CHAPTER 6 Cost allocation: joint-cost situations — p. 170 Meaning of joint products and by-products terms — p. 171 Why allocate joint costs? — p. 172 Approaches to allocating joint costs — p. 173 No allocation of joint costs — p. 182 Irrelevance of joint costs for decision making — p. 182 Accounting for by-products — p. 186 CHAPTER 7 Income effects of alternative stock-costing methods — p. 198 PART ONE: Stock-costing methods — p. 199 Variable costing and absorption costing — p. 199 Comparison of variable costing and absorption costing — p. 203 Capsule comparison of stock-costing methods — p. 208 Performance measures and absorption costing — p. 210 PART TWO: Denominator-level concepts and absorption costing — p. 212 Alternative denominator-level concepts — p. 212 Effect on financial statements — p. 214 PART II Accounting information for decision making CHAPTER 8 Cost–volume–profit relationships — p. 240 Revenue drivers and cost drivers — p. 241 CVP assumptions — p. 242 The breakeven point — p. 243 The PV graph — p. 246 Impact of income taxes — p. 247 Sensitivity analysis and uncertainty — p. 248 Cost planning and CVP — p. 251 Effects of revenue mix on profit — p. 253 Not-for-profit organisations and CVP — p. 254 Contribution margin and gross margin — p. 255 CHAPTER 9 Determining how costs behave — p. 270 General issues in estimating cost functions — p. 271 The cause-and-effect criterion in choosing cost drivers — p. 274 Cost estimation approaches — p. 275 Steps in estimating a cost function — p. 276 Evaluating and choosing cost drivers — p. 282 Cost drivers and activity-based costing — p. 284 Non-linearity and cost functions — p. 285 Learning curves and non-linear cost functions — p. 287 CHAPTER 10 Relevant information for decision making — p. 309 Information and the decision process — p. 310 The concept of relevance — p. 311 An illustration of relevance: choosing output levels — p. 313 Outsourcing and make-or-buy decisions — p. 315 Opportunity costs, outsourcing and capacity constraints — p. 318 Product-mix decisions under capacity constraints — p. 323 Customer profitability and relevant costs — p. 324 Irrelevance of past costs and equipment-replacement decisions — p. 326 CHAPTER 11 Activity-based costing — p. 341 Undercosting and overcosting — p. 342 Costing system at Plastim Limited — p. 343 Refining a costing system — p. 346 Activity-based costing systems — p. 347 Implementing ABC at Plastim Limited — p. 351 Comparing alternative costing systems — p. 356 Using ABC systems for cost and profit management — p. 357 ABC and department-costing systems — p. 359 Implementing ABC systems — p. 360 ABC and the organisational context — p. 364 CHAPTER 12 Pricing, target costing and customer profitability analysis — p. 376 Major influences on pricing — p. 377 Product-cost categories and time horizon — p. 378 Costing and pricing for the short run — p. 378 Costing and pricing for the long run — p. 380 Target costing for target pricing — p. 384 Achieving the target cost per unit for Provalue — p. 388 Cost-plus pricing — p. 392 Life-cycle product budgeting and costing — p. 394 Customer-profitability analysis — p. 397 Customer revenues — p. 397 Customer costs — p. 398 Customer-profitability profiles — p. 401 CHAPTER 13 Capital investment decisions — p. 416 Two focuses of cost analysis — p. 417 Stages of capital budgeting — p. 418 Discounted cash-flow methods — p. 420 Sensitivity analysis — p. 425 Relevant cash flows in discounted cash-flow analysis — p. 426 Payback method — p. 429 Accounting rate-of-return method — p. 431 Managing the project — p. 432 Income tax factors — p. 433 Capital budgeting and inflation — p. 434 Choosing between the net present-value and the internal rate-of-return decision approaches — p. 435 PART III Planning and budgetary control systems CHAPTER 14 Motivation, budgets and responsibility accounting — p. 466 Major features of budgets — p. 467 Roles of budgets — p. 467 Types of budget — p. 473 Computer-based financial planning models — p. 483 Kaizen budgeting — p. 484 Activity-based budgeting — p. 485 Budgeting and responsibility accounting — p. 486 Responsibility and controllability — p. 488 Budgeting: a discipline in transition — p. 489 CHAPTER 15 Flexible budgets, variances and management control: I — p. 508 Static budgets and flexible budgets — p. 509 Static-budget variances — p. 510 Steps in developing a flexible budget — p. 511 Flexible-budget variances and sales-volume variances — p. 512 Price variances and efficiency variances for inputs — p. 514 Impact of stocks — p. 519 Management uses of variances — p. 522 Flexible budgeting and activity-based costing — p. 525 An illustration of journal entries using standard costs — p. 527 Benchmarking and variance analysis — p. 528 CHAPTER 16 Flexible budgets, variances and management control: II — p. 541 Planning of variable- and fixed-overhead costs — p. 542 Developing budgeted variable-overhead rates — p. 543 Variable-overhead cost variances — p. 544 Developing budgeted fixed-overhead rates — p. 548 Fixed-overhead cost variances — p. 549 Production-volume variance — p. 550 Integrated analysis of overhead cost variances — p. 551 Different purposes of manufacturing overhead cost analysis — p. 553 Journal entries for overhead costs and variances — p. 554 Engineered, discretionary and infrastructure costs — p. 557 Financial and non-financial performance measures — p. 558 Actual, normal and standard costing — p. 559 Activity-based costing and variance analysis — p. 562 CHAPTER 17 Measuring yield, mix and quantity effects — p. 577 Input variances — p. 578 Direct materials yield and mix variances — p. 578 Direct manufacturing labour yield and mix variances — p. 583 Revenue and sales variances — p. 586 Variance analysis for multiple products — p. 587 PART IV Management control systems and performance issues CHAPTER 18 Control systems and transfer pricing — p. 614 Management control systems — p. 615 Evaluating management control systems — p. 616 Organisational structure and decentralisation — p. 616 Choices about responsibility centres — p. 619 Transfer pricing — p. 619 An illustration of transfer pricing — p. 620 Market-based transfer prices — p. 623 Cost-based transfer prices — p. 624 Negotiated transfer prices — p. 627 A general guideline for transfer-pricing situations — p. 629 Transfer pricing and tax considerations — p. 631 CHAPTER 19 Control systems and performance measurement — p. 644 Financial and non-financial performance measures — p. 645 Designing an accounting-based performance measure — p. 646 Different performance measures — p. 646 Alternative definitions of investment — p. 654 Alternative performance measures — p. 654 Choosing targeted levels of performance and timing of feedback — p. 657 Distinction between managers and organisational units — p. 658 Performance measures at the individual activity level — p. 661 Environmental and ethical responsibilities — p. 662 Strategy and levers of control — p. 663 PART V Quality, time and the strategic management of costs CHAPTER 20 Quality and throughput concerns in managing costs — p. 700 Quality as a competitive weapon — p. 701 Costs of quality — p. 702 Techniques used to identify quality problems — p. 705 Relevant costs and benefits of quality improvement — p. 707 Non-financial measures of quality and customer satisfaction — p. 710 Evaluating quality performance — p. 712 Theory of constraints and throughput accounting — p. 712 CHAPTER 21 Accounting for just-in-time systems — p. 728 Just-in-time systems — p. 729 Major features of JIT production systems — p. 729 Enterprise resource planning (ERP) systems — p. 734 Backflush costing — p. 735 Managing goods for sale in retail organisations — p. 745 Challenges in estimating stock-related costs and their effects — p. 751 Just-in-time purchasing — p. 752 Stock costs and their management in manufacturing organisations — p. 756 CHAPTER 22 Strategic management accounting and emerging issues — p. 770 Conceptions of strategy — p. 771 What is strategic management accounting? — p. 774 The balanced scorecard — p. 776 Evaluating the success of a strategy — p. 783 The tableau de bord — p. 785 Enterprise governance and strategy — p. 787 The strategic management accounting potential — p. 789 Emerging issues impacting management accounting — p. 790