Horngren's Financial & Managerial Accounting: The Managerial Chapters

Cover
Title Page
Copyright
About the Authors
Brief Contents
Contents
Financial & Managerial Accounting . . . Expanding on Proven Success
Solving Learning and Teaching Challenges
Dedication
Acknowledgments
Chapter 1: Introduction to Managerial Accounting
Why Is Managerial Accounting Important?
Managers’ Role in the Organization
Managerial Accounting Functions
Ethical Standards of Managers
How Are Costs Classified?
Manufacturing Companies
Direct and Indirect Costs
Manufacturing Costs
Prime and Conversion Costs
Product and Period Costs
How Do Manufacturing Companies Prepare Financial Statements?
Balance Sheet
Income Statement
Flow of Product Costs in a Manufacturing Company
Calculating Cost of Goods Manufactured
Calculating Cost of Goods Sold
Flow of Product Costs Through the Inventory Accounts
Using the Schedule of Cost of Goods Manufactured to Calculate Unit Product Cost
What Are Business Trends That Are Affecting Managerial Accounting?
Shift Toward a Service Economy
Global Competition
Time-Based Competition
Advances in Technology
Total Quality Management
The Triple Bottom Line
How Is Managerial Accounting Used in Service and Merchandising Companies?
Calculating Cost per Service
Calculating Cost per Item
Review
Assess Your Progress
Critical Thinking
Chapter 2: Job Order Costing
How Do Manufacturing Companies Use Job Order and Process Costing Systems?
Job Order Costing
Process Costing
How Do Materials and Labor Costs Flow Through the Job Order Costing System?
Materials
Labor
How Do Overhead Costs Flow Through the Job Order Costing System?
Before the Period—Calculating the Predetermined Overhead Allocation Rate
During the Period—Allocating Overhead
What Happens When Products Are Completed and Sold?
Transferring Costs to Finished Goods Inventory
Transferring Costs to Cost of Goods Sold
How Is the Manufacturing Overhead Account Adjusted?
At the End of the Period—Adjusting for Overallocated and Underallocated Overhead
How Are Cost of Goods Manufactured and Cost of Goods Sold Calculated?
Summary of Journal Entries
Cost of Goods Manufactured and Cost of Goods Sold
How Do Service Companies Use a Job Order Costing System?
Review
Assess Your Progress
Critical Thinking
Chapter 3: Process Costing
How Do Costs Flow Through a Process Costing System?
Job Order Costing Versus Process Costing
Flow of Costs Through a Process Costing System
What Are Equivalent Units of Production, and How Are They Calculated?
How Is a Production Cost Report Prepared for the First Department?
Production Cost Report—First Process—Assembly Department
How Is a Production Cost Report Prepared for Subsequent Departments?
Production Cost Report—Second Process—Cutting Department
What Journal Entries Are Required in a Process Costing System?
Transaction 1—Materials Purchased
Transaction 2—Materials Used
Transaction 3—Labor Costs Incurred
Transaction 4—Actual Overhead Costs Incurred
Transaction 5—Overhead Allocation
Transaction 6—Transferring Costs from the Assembly Department to the Cutting Department
Transaction 7—Transferring Costs from the Cutting Department to Finished Goods Inventory
Transaction 8—Puzzles Sold and Transferring Costs from Finished Goods Inventory to Cost of Goods Sold
Transaction 9—Adjust Manufacturing Overhead
How Can the Production Cost Report Be Used to Make Decisions?
Appendix 3A: Process Costing: First-In, First-Out Method
How Is a Production Cost Report Prepared Using the FIFO Method?
Step 1: Summarize the Flow of Physical Units
Step 2: Compute Output in Terms of Equivalent Units of Production
Step 3: Compute the Cost per Equivalent Unit of Production
Step 4: Assign Costs to Units Completed and Units in Process
Comparison of Weighted-Average and FIFO Methods
Review
Assess Your Progress
Critical Thinking
Chapter 4: Lean Management Systems: Activity-Based, Just-in-Time, and Quality Management Systems
How Do Companies Assign and Allocate Costs?
Single Plantwide Rate
Multiple Department Rates
Comparing Single Plantwide Rate to Multiple Department Rates
How Is an Activity-Based Costing System Developed?
Step 1: Identify Activities and Estimate Their Total Indirect Costs
Step 2: Identify the Allocation Base for Each Activity and Estimate the Total Quantity of Each Allocation Base
Step 3: Compute the Predetermined Overhead Allocation Rate for Each Activity
Step 4: Allocate Indirect Costs to the Cost Object
Traditional Costing Systems Compared with ABC Systems
How Can Companies Use Activity-Based Management to Make Decisions?
Pricing and Product Mix Decisions
Cost Management Decisions
How Can Activity-Based Management Be Used in Service Companies?
How Do Just-in-Time Management Systems Work?
Just-in-Time Management Systems
Just-in-Time Costing
Recording Transactions in JIT
How Do Companies Manage Quality Using a Quality Management System?
Quality Management Systems
The Four Types of Quality Costs
Quality Improvement Programs
Review
Assess Your Progress
Critical Thinking
Chapter 5: Cost-Volume-Profit Analysis
How Do Costs Behave When There Is a Change in Volume?
Variable Costs
Fixed Costs
Mixed Costs
What Is Contribution Margin, and How Is It Used to Compute Operating Income?
Contribution Margin
Unit Contribution Margin
Contribution Margin Ratio
Contribution Margin Income Statement
How Is Cost-Volume-Profit (CVP) Analysis Used for Profit Planning?
Assumptions
Breakeven Point—Three Approaches
Target Profit
CVP Graph—A Graphic Portrayal
How Is CVP Analysis Used for Sensitivity Analysis?
Changes in the Sales Price
Changes in Variable Costs
Changes in Fixed Costs
Using Sensitivity Analysis
Cost Behavior Versus Management Behavior
What Are Some Other Ways CVP Analysis Can Be Used?
Margin of Safety
Operating Leverage
Sales Mix
Review
Assess Your Progress
Critical Thinking
Comprehensive Problem for Chapters M:1–M:5
Chapter 6: Variable Costing
How Does Variable Costing Differ from Absorption Costing?
Absorption Costing
Variable Costing
Comparison of Unit Product Costs
How Does Operating Income Differ Between Variable Costing and Absorption Costing?
Units Produced Equal Units Sold
Units Produced Are More Than Units Sold
Units Produced Are Less Than Units Sold
Summary
How Can Variable Costing Be Used for Decision Making in a Manufacturing Company?
Setting Sales Prices
Controlling Costs
Planning Production
Analyzing Profitability
Analyzing Contribution Margin
Summary
How Can Variable Costing Be Used for Decision Making in a Service Company?
Operating Income
Profitability Analysis
Contribution Margin Analysis
Review
Assess Your Progress
Critical Thinking
Chapter 7: Master Budgets
Why Do Managers Use Budgets?
Budgeting Objectives
Budgeting Benefits
Budgeting Procedures
Budgeting and Human Behavior
What Are the Different Types of Budgets?
Strategic and Operational Budgets
Static and Flexible Budgets
Master Budgets
How Are Operating Budgets Prepared for a Manufacturing Company?
Sales Budget
Production Budget
Direct Materials Budget
Direct Labor Budget
Manufacturing Overhead Budget
Cost of Goods Sold Budget
Selling and Administrative Expense Budget
How Are Financial Budgets Prepared for a Manufacturing Company?
Capital Expenditures Budget
Cash Budget
Budgeted Income Statement
Budgeted Balance Sheet
How Are Operating Budgets Prepared for a Merchandising Company?
Sales Budget
Inventory, Purchases, and Cost of Goods Sold Budget
Selling and Administrative Expense Budget
How Are Financial Budgets Prepared for a Merchandising Company?
Capital Expenditures Budget
Cash Budget
Budgeted Income Statement
Budgeted Balance Sheet
How Can Information Technology Be Used in the Budgeting Process?
Sensitivity Analysis
Budgeting Software
Review
Assess Your Progress
Critical Thinking
Chapter 8: Flexible Budgets and Standard Cost Systems
How Do Managers Use Budgets to Control Business Activities?
Performance Reports Using Static Budgets
Performance Reports Using Flexible Budgets
Why Do Managers Use a Standard Cost System to Control Business Activities?
Setting Standards
Standard Cost System Benefits
Variance Analysis for Product Costs
How Are Standard Costs Used to Determine Direct Materials and Direct Labor Variances?
Direct Materials Variances
Direct Labor Variances
How Are Standard Costs Used to Determine Manufacturing Overhead Variances?
Allocating Overhead in a Standard Cost System
Variable Overhead Variances
Fixed Overhead Variances
What Is the Relationship Among the Product Cost Variances, and Who Is Responsible for Them?
Variance Relationships
Variance Responsibilities
How Do Journal Entries Differ in a Standard Cost System?
Journal Entries
Standard Cost Income Statement
Review
Assess Your Progress
Critical Thinking
Chapter 9: Responsibility Accounting and Performance Evaluation
Why Do Decentralized Companies Need Responsibility Accounting?
Advantages of Decentralization
Disadvantages of Decentralization
Responsibility Accounting
What Is a Performance Evaluation System, and How Is It Used?
Goals of Performance Evaluation Systems
Limitations of Financial Performance Measurement
The Balanced Scorecard
How Do Companies Use Responsibility Accounting to Evaluate Performance in Cost, Revenue, and Profit Centers?
Controllable Versus Noncontrollable Costs
Responsibility Reports
How Does Performance Evaluation in Investment Centers Differ from Other Centers?
Return on Investment (ROI)
Residual Income (RI)
Limitations of Financial Performance Measures
How Do Transfer Prices Affect Decentralized Companies?
Objectives in Setting Transfer Prices
Setting Transfer Prices
Review
Assess Your Progress
Critical Thinking
Comprehensive Problem for Chapters M:7–M:9
Chapter 10: Short-Term Business Decisions
How Is Relevant Information Used to Make Short-Term Decisions?
Relevant Information
Relevant Nonfinancial Information
Differential Analysis
How Does Pricing Affect Short-Term Decisions?
Setting Regular Prices
Special Pricing
How Do Managers Decide Which Products to Produce and Sell?
Dropping Unprofitable Products and Segments
Product Mix
Sales Mix
How Do Managers Make Outsourcing and Processing Further Decisions?
Outsourcing
Sell or Process Further
Review
Assess Your Progress
Critical Thinking
Chapter 11: Capital Investment Decisions
What Is Capital Budgeting?
The Capital Budgeting Process
Focus on Cash Flows
How Do the Payback and Accounting Rate of Return Methods Work?
Payback
Accounting Rate of Return (ARR)
What Is the Time Value of Money?
Time Value of Money Concepts
Present Value of a Lump Sum
Present Value of an Annuity
Present Value Examples
Future Value of a Lump Sum
Future Value of an Annuity
How Do Discounted Cash Flow Methods Work?
Net Present Value (NPV)
Internal Rate of Return (IRR)
Comparing Capital Investment Analysis Methods
Sensitivity Analysis
Capital Rationing
Review
Assess Your Progress
Critical Thinking
Comprehensive Problem for Chapters M:10 and M:11
Appendix A: Present Value Tables and Future Value Tables
Appendix B: The Statement of Cash Flows
Appendix C: Financial Statement Analysis
Glossary
Subject Index