Accounting Volume 2: Managerial Accounting

Senior Contributing Authors

Mitchell Franklin, LeMoyne College (Financial Accounting)
Patty Graybeal, University of Michigan-Dearborn (Managerial Accounting)
Dixon Cooper, Ouachita Baptist University


Contributing Authors

LuAnn Bean, Florida Institute of Technology
Ian Burt, Niagara University
Shana Carr, San Diego City College
David T. Collins, Bellarmine University
Shawna Coram, Florida State College at Jacksonville
Kenneth Creech, Briar Cliff University
Alan Czyzewski, Indiana State University
Michael Gauci, Florida Atlantic University
Cindy Greenman, Embry-Riddle Aeronautical University
Michael Haselkorn, Bentley University
Christine Irujo, Westfield State University
Cynthia Johnson, University of Arkansas at Little Rock
Cynthia Khanlarian, North Carolina Agricultural and Technical State University
Terri Lukshaitis, Ferris State University
Debra Luna, Southwest University
Bill Nantz, Houston Community College
Tatyana Pashnyak, Bainbridge State College
Brian Pusateri, University of Scranton
Ellen Rackas, Muhlenberg College
Marianne Rexer, Wilkes University
Roslyn Roberts, California State University, Sacramento
Rebecca Rosner, Long Island University
Jeffrey J. Sabolish, University of Michigan-Flint
Jason E. Swartzlander, Bluffton University
Diane Tanner, University of North Florida
Mark M. Ulrich, Queensborough Community College
Janis Weber, University of Louisiana Monroe
Linda Williams, Tidewater Community College
Darryl Woolley, University of Idaho

Chapter 1 Accounting as a Tool for Managers
• Why It Matters
• 1.1 Define Managerial Accounting and Identify the Three Primary Responsibilities of Management
• 1.2 Distinguish between Financial and Managerial Accounting
• 1.3 Explain the Primary Roles and Skills Required of Managerial Accountants
• 1.4 Describe the Role of the Institute of Management Accountants and the Use of Ethical Standards
• 1.5 Describe Trends in Today’s Business Environment and Analyze Their Impact on Accounting
• Key Terms
• Summary
• Multiple Choice
• Questions
• Exercise Set A
• Exercise Set B
• Thought Provokers

Chapter 2 Building Blocks of Managerial Accounting
• Why It Matters
• 2.1 Distinguish between Merchandising, Manufacturing, and Service Organizations
• 2.2 Identify and Apply Basic Cost Behavior Patterns
• 2.3 Estimate a Variable and Fixed Cost Equation and Predict Future Costs
• Key Terms
• Summary
• Multiple Choice
• Questions
• Exercise Set A
• Exercise Set B
• Problem Set A
• Problem Set B
• Thought Provokers

Chapter 3 Cost-Volume-Profit Analysis
• Why It Matters
• 3.1 Explain Contribution Margin and Calculate Contribution Margin per Unit, Contribution Margin Ratio, and Total Contribution Margin
• 3.2 Calculate a Break-Even Point in Units and Dollars
• 3.3 Perform Break-Even Sensitivity Analysis for a Single Product Under Changing Business Situations
• 3.4 Perform Break-Even Sensitivity Analysis for a Multi-Product Environment Under Changing Business Situations
• 3.5 Calculate and Interpret a Company’s Margin of Safety and Operating Leverage
• Key Terms
• Summary
• Multiple Choice
• Questions
• Exercise Set A
• Exercise Set B
• Problem Set A
• Problem Set B
• Thought Provokers

Chapter 4 Job Order Costing
• Why It Matters
• 4.1 Distinguish between Job Order Costing and Process Costing
• 4.2 Describe and Identify the Three Major Components of Product Costs under Job Order Costing
• 4.3 Use the Job Order Costing Method to Trace the Flow of Product Costs through the Inventory Accounts
• 4.4 Compute a Predetermined Overhead Rate and Apply Overhead to Production
• 4.5 Compute the Cost of a Job Using Job Order Costing
• 4.6 Determine and Dispose of Underapplied or Overapplied Overhead
• 4.7 Prepare Journal Entries for a Job Order Cost System
• 4.8 Explain How a Job Order Cost System Applies to a Nonmanufacturing Environment
• Key Terms
• Summary
• Multiple Choice
• Questions
• Exercise Set A
• Exercise Set B
• Problem Set A
• Problem Set B
• Thought Provokers

Chapter 5 Process Costing
• Why It Matters
• 5.1 Compare and Contrast Job Order Costing and Process Costing
• 5.2 Explain and Identify Conversion Costs
• 5.3 Explain and Compute Equivalent Units and Total Cost of Production in an Initial Processing Stage
• 5.4 Explain and Compute Equivalent Units and Total Cost of Production in a Subsequent Processing Stage
• 5.5 Prepare Journal Entries for a Process Costing System
• Key Terms
• Summary
• Multiple Choice
• Questions
• Exercise Set A
• Exercise Set B
• Problem Set A
• Problem Set B
• Thought Provokers

Chapter 6 Activity-Based, Variable, and Absorption Costing
• Why It Matters
• 6.1 Calculate Predetermined Overhead and Total Cost under the Traditional Allocation Method
• 6.2 Describe and Identify Cost Drivers
• 6.3 Calculate Activity-Based Product Costs
• 6.4 Compare and Contrast Traditional and Activity-Based Costing Systems
• 6.5 Compare and Contrast Variable and Absorption Costing
• Key Terms
• Summary
• Multiple Choice
• Questions
• Exercise Set A
• Exercise Set B
• Problem Set A
• Problem Set B
• Thought Provokers

Chapter 7 Budgeting
• Why It Matters
• 7.1 Describe How and Why Managers Use Budgets
• 7.2 Prepare Operating Budgets
• 7.3 Prepare Financial Budgets
• 7.4 Prepare Flexible Budgets
• 7.5 Explain How Budgets Are Used to Evaluate Goals
• Key Terms
• Summary
• Multiple Choice
• Questions
• Exercise Set A
• Exercise Set B
• Problem Set A
• Problem Set B
• Thought Provokers

Chapter 8 Standard Costs and Variances
• Why It Matters
• 8.1 Explain How and Why a Standard Cost Is Developed
• 8.2 Compute and Evaluate Materials Variances
• 8.3 Compute and Evaluate Labor Variances
• 8.4 Compute and Evaluate Overhead Variances
• 8.5 Describe How Companies Use Variance Analysis
• Key Terms
• Summary
• Multiple Choice
• Questions
• Exercise Set A
• Exercise Set B
• Problem Set A
• Problem Set B
• Thought Provokers

Chapter 9 Responsibility Accounting and Decentralization
• Why It Matters
• 9.1 Differentiate between Centralized and Decentralized Management
• 9.2 Describe How Decision-Making Differs between Centralized and Decentralized Environments
• 9.3 Describe the Types of Responsibility Centers
• 9.4 Describe the Effects of Various Decisions on Performance Evaluation of Responsibility Centers
• Key Terms
• Summary
• Multiple Choice
• Questions
• Exercise Set A
• Exercise Set B
• Problem Set A
• Problem Set B
• Thought Provokers

Chapter 10 Short-Term Decision Making
• Why It Matters
• 10.1 Identify Relevant Information for Decision-Making
• 10.2 Evaluate and Determine Whether to Accept or Reject a Special Order
• 10.3 Evaluate and Determine Whether to Make or Buy a Component
• 10.4 Evaluate and Determine Whether to Keep or Discontinue a Segment or Product
• 10.5 Evaluate and Determine Whether to Sell or Process Further
• 10.6 Evaluate and Determine How to Make Decisions When Resources Are Constrained
• Key Terms
• Summary
• Multiple Choice
• Questions
• Exercise Set A
• Exercise Set B
• Problem Set A
• Problem Set B
• Thought Provokers

Chapter 11 Capital Budgeting Decisions
• Why It Matters
• 11.1 Describe Capital Investment Decisions and How They Are Applied
• 11.2 Evaluate the Payback and Accounting Rate of Return in Capital Investment Decisions
• 11.3 Explain the Time Value of Money and Calculate Present and Future Values of Lump Sums and Annuities
• 11.4 Use Discounted Cash Flow Models to Make Capital Investment Decisions
• 11.5 Compare and Contrast Non-Time Value-Based Methods and Time Value-Based Methods in Capital Investment Decisions
• Key Terms
• Summary
• Multiple Choice
• Questions
• Exercise Set A
• Exercise Set B
• Problem Set A
• Problem Set B
• Thought Provokers

Chapter 12 Balanced Scorecard and Other Performance Measures
• Why It Matters
• 12.1 Explain the Importance of Performance Measurement
• 12.2 Identify the Characteristics of an Effective Performance Measure
• 12.3 Evaluate an Operating Segment or a Project Using Return on Investment, Residual Income, and Economic Value Added
• 12.4 Describe the Balanced Scorecard and Explain How It Is Used
• Key Terms
• Summary
• Multiple Choice
• Questions
• Exercise Set A
• Exercise Set B
• Problem Set A
• Problem Set B
• Thought Provokers

Chapter 13 Sustainability Reporting
• Why It Matters
• 13.1 Describe Sustainability and the Way It Creates Business Value
• 13.2 Identify User Needs for Information
• 13.3 Discuss Examples of Major Sustainability Initiatives
• 13.4 Future Issues in Sustainability
• Key Terms
• Summary
• Multiple Choice
• Questions
• Thought Provokers