Management Accounting: An Integrative Approach
About the Authors
Preface
Acknowledgements
Contents
Chapter One. Business Planning and Analysis: An Integrative Framework for Management Accounting
The World of Management: A n Overview
WHAT IS A MANAGER?
TYPES OF MANAGERIAL WORK
The Management Process and the Role of Management Accounting
What Is Business Planning and Analysis?
BPA AS A TOOL TO INTEGRATE MANAGEMENT ACCOUNTING PRACTICES
A FINANCIAL VS. MANAGERIAL PERSPECTIVE
The BPA Integrated Framework and Management Accounting
THE BPA DATABASE
THE DECISION DOMAINS
Management Accounting: Real WorldβReal Issues
ANALYZING PERFORMANCE
MANAGEMENT ACCOUNTING IN ACTION
IMA Statement of Ethical Professional Practice
The Management Accounting Professional
Summary
Key Terms
Questions
Exercises
Problems
Cases
Chapter Two. Measuring and Evaluating Performance
Measurement: A Matter of Perspective
FINANCIAL ACCOUNTING VS. MANAGEMENT ACCOUNTING MEASUREMENTS
Measurement: A Strategic View
GOOD MEASURES, BAD MEASURES
A SYSTEM OF MEASUREMENTSβMCDONALDβS-STYLE
Measurement and the Management Process
MEASUREMENT AND PLANNING
Action and Measurement
Using Measures to Check Progress
USING MEASUREMENTS TO ADJUST PERFORMANCE
THE BEHAVIORAL IMPACT OF PERFORMANCE MEASUREMENT
Results, Action, and Personnel/Cultural Controls
CONTROL IN A CONTINUOUS IMPROVEMENT SETTING
The Potential for Dysfunctional Consequences
Summary
Key Terms
Questions
Exercises
Problems
Database Problems
Cases
Chapter Three. Defining and Using Cost Estimates
Cost Measurement: Basic Concepts
DIRECT AND INDIRECT COSTS
DIFFERENT COSTS FOR DIFFERENT PURPOSES
The Behavior of Costs
FIXED, VARIABLE, AND MIXED COSTS
ESTIMATING AVERAGE COSTS
STEPPED COSTS AND THE RELEVANT RANGE
Cost-Volume-Profit Analysis
THE BASIC CVP FORMULA
THE VARIABLE COST INCOME STATEMENT AND OPERATING LEVERAGE
USING CVP TO IMPROVE PROFIT PERFORMANCE
EXPANDING THE BASIC CVP FORMULA
MULTIPLE PRODUCT CVP
Building an Effective Business Case
Summary
Key Terms
Appendix to Chapter 3
Questions
Exercises
Problems
Database Problems
Cases
Chapter Four. Cost Pools, Capacity, and Activity-Based Costing
From Resources to Cost Pools
RESOURCE DRIVERS: COMBINING DIRECT AND INDIRECT RESOURCES
HOMOGENOUS VS. HETEROGENEOUS COST POOLS
Capacity and Cost Pools
CAPACITY COSTING EXPLORED
MANAGED AND COMMITTED COSTS
PRODUCTIVE, NONPRODUCTIVE, AND IDLE CAPACITY
Activity-Based Costing
USING ABC TO ESTIMAT E COSTS
PEOPLE-PACED VS. MACHINE-PACED COST POOLS
From Cost Pools to Cost Objects
Summary
Key Terms
Questions
Exercises
Problems
Database Problems
Cases
Chapter Five. Understanding the Management Process
Planning for Performance
CREATING PLANS FOR ACTION
PLANNING AND THE ROLE OF INFORMATION
BENCHMARKING THE PLAN
STANDARD SETTING
Comparing Actual Results with Plan
GAP ANALYSIS
TREND ANALYSIS
RADAR CHART ANALYSIS
VARIANCE ANALYSIS
Applying Analytical Tools to Solve Problems
PARETO ANALYSIS
CAUSE-AND-EFFECT ANALYSIS
Making Adjustments
ASSESSING THE IMPACT OF CHANGE: INCREMENTAL ANALYSIS
BALANCING OBJECTIVE AND SUBJECTIVE INFORMATION
USING INCREMENTAL ANALYSIS TO BUILD AN EFFECTIVE BUSINESS CASE
Summary
Key Terms
Questions
Exercises
Problems
Database Problems
Cases
Chapter Six. Planning in the Product Domain
Target Costing: Planning in the Product Domain
UNDERSTANDING AND USING TARGET COSTING
ACHIEVING THE TARGET COST
APPLYING TARGET COSTING
COMMITTED VS. INCURRED PRODUCT COSTS
Organizing for Production
PROCESS MANUFACTURING
LARGE BATCH
ASSEMBLY LINE
CELLULAR MANUFACTURING
Estimating Product Costs
WHAT IS A PRODUCT COST ?
Estimating Overhead and Job Order Costs
PLANT-WIDE VS. DEPARTMENTAL OVERHEAD RATES
DEVELOPING AND USING DEPARTMENTAL OVERHEAD RATES
Product Costing in Complex Settings
CONVERSION COSTS IN MACHINE-PACED SETTINGS
ACTIVITY-BASED COSTS AND PRODUCT COST ESTIMATES
Summary
Key Terms
Appendix: Process Costing
Questions
Exercises
Problems
Database Problems
Cases
Chapter Seven. Assessing and Improving Product Profitability
Moving Beyond Target Costing: Attainment Phase
ATTAINING THE TARGET COST
SETTING AND MEETING STANDARDS
CREATING AND SUPPORTING CONTINUOUS IMPROVEMENT
Analyzing Product Profitability
FINANCIAL MEASURES OF PRODUCT PERFORMANCE
EVALUATING PRODUCT COST VARIANCES
Analyzing Product Performance
PRODUCT-FOCUSED RADAR ANALYSIS
PRODUCT-FOCUSED PARETO ANALYSIS
PRODUCT-FOCUSED CAUSE-AND-EFFECT ANALYSIS
Developing the Case for Change
LEVERAGING EXISTING PROCESSES: COST-VOLUME-PROFIT ANALYSIS
ASSESSING STRUCTURAL CHANGES: INCREMENTAL ANALYSIS
Developing a Product-Focused Business Case: Behavioral, Strategic and Operational Considerations
Summary
Key Terms
Questions
Exercises
Problems
Database Problems
Cases
Chapter Eight. Setting Process Expectations
Key Issues in the Process Domain
PROCESS VS. FUNCTIONAL ORGANIZATIONS
UNDERSTANDING THE PROCESS FLOW
Going Lean
LEAN ACCOUNTING
APPLYING LEAN ACCOUNTING
Activity-Based Approaches to Process Management
ACTIVITY-BASED MANAGEMENT
Activity-Based Budgeting
The Theory of Constraints, Just-in-Time Management, and Capacity
THE THEORY OF CONSTRAINTS
JUST-IN-TIME MANAGEMENT AND CELLULAR PROCESS FLOWS
A ROLE FOR CAPACITY ANALYSIS
APPLYING JIT AND CAPACITY ANALYSIS IN NONMACHINE SETTINGS
Summary
Key Terms
Appendix
Questions
Exercises
Problems
Database Problems
Cases
Chapter Nine. Evaluating and Improving Process Performance
The Continuous Improvement Philosophy
EAST MEETS WEST: KAIZEN
IDENTIFYING AND ELIMINATING WASTE: MUDA
Total Quality Management and the Cost of Quality
COST OF QUALITY REPORTING
THE TAGUCHI LOSS FUNCTION
THE MALCOLM BALDRIGE AWARD
Capacity Analysis and Reporting
CAPACITY VARIANCE ANALYSIS
Measuring Delivery Performance
Incentives and Behavior: A Process Perspective
USING INCENTIVES TO FOSTER IMPROVEMENT
BUILDING A PORTFOLIO OF INCENTIVES
BEHAVIORAL ISSUES OR, WHOβS IN CHARGE?
Summary
Key Terms
Questions
Exercises
Problems
Database Problem
Cases
Chapter Ten. Setting Performance Expectations at the Entity Level
Planning Prerequisites: Missions and Objectives
Three Organizational Archetypes
SMALL ORGANIZATIONS
FUNCTIONAL ORGANIZATIONS
DIVISIONAL ORGANIZATIONS
Planning in Small Organizations
SCENARIO PLANNING IN SMALL ORGANIZATIONS
Planning in Functional Organizations
Budgeting in Functional Organizations
FORECASTING SALES
PRODUCTION BUDGET
RAW MATERIALS, LABOR, AND OVERHEAD BUDGETS
FINISHED GOODS AND COST OF GOODS SOLD BUDGETS
SALES AND MARKETING, ADMINISTRATIVE, AND RESEARCH AND DEVELOPMENT BUDGETS
BUDGETED INCOME STATEMENT
CASH BUDGET
ENDING BALANCE SHEET
βFLEXINGβ THE BUDGET
Eliminating or Reducing the Planning Gap
Target-Setting Alternatives
Summary
Key Terms
Questions
Exercises
Problems
Database Problems
Cases
Chapter Eleven. Setting Performance Expectations in Large, Complex Organizations
Organizing for Performance
COSTS OF DECENTRALIZATION
The Role of Responsibility Centers
Planning and Budgeting Systems in Large, Complex Organizations
THREE PLANNING AND BUDGETING CYCLES
COMPANY-BY-COMPANY VARIATIONS IN PRACTICE
Performance Measurement Problems in Divisionally Organized Entities
ACCOUNTING METRICS AS SURROGATE INDICATORS OF VALUE
THE CONGRUENCE PROBLEM
THE INTERDEPENDENCY PROBLEM
THE SUBOPTIMIZATION PROBLEM
Summary
Key Terms
Questions
Exercises
Problems
Database Problems
Cases
Chapter Twelve. Evaluating and Improving Entity Performance
Evaluating Performance
Comparing Measured Results with a Performance Target
Profit Variance Analyses
DISAGGREGATING PROFIT VARIANCES BY LINE ITEM
DISAGGREGATING PROFIT VARIANCES BY RESPONSIBILITY CENTER
DISAGGREGATING PROFIT VARIANCES BY PROFIT DRIVER
Relative Performance Evaluations
Subjective Performance Evaluations
Designing an Incentive Program
PERFORMANCE REWARDS: INDIVIDUAL VS. GROUP PERFORMANCE VS. A COMBINATION
DETERMINING THE SHAPE OF THE FUNCTION LINKING REWARDS AND PERFORMANCE MEASURES
DETERMINING THE AMOUNT OF THE INCENTIVE
DETERMINING THE FORM OF INCENTIVES
Summary
Key Terms
Questions
Exercises
Problems
Database Problems
Cases
Chapter Thirteen. Setting and Achieving Targets in the Customer Domain
Measuring Customer Profitability
The Customer Value Perspective
Planning in the Customer Domain
ACQUIRING CUSTOMERS OF THE RIGHT TYPE
MAKING EXISTING CUSTOMERS MORE PROFITABLE
RETAINING EXISTING CUSTOMERS
Measuring Performance and Making Adjustments
CUSTOMER PROFIT VARIANCE ANALYSES
NONFINANCIAL PERFORMANCE MEASURES IN THE CUSTOMER DOMAIN
Summary
Key Terms
Questions
Exercises
Problems
Database Problems
Cases
Chapter Fourteen. Strategic Cost Management and the Supply Chain Domain
Key Issues in the Value Chain Domain
BASIC FEATURES OF VALUE CHAINS
STRATEGIC COST MANAGEMENT
VALUE CHAINS AND COMPETITIVE ADVANTAGE
Beyond the Basics
IDENTIFYING AND MEASURING CURRENT PERFORMANCE
RETURN ON EQUITY AND A FIRMβS BASIC ECONOMIC STRUCTURE
CHANNEL ANALYSIS
VALUE CHAIN PATTERNS
VALUE MIGRATION
Integrated Supply Chain Management
THE BASICS OF ISCM
ALIGNING THE SUPPLY CHAIN WITH BUSINESS STRATEGY
MEASURING AND CONTROLLING SUPPLY CHAIN PERFORMANCE
Summary
Key Terms
Questions
Exercises
Problems
Database Problems
Cases
Index
EULA