Cost Management : A Strategic Emphasis,9780073128153

Cost Management : A Strategic Emphasis

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Edition: 4th
ISBN13: 9780073128153
ISBN10: 0073128155
Format: Hardcover
Pub. Date: 2006-10-03
Publisher(s): McGraw-Hill/Irwin
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Summary

Cost Management: A Strategic Emphasis, by Blocher/Stout/Cokins/Chen is the first cost accounting text to offer integrated coverage of strategic management topics in cost accounting. The text is written to help students understand more about management and the role of cost accounting in helping an organization succeed. This text aims to teach management concepts and methods, and to demonstrate how managers use cost management information to make better decisions and improve their organization's competitiveness. In teaching these key management skills, the text takes on a strategic focus. It addresses issues such as:How does a firm compete? What type of cost management information is needed for a firm to succeed? How does the management accountant develop and present this information?This text helps students learn why, when, and how cost information is used to make effective decisions that lead a firm to success.

Table of Contents

PART ONE INTRODUCTION TO COST MANAGEMENT
2(168)
Cost Management and Strategy: An Overview
2(28)
The Uses of Cost Management
3(4)
The Four Functions of Management
4(2)
Strategic Management and Strategic Cost Management
6(1)
Types of Organizations
6(1)
The Contemporary Business Environment
7(3)
The Global Business Environment
7(1)
Manufacturing Technologies
8(1)
The New Economy: Use of Information Technology, the Internet, and E-Commerce
8(1)
Focus on the Customer
8(1)
Management Organization
9(1)
Social, Political, and Cultural Considerations
9(1)
The Strategic Focus of Cost Management
10(1)
Contemporary Management Techniques
10(3)
Benchmarking
10(1)
Total Quality Management
11(1)
Business Process Improvement
11(1)
Activity-Based Costing and Management
11(1)
Reengineering
11(1)
The Theory of Constraints
11(1)
Mass Customization
12(1)
Target Costing
12(1)
Life-Cycle Costing
12(1)
The Value Chain
12(1)
The Balanced Scorecard
12(1)
How a Firm Succeeds: The Competitive Strategy
13(2)
Strategic Measures of Success
14(1)
Developing a Competitive Strategy: Strategic Positioning
15(2)
Cost Leadership
15(1)
Differentiation
16(1)
Other Strategic Issues
16(1)
The Professional Environment of Cost Management
17(4)
Professional Organizations
17(2)
Professional Certifications
19(1)
Professional Ethics
20(1)
Summary
21(1)
Appendix A: More about Strategy
22(1)
Key Terms
23(1)
Comments on Cost Management in Action
23(1)
Self-Study Problem
24(1)
Questions
24(1)
Brief Exercises
25(1)
Exercises
25(1)
Problems
26(3)
Solution to Self-Study Problem
29(1)
Implementing Strategy: The Balanced Scorecard and the Value Chain
30(24)
Strengths-Weaknesses-Opportunities-Threats (SWOT) Analysis
31(2)
Execution
33(2)
Value-Chain Analysis
35(3)
Value-Chain Analysis in Computer Manufacturing
37(1)
The Balanced Scorecard
38(5)
The Balanced Scorecard Reflects Strategy
39(1)
The Strategy Map
40(2)
Expanding the Balanced Scorecard Sustainability
42(1)
Summary
43(1)
Key Terms
43(1)
Comments on Cost Management in Action
43(1)
Self-Study Problems
44(1)
Questions
44(1)
Brief Exercises
45(1)
Exercises
45(1)
Problems
45(7)
Solutions to Self-Study Problems
52(2)
Basic Cost Management Concepts
54(30)
Cost Drivers, Cost Pools, and Cost Objects
55(9)
Cost Assignment and Cost Allocation: Direct and Indirect Costs
55(3)
Cost Drivers and Cost Behavior
58(1)
Activity-Based Cost Drivers
58(1)
Volume-Based Cost Drivers
59(4)
Structural and Executional Cost Drivers
63(1)
Cost Concepts for Product and Service Costing
64(4)
Cost Accounting for Products and Services
64(1)
Product Costs and Period Costs
64(1)
Manufacturing, Merchandising, and Service Costing
65(3)
Cost Concepts for Planning and Decision Making
68(2)
Relevant Cost
68(1)
Attributes of Cost Information for Decision Making
69(1)
Cost Concepts for Management and Operational Control
70(1)
Controllability
70(1)
Summary
70(1)
Key Terms
71(1)
Comments on Cost Management in Action
71(1)
Self-Study Problem
71(1)
Questions
72(1)
Brief Exercises
72(1)
Exercises
73(5)
Problems
78(4)
Solution to Self-Study Problem
82(2)
Job Costing
84(36)
Product Costing Systems
84(2)
Cost Accumulation: Job or Process Costing?
85(1)
Cost Measurement: Actual, Normal, or Standard Costing?
85(1)
Overhead Assignment under Normal Costing: Volume-Based or Activity-Based?
85(1)
The Strategic Role of Product Costing
86(1)
Job Costing: The Cost Flows
86(7)
Direct Materials Costs
87(2)
Direct Labor Costs
89(2)
Factory Overhead Costs
91(1)
Actual Costing
91(1)
Normal Costing
91(2)
The Application of Factory Overhead in Normal Costing
93(4)
Cost Drivers for Factory Overhead Application
93(1)
Applying Factory Overhead Costs
93(1)
Departmental Overhead Rates
94(1)
Disposition of Underapplied and Overapplied Overhead
95(2)
Job Costing in Service Industries
97(1)
Operation Costing
98(2)
Summary
100(1)
Appendix A: Spoilage, Rework, and Scrap in Job Costing
101(2)
Key Terms
103(1)
Comments on Cost Management in Action
103(1)
Self-Study Problem
103(1)
Questions
104(1)
Brief Exercises
104(1)
Exercises
105(3)
Problems
108(10)
Solution to Self-Study Problem
118(2)
Activity-Based Costing and Management
120(50)
The Strategic Role of Activity-Based Costing
120(1)
Role of Volume-Based Costing
121(1)
Activity-Based Costing
122(2)
Resources, Activities, Resource Consumption Cost Drivers, and Activity Consumption Cost Drivers
122(1)
What Is Activity-Based Costing?
122(1)
The Two-Stage Cost Assignment Procedure
123(1)
Steps in Developing an Activity-Based Costing System
124(2)
Step 1: Identify Resource Costs and Activities
124(1)
Step 2: Assign Resource Costs to Activities
125(1)
Step 3: Assign Activity Costs to Cost Objects
126(1)
Benefits and Limitations of Activity-Based Costing
126(2)
Benefits
126(1)
Limitations
127(1)
A Comparison of Volume-Based and Activity-Based Costing
128(2)
Volume-Based Costing
128(1)
Activity-Based Costing
129(1)
Activity-Based Management
130(3)
What Is Activity-Based Management?
130(1)
Activity Analysis
131(1)
Value-Added Analysis
131(2)
Activity-Based Costing/Management (ABC/M) Applications
133(5)
ABC/M in Manufacturing: Industrial Air Conditioner Units
133(2)
ABC/M Application in the Service Industry: A Retirement and Assisted Living Community
135(1)
ABC/M Applications in Government
136(2)
Customer Profitability Analysis
138(4)
Customer Cost Analysis
139(1)
Customer Profitability Analysis
140(1)
Customer Value Assessment
141(1)
Implementation Issues
142(2)
Multiple-Stage Activity-Based Costing
143(1)
Time-Driven Activity-Based Costing
143(1)
Summary
144(1)
Key Terms
144(1)
Comments on Cost Management in Action
145(1)
Self-Study Problem
145(1)
Questions
146(1)
Brief Exercises
146(1)
Exercises
147(6)
Problems
153(14)
Solution to Self-Study Problem
167(3)
PART TWO PLANNING AND DECISION MAKING
170(234)
Cost Estimation
170(48)
Strategic Role of Cost Estimation
170(2)
Using Cost Estimation to Predict Future Costs
171(1)
Using Cost Estimation to Identify Cost Drivers
171(1)
Six Steps of Cost Estimation
172(1)
Step 1: Define the Cost Object to Be Estimated
172(1)
Step 2: Determine the Cost Drivers
172(1)
Step 3: Collect Consistent and Accurate Data
172(1)
Step 4: Graph the Data
172(1)
Step 5: Select and Employ the Estimation Method
173(1)
Step 6: Assess the Accuracy of the Cost Estimation
173(1)
Cost Estimation Methods
173(10)
An Illustration of Cost Estimation
173(1)
High-Low Method
173(3)
Work Measurement
176(1)
Regression Analysis
176(6)
Using Spreadsheet Software for Regression Analysis
182(1)
Data Requirements and Implementation Problems
183(2)
Data Accuracy
183(1)
Selecting the Time Period
183(1)
Nonlinearity Problems
184(1)
Summary
185(1)
Appendix A: Learning Curve Analysis
186(3)
Appendix B: Regression Analysis
189(6)
Key Terms
195(1)
Comments on Cost Management in Action
195(1)
Self-Study Problems
196(1)
Questions
197(1)
Brief Exercises
198(1)
Exercises
199(3)
Problems
202(12)
Solutions to Self-Study Problems
214(4)
Cost-Volume-Profit Analysis
218(36)
Cost-Volume-Profit Analysis
218(2)
Contribution Margin and Contribution Income Statement
219(1)
Strategic Role of CVP Analysis
220(2)
CVP Analysis for Breakeven Planning
222(3)
Equation Method: For Breakeven in Units
222(1)
Equation Method: For Breakeven in Dollars
222(1)
Contribution Margin Method
223(2)
CVP Analysis for Profit Planning
225(4)
Revenue Planning
225(1)
Cost Planning
225(3)
Including Income Taxes in CVP Analysis
228(1)
CVP Analysis for Activity-Based Costing
229(2)
Sensitivity Analysis of CVP Results
231(3)
What-If Analysis of Sales: Contribution Margin and Contribution Margin Ratio
231(1)
Margin of Safety
231(1)
Operating Leverage
232(2)
CVP Analysis with Two or More Products
234(2)
CVP Analysis for Not-for-Profit Organizations
236(1)
Assumptions and Limitations of CVP Analysis
236(2)
Linearity and the Relevant Range
236(1)
Identifying Fixed and Variable Costs for CVP Analysis
237(1)
Summary
238(1)
Key Terms
239(1)
Comments on Cost Management in Action
239(1)
Self-Study Problem
239(1)
Questions
239(1)
Brief Exercises
240(1)
Exercises
240(2)
Problems
242(11)
Solution to Self-Study Problem
253(1)
Strategy and the Master Budget
254(62)
Role of Budgets
255(1)
Strategy, the Long-Term Plan, and the Master Budget
256(4)
Importance of Strategy in Budgeting
256(2)
Formulation of Strategy
258(1)
Strategic Goals and Long-Term Objectives
258(1)
Short-Term Objectives and the Master Budget
258(2)
Budgeting Process
260(3)
Budget Committee
260(1)
Budget Period
261(1)
Budget Guidelines
262(1)
Initial Budget Proposal
262(1)
Negotiation, Review, and Approval
262(1)
Revision
263(1)
Master Budget
263(13)
Sales Budget
263(2)
Manufacturing Budgets
265(4)
Merchandise Purchases Budget
269(2)
Selling and General Administrative Expense Budget
271(1)
Cash Receipts (Collections) Budget
272(1)
Cash Budget
272(2)
Budgeted Income Statement
274(1)
Budgeted Balance Sheet
274(2)
Budgeting in Service Companies and International Firms, and Not-for-Profit Organizations
276(3)
Budgeting in Service Industries
276(2)
Budgeting in Not-for-Profit Organizations
278(1)
Budgeting in International Settings
278(1)
Alternative Budgeting Approaches
279(3)
Zero-Base Budgeting (ZBB)
279(1)
Activity-Based Budgeting (ABB)
280(1)
Kaizen (Continuous Improvement) Budgeting
281(1)
Computer Software in Budgeting and Planning
282(2)
Ethical and Behavioral Issues in Budgeting
284(3)
Ethics in Budgeting
284(1)
Goal Congruence
284(1)
Difficulty Level of the Budget Target
285(1)
Authoritative or Participative Budgeting?
286(1)
Role of the Budget Department or Controller
286(1)
Summary
287(1)
Key Terms
287(1)
Comments on Cost Management in Action
287(1)
Self-Study Problems
288(1)
Questions
289(1)
Brief Exercises
290(1)
Exercises
291(8)
Problems
299(14)
Solutions to Self-Study Problems
313(3)
Decision Making with Relevant Costs and a Strategic Emphasis
316(44)
The Decision-Making Process
317(1)
Relevant Cost Analysis
318(3)
Relevant Cost Information
318(1)
Batch-Level Cost Drivers
319(1)
Fixed Costs and Depreciation
320(1)
Other Relevant Information: Opportunity Costs
320(1)
Strategic Cost Analysis
321(1)
Special-Order Decisions
322(3)
Cost Analysis
322(1)
Strategic Analysis
323(1)
Is TTS Now Operating at Full Capacity?
323(1)
Excessive Relevant Cost Pricing
324(1)
Other Important Factors
325(1)
Make, Lease, or Buy Decision
325(2)
Cost Analysis
325(2)
Strategic Analysis
327(1)
Sell Before or After Additional Processing
327(2)
Cost Analysis
327(1)
Strategic Analysis
328(1)
Profitability Analysis
329(3)
Profitability Analysis: Keep or Drop a Product Line
329(1)
Strategic Analysis
330(1)
Profitability Analysis: Evaluating Programs
331(1)
Profitability Analysis: Service and Not-for-Profit Organizations
331(1)
Multiple Products and Limited Resources
332(3)
Case 1: One Production Constraint
332(1)
Case 2: Two or More Production Constraints
333(2)
Behavioral and Implementation Issues
335(2)
Consideration of Strategic Objectives
335(1)
Predatory Pricing
335(1)
Replacement of Variable Costs with Fixed Costs
336(1)
Proper Identification of Relevant Factors
336(1)
Summary
337(1)
Appendix A: Linear Programming and the Product Mix Decision
337(3)
Key Terms
340(1)
Comments on Cost Management in Action
340(1)
Self-Study Problems
340(1)
Questions
341(1)
Brief Exercises
341(1)
Exercises
342(4)
Problems
346(12)
Solutions to Self-Study Problems
358(2)
Cost Planning for the Product Life Cycle: Target Costing, Theory of Constraints, and Strategic Pricing
360(44)
Target Costing
362(7)
Value Engineering
363(2)
Target Costing and Kaizen
365(1)
An Illustration: Target Costing in Health Product Manufacturing
366(1)
An Illustration Using Quality: Function Deployment (OFD)
367(1)
Benefits of Target Costing
368(1)
The Theory of Constraints
369(7)
The Use of the Theory of Constraints Analysis in Health Product Manufacturing
370(1)
Steps in the Theory of Constraints Analysis
370(5)
Theory of Constraints Reports
375(1)
Activity-Based Costing and the Theory of Constraints
375(1)
Life-Cycle Costing
376(3)
The Importance of Design
377(1)
The Use of Life-Cycle Costing in a Software Firm
378(1)
Strategic Pricing Using the Product Life Cycle
379(3)
Pricing Using the Cost Life Cycle
379(2)
Strategic Pricing for Phases of the Sales Life Cycle
381(1)
The Use of the Sales Life Cycle in Computer Manufacturing
381(1)
Summary
382(1)
Appendix A: Using the Flow Diagram to Identify Constraints
382(2)
Key Terms
384(1)
Comments on Cost Management in Action
384(1)
Self-Study Problem
384(1)
Questions
385(1)
Brief Exercises
385(1)
Exercises
386(5)
Problems
391(10)
Solution to Self-Study Problem
401(3)
PART THREE PROCESS COSTING AND COST ALLOCATION
404(90)
Process Costing
404(90)
Characteristics of Process Costing Systems
405(3)
Equivalent Units
405(1)
Flow of Costs in Process Costing
406(1)
Steps in Process Costing
407(1)
Process Costing Methods
408(1)
Illustration of Process Costing
408(11)
Weighted-Average Method
409(3)
First-In, First-Out (FIFO) Method
412(7)
Comparison of Weighted-Average and FIFO Methods
419(1)
Process Costing with Multiple Departments
419(6)
Transferred-In-Costs
420(1)
Weighted-Average Method
420(2)
The FIFO Method
422(3)
Journal Entries for Process Costing
425(1)
Implementation and Enhancement of Process Costing
426(2)
Activity-Based Costing and the Theory of Constraints
426(1)
Just-in-Time Systems and Backflush Costing
427(1)
Summary
428(1)
Appendix A: Spoilage in Process Costing
428(4)
Key Terms
432(1)
Comments on Cost Management in Action
432(1)
Self-Study Problems
432(1)
Questions
433(1)
Brief Exercises
434(1)
Exercises
434(3)
Problems
437(11)
Solutions to Self-Study Problems
448(6)
Appendix B: Cost Allocation: Service Departments and Joint Product Costs
454(1)
The Strategic Role of Cost Allocation
455(1)
The Ethical Issues of Cost Allocation
456(1)
Cost Allocation to Service and Production Departments
456(12)
Departmental Approach
457(11)
Cost Allocation in Service Industries
468(2)
Joint Product Costing
470(5)
Methods for Allocating Joint Costs to Joint Products
471(4)
Summary
475(1)
Appendix A By-Product Costing
475(3)
Key Terms
478(1)
Comments on Cost Management in Action
478(1)
Self-Study Problem
478(1)
Questions
478(1)
Brief Exercises
479(1)
Exercises
480(1)
Problems
481(11)
Solution to Self-Study Problem
492(2)
PART FOUR OPERATIONAL CONTROL
494(204)
The Flexible Budget and Standard Costing: Direct Materials and Direct Labor
494(56)
Management Accounting and Control Systems
495(1)
Evaluating Operating Performance
495(2)
Effectiveness
495(2)
Standard Costs
497(7)
Standard Costs versus a Standard Cost System
497(1)
Types of Standards
498(1)
Selection of Standards
499(1)
Sources of Standards
499(2)
Standard-Setting Procedures
501(1)
Establishing Standard Costs
501(1)
Standard Cost Sheet
502(2)
Flexible Budgets and Operational Control
504(12)
The Flexible Budget
504(1)
Assessing Efficiency
505(2)
Breakdown of the Total Flexible Budget Variance
507(1)
Selling Price Variance
508(1)
Variable Cost Flexible Budget Variances
508(1)
Further Analysis of the Total Variable Cost Flexible Budget Variance
509(1)
General Model for Analysis of Variable Cost Variances
509(1)
Direct Materials Variances
510(3)
Direct Labor Variances
513(2)
Timing of Variance Recognition
515(1)
Effect of the New Manufacturing Technology
516(1)
Behavioral and Implementation Issues
516(1)
Summary
517(2)
Appendix A: Recording Cost Flows and Variances in a Standard Cost System
519(3)
Key Terms
522(1)
Comments on Cost Management in Action
522(1)
Self-Study Problems
523(1)
Questions
524(1)
Brief Exercises
525(1)
Exercises
526(8)
Problems
534(13)
Solutions to Self-Study Problems
547(3)
The Flexible Budget: Factory Overhead
550(60)
Standard Overhead Costs: Planning versus Control
551(1)
Variance Analysis for Factory Overhead Costs
552(10)
Variable Overhead Cost Analysis
553(1)
Interpretation and Implications of Variable Overhead Variances
554(1)
Fixed Overhead Cost Analysis
555(4)
Interpretation of Fixed Factory Overhead Variances
559(1)
Alternative Analyses of Factory Overhead Variances
559(2)
Summary of Factory Overhead Variances
561(1)
Recording Standard Factory Overhead Costs
562(3)
Journal Entries and Variances for Factory Overhead Costs
562(1)
Variance Disposition
563(2)
Standard Costs in Service Organizations
565(3)
Overhead Variances in ABC Systems
568(4)
ABC-Based Flexible Budgets for Control
569(3)
Investigation of Variances
572(4)
Type of Standard
572(1)
Expectations of the Organization
572(1)
Magnitude, Pattern, and Impact of a Variance
572(1)
Causes and Controllability
573(3)
Company Practices
576(1)
Summary
576(2)
Appendix A: Variance Investigation Decisions Under Uncertainty
578(2)
Key Terms
580(1)
Comments on Cost Management in Action
580(1)
Self-Study Problems
581(1)
Questions
582(1)
Brief Exercises
583(1)
Exercises
583(1)
Problems
583(23)
Solutions to Self-Study Problems
606(4)
The Flexible Budget: Further Analysis of Productivity and Sales
610(38)
The Strategic Role of the Flexible Budget in Analyzing Sales and Productivity
610(2)
Analyzing Productivity
612(7)
Partial Productivity
613(5)
Total Productivity
618(1)
Analyzing Sales: Comparison with the Master Budget
619(8)
Sales Volume Variance Decomposed: Sales Quantity and Sales Mix Variances
620(4)
Sales Quantity Variance Decomposed: Market Size and Market Share Variances
624(3)
Analyzing Sales: Comparison with Prior Year Results
627(3)
Analysis of Selling Price and Volume Variances
628(1)
Analysis of Mix and Quantity Variances
629(1)
Analysis of Variable Cost Variances
629(1)
Summary
630(1)
Key Terms
631(1)
Comments on Cost Management in Action
631(1)
Self-Study Problems
631(1)
Questions
632(1)
Brief Exercises
633(1)
Exercises
634(2)
Problems
636(8)
Solutions to Self-Study Problems
644(4)
The Management and Control of Quality
648(50)
The Strategic Importance of Quality
649(3)
Baldrige Quality Award
649(1)
ISO 9000 and ISO 14000
649(1)
Quality and Profitability: Conceptual Linkage
650(1)
Empirical Evidence---Does TQM Matter?
651(1)
Accounting's Role in the Management and Control of Quality
652(1)
Chapter Preview
652(1)
Total Quality Management (TQM)
652(2)
The Meaning of Quality
652(2)
Characteristics of Total Quality Management
654(1)
The Need for a New Accounting System
654(1)
Comprehensive Framework for Managing and Controlling Quality
654(3)
Knowledge of Business Processes
654(1)
Role of the Customer
655(1)
Financial Component
656(1)
Nonfinancial Performance Indicators
656(1)
Feedback Loops
656(1)
Relevant Cost Analysis
656(1)
Link to Operations Management
656(1)
Breadth of the System
656(1)
Setting Quality-Related Expectations
657(4)
Setting Quality Expectations: A Six Sigma Approach
657(2)
Setting Quality Expectations: Goalpost versus Absolute Conformance Standards
659(1)
Goalpost Conformance
659(1)
Absolute Quality Conformance
660(1)
Goalpost or Absolute Conformance?
660(1)
Financial Measures and Costs of Quality
661(5)
Relevant Cost Analysis
661(1)
Cost of Quality (COQ) Reporting
662(2)
Quality Cost Reports
664(1)
Data Definition, Sources, and Collection
664(1)
Report Format
665(1)
Illustration of a Cost of Quality Report
665(1)
COQ and Activity-Based Costing (ABC)
666(1)
Nonfinancial Quality Indicators
666(2)
Internal Nonfinancial Quality Metrics
666(1)
External (Customer Satisfaction) Quality Metrics
667(1)
Role of Nonfinancial Performance Measures
667(1)
Detecting and Correcting Poor Quality
668(5)
Detecting Poor Quality
668(2)
Taking Corrective Action
670(3)
Summary
673(1)
Appendix A: Taguchi Quality Loss Functions
673(3)
Key Terms
676(1)
Comments on Cost Management in Action
677(1)
Self-Study Problems
677(1)
Questions
678(1)
Brief Exercises
679(1)
Exercises
680(7)
Problems
687(9)
Solutions to Self-Study Problems
696(2)
PART FIVE MANAGEMENT CONTROL
698(86)
Management Control and Strategic Performance Measurement
698(44)
Performance Evaluation and Control
699(3)
Operational Control versus Management Control
699(1)
Objectives of Management Control
699(1)
Employment Contracts
700(2)
Design of Management Control Systems for Motivation and Evaluation
702(2)
Informal Control Systems
703(1)
Formal Control Systems
704(1)
Strategic Performance Measurement
704(2)
Decentralization
704(1)
Types of Strategic Business Units
705(1)
The Balanced Scorecard
706(1)
Cost Strategic Business Units
706(5)
Strategic Issues Related to Implementing Cost SBUs
706(2)
Implementing Cost SBUs in Departments
708(2)
Outsourcing Cost SBUs
710(1)
Cost Allocation
710(1)
Revenue Strategic Business Units
711(1)
Profit Strategic Business Units
712(4)
Strategic Role of Profit SBUs
712(1)
The Contribution Income Statement
713(1)
Variable Costing versus Full Costing
714(2)
Strategic Performance Measurement and the Balanced Scorecard
716(4)
Management Control in Service Firms and Not-for-Profit Organizations
720(2)
Summary
722(1)
Key Terms
722(1)
Comments on Cost Management in Action
722(1)
Self-Study Problem
723(1)
Questions
723(1)
Brief Exercises
724(1)
Exercises
725(2)
Problems
727(13)
Solution to Self-Study Problem
740(2)
Strategic Investment Units and Transfer Pricing
742(42)
Part One: Strategic Investment Units
743(1)
The Strategic Role of Investment Units
743(1)
Return on Investment
744(9)
ROI Equals Return on Sales Times Asset Turnover
744(1)
Illustration of Evaluation Using Return on Investment
744(3)
Use of Return on Investment
747(4)
Strategic Issues in Using Return on Investment
751(2)
Residual Income
753(2)
Limitations of Residual Income
754(1)
Economic Value Added
755(1)
Using Average Total Assets
755(1)
Part Two: Transfer Pricing
756(1)
When Is Transfer Pricing Important?
756(1)
Objectives of Transfer Pricing
757(1)
International Transfer Pricing Objectives
757(1)
Transfer Pricing Methods
758(3)
Choosing the Right Transfer Pricing Method
758(3)
International Tax Issues in Transfer Pricing
761(2)
The Arm's-Length Standard
761(1)
Advance Pricing Agreements
762(1)
Summary
763(1)
Key Terms
763(1)
Comments on Cost Management in Action
763(1)
Self-Study Problems
764(1)
Questions
764(1)
Brief Exercises
764(1)
Exercises
765(6)
Problems
771(11)
Solutions to Self-Study Problems
782(2)
PART SIX ADVANCED TOPICS IN COST MANAGEMENT
784(86)
Management Compensation, Business Analysis, and Business Valuation
784(34)
Part One: Management Compensation
784(1)
Types of Management Compensation
785(1)
Strategic Role and Objectives of Management Compensation
786(2)
Design the Compensation Plan for Existing Strategic Conditions
786(1)
Risk Aversion and Management Compensation
786(1)
Ethical Issues
787(1)
Objectives of Management Compensation
787(1)
Bonus Plans
788(4)
Bases for Bonus Compensation
788(2)
Bonus Compensation Pools
790(1)
Bonus Payment Options
790(2)
Tax Planning and Financial Reporting
792(1)
Management Compensation in Service Firms
793(1)
Part Two: Business Analysis and Business Valuation
794(1)
Business Analysis
795(3)
The Balanced Scorecard
795(1)
Financial Ratio Analysis
795(3)
Business Valuation
798(3)
The Discounted Cash Flow Method
798(2)
Multiples-Based Valuation
800(1)
Enterprise Value
800(1)
Summary
801(1)
Key Terms
801(1)
Comments on Cost Management in Action
801(1)
Self-Study Problem
802(1)
Questions
802(1)
Brief Exercises
803(1)
Exercises
803(4)
Problems
807(9)
Solution to Self-Study Problem
816(2)
Capital Budgeting
818(52)
Strategy and the Capital Budgeting Process
819(2)
Underlying Nature of Capital Expenditures
819(1)
Organizational Strategy and the Nature of Capital Investment Analysis
819(1)
Effect of Capital Expenditures on Strategic Cost Drivers
820(1)
Chapter Overview---Where Are We Headed?
821(1)
The Role of Accounting in the Capital Budgeting Process
821(3)
Linkage to Master Budget
821(1)
Linkage to the Balanced Scorecard (BSC)
821(2)
Generation of Relevant Financial Data for Decision-Making Purposes
823(1)
Conducting Post-Audits
823(1)
Identification of Relevant Cash-Flow Data for Capital Expenditure Analysis
824(8)
Why Focus on Cash Flows?
824(1)
Cash Flows---A Framework for Analysis
825(1)
Sample Data Set: Mendoza Company---Equipment Replacement Decision
825(2)
Determining After-Tax Cash Flows for Capital Investment Analysis
827(5)
Recap---Cash Flow Information for the Mendoza Company Investment Proposal
832(1)
Discounted Cash Flow (DCF) Capital Budgeting Decision Models
832(7)
Types of Capital Budgeting Decision Models
832(1)
DCF Models: Specifying the Discount Rate
832(2)
Estimating the WACC
834(2)
Net Present Value (NPV) Decision Model
836(1)
Internal Rate of Return (IRR) Decision Model
837(2)
Comparison of NPV and IRR Methods: Which to Use?
839(1)
Sensitivity Analysis
839(3)
What-If-Analyses
839(2)
Scenario Analysis
841(1)
Monte Carlo Simulation
841(1)
Other Capital Budgeting Decision Models
842(4)
Payback Period
842(2)
Accounting (Book) Rate of Return
844(2)
Behavioral Issues in Capital Budgeting
846(2)
Common Behavioral Problems: Cost Escalation, Incrementalism, and Uncertainty Intolerance
846(1)
Goal-Congruency Issues
847(1)
Addressing the Goal-Congruency Problem
847(1)
Summary
848(1)
Appendix A: DCF Models: Some Advanced Considerations
848(3)
Key Terms
851(1)
Comments on Cost Management in Action
851(1)
Self-Study Problem
852(1)
Questions
853(1)
Brief Exercises
854(1)
Exercises
855(3)
Problems
858(8)
Solution to Self-Study Problem
866(4)
Present Value Tables 870(2)
Glossary 872(10)
Index 882

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