Managerial Accounting (9th Edition), Notas de estudo de Economia Agroindustrial

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N I N T H E D I T I O N

Managerial

Accounting

N I N T H E D I T I O N

Susan V. Crosson, M.S. Accounting, C.P.A

Santa Fe College

Belverd E. Needles, Jr., Ph.D., C.P.A., C.M.A.

DePaul University

Managerial

Accounting

Managerial Accounting, Ninth Edition Susan Crosson, Belverd Needles Vice President of Editorial, Business: Jack W. Calhoun Editor in Chief: Rob Dewey Executive Editor: Sharon Oblinger Supervising Developmental Editor: Katie Yanos Sr. Marketing Manager: Kristen Hurd Marketing Coordinator: Heather Mooney Sr. Marketing Communications Manager: Libby Shipp Content Project Manager: Darrell Frye Media Editor: Bryan England Editorial Assistant: Julie Warwick Frontlist Buyer, Manufacturing: Doug Wilke Production Service: S4Carlisle Publishing Services Sr. Art Director: Stacy Jenkins Shirley Cover and Internal Designer: Grannan Graphic Design Cover Image: ©Getty Images/Image Bank Permissions Account Manager: John Hill

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Library of Congress Control Number: 2009943379

Student Edition ISBN 10: 0-538-74280- Student Edition ISBN 13: 978-0-538-74280-

Instructors Edition ISBN 10: 0-538-74281-X Instructors Edition ISBN 13: 978-0-538-74281-

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vii

Preface xv About the Authors xxix

CONTENTS

CHAPTER 1 The Changing Business Environment: A Manager’s Perspective 2

DECISION POINT  A MANAGER’S FOCUS WAL-MART STORES, INC. 3

The Role of Management Accounting 4

Management Accounting and Financial Accounting:

A Comparison 4

Management Accounting and the Management

Process 5

Value Chain Analysis 11

Primary Processes and Support Services 12

Advantages of Value Chain Analysis 13

Managers and Value Chain Analysis 13

Continuous Improvement 15

Management Tools for Continuous

Improvement 16

Achieving Continuous Improvement 17

Performance Measures: A Key to Achieving

Organizational Objectives 19

Using Performance Measures in the Management

Process 19

The Balanced Scorecard 20

Benchmarking 22

Standards of Ethical Conduct 22

A LOOK BACK AT  WAL-MART STORES, INC. 25

STOP & REVIEW 27

CHAPTER ASSIGNMENTS 29

CHAPTER 2 Cost Concepts and Cost Allocation 44

DECISION POINT  A MANAGER’S FOCUS THE HERSHEY COMPANY 45

Cost Information 46

Managers’ Use of Cost Information 46

Cost Information and Organizations 46

Cost Classifications and Their Uses 46

Cost Traceability 47

Cost Behavior 48

Value-Adding Versus Nonvalue-Adding

Costs 48

Cost Classifications for Financial Reporting 48

Financial Statements and the Reporting

of Costs 50

Income Statement and Accounting for

Inventories 50

Statement of Cost of Goods Manufactured 51

Cost of Goods Sold and a Manufacturer’s Income

Statement 53

Inventory Accounts in Manufacturing

Organizations 54

Document Flows and Cost Flows Through the

Inventory Accounts 54

The Manufacturing Cost Flow 56

Elements of Product Costs 58

Prime Costs and Conversion Costs 59

Computing Product Unit Cost 59

xii Contents

 - 1 The Changing Business Environment: A Manager’s Perspective - 2 Cost Concepts and Cost Allocation - 3 Costing Systems: Job Order Costing - 4 Costing Systems: Process Costing - 5 Value-Based Systems: ABM and Lean - 6 Cost Behavior Analysis - 7 The Budgeting Process - 8 Performance Management and Evaluation - 9 Standard Costing and Variance Analysis 

• 10 Short-Run Decision Analysis
• 11 Capital Investment Analysis - Pricing 12 Pricing Decisions, Including Target Costing and Transfer
• 13 Quality Management and Measurement
• 14 Financial Analysis of Performance
• APPENDIX A Present Value Tables
• CHAPTER 3 Costing Systems: Job Order Costing - CREAMERY, INC. DECISION POINT  A MANAGER’S FOCUS COLD STONE - Management Process Product Unit Cost Information and the
  • Planning
  • Performing
  • Evaluating
  • Communicating
  • Product Costing Systems
    • Company Job Order Costing in a Manufacturing
  • Materials
  • Labor - Overhead - Completed Units - Sold Units - Reconciliation of Overhead Costs - of Unit Cost A Job Order Cost Card and the Computation - Computation of Unit Cost A Manufacturer’s Job Order Cost Card and the - Job Order Costing in a Service Organization - A LOOK BACK AT  COLD STONE CREAMERY, INC. - STOP & REVIEW - CHAPTER ASSIGNMENTS
• CHAPTER 4 Costing Systems: Process Costing - FOODS DECISION POINT  A MANAGER’S FOCUS DEAN
  • The Process Costing System
    • Methods Patterns of Product Flows and Cost Flow
    • Accounts Cost Flows Through the Work in Process Inventory
  • Computing Equivalent Production
  • Equivalent Production for Direct Materials
  • Equivalent Production for Conversion Costs
  • Summary of Equivalent Production
    • FIFO Costing Method Preparing a Process Cost Report Using the
      • Accounting for Units
      • Accounting for Costs
      • Assigning Costs
        • Departments Process Costing for Two or More Production
        • Average Costing Method Preparing a Process Cost Report Using the
      • Accounting for Units
      • Accounting for Costs
      • Assigning Costs
      • A LOOK BACK AT  DEAN FOODS
      • STOP & REVIEW
      • CHAPTER ASSIGNMENTS
  • Product Cost Measurement Methods
  • Computing Service Unit Cost
  • Cost Allocation
  • Allocating the Costs of Overhead
  • Allocating Overhead: The Traditional Approach - Allocating Overhead: The ABC Approach - A LOOK BACK AT  THE HERSHEY COMPANY - STOP & REVIEW - CHAPTER ASSIGNMENTS
• CHAPTER 5 Value-Based Systems: ABM and Lean Contents ix - INC. DECISION POINT  A MANAGER’S FOCUS LA-Z-BOY, - Management Value-Based Systems and - Value Chains and Supply Chains - Process Value Analysis - Value-Adding and Non-Value-Adding Activities - Value-Based Systems - Activity-Based Management - Managing Lean Operations - Activity-Based Costing - The Cost Hierarchy and the Bill of Activities - Operations The New Operating Environment and Lean - Just-in-Time (JIT) - Environment Continuous Improvement of the Work - Environment Accounting for Product Costs in a JIT Operating - Backflush Costing - Comparison of ABM and Lean - A LOOK BACK AT  LA-Z-BOY, INC. - STOP & REVIEW - CHAPTER ASSIGNMENTS
  • CHAPTER 6 Cost Behavior Analysis - DECISION POINT  A MANAGER’S FOCUS FLICKR - Cost Behavior and Management - The Behavior of Costs - Income Statement Mixed Costs and the Contribution Margin - The Engineering Method - The Scatter Diagram Method - The High-Low Method - Statistical Methods - Contribution Margin Income Statements - Cost-Volume-Profit Analysis - Breakeven Analysis - Point Using an Equation to Determine the Breakeven - The Breakeven Point for Multiple Products - Costs, and Profits Using C-V-P Analysis to Plan Future Sales, - Applying C-V-P to Target Profits - A LOOK BACK AT  FLICKR - STOP & REVIEW - CHAPTER ASSIGNMENTS
• CHAPTER 7 The Budgeting Process - CORPORATION DECISION POINT  A MANAGER’S FOCUS FRAMERICA - The Budgeting Process - Advantages of Budgeting - Budgeting and Goals - Budgeting Basics - The Master Budget - Preparation of a Master Budget - Budget Procedures - Operating Budgets - The Sales Budget - The Production Budget - The Direct Materials Purchases Budget - The Direct Labor Budget - The Overhead Budget x Contents - Budget The Selling and Administrative Expense - The Cost of Goods Manufactured Budget - Financial Budgets - The Budgeted Income Statement - The Capital Expenditures Budget - The Cash Budget - The Budgeted Balance Sheet - A LOOK BACK AT  FRAMERICA CORPORATION - STOP & REVIEW - CHAPTER ASSIGNMENTS
• CHAPTER 9 Standard Costing and Variance Analysis - CORPORATION DECISION POINT  A MANAGER’S FOCUS iROBOT - Standard Costing - Standard Costs and Managers - Computing Standard Costs - Standard Direct Materials Cost - Standard Direct Labor Cost - Standard Overhead Cost - Total Standard Unit Cost - Variance Analysis - Analysis The Role of Flexible Budgets in Variance - Using Variance Analysis to Control Costs - Variances Computing and Analyzing Direct Materials - Computing Direct Materials Variances - Variances Analyzing and Correcting Direct Materials
  • CHAPTER 8 Performance Management and Evaluation - RESORTS DECISION POINT  A MANAGER’S FOCUS VAIL - Performance Measurement - What to Measure, How to Measure - Other Measurement Issues - Scorecard Organizational Goals and the Balanced - The Balanced Scorecard and Management - Responsibility Accounting - Types of Responsibility Centers - Management Organizational Structure and Performance - Profit Centers Performance Evaluation of Cost Centers and - Budgeting Evaluating Cost Center Performance Using Flexible - Variable Costing Evaluating Profit Center Performance Using - Centers Performance Evaluation of Investment - Return on Investment - Residual Income - Economic Value Added - Measures The Importance of Multiple Performance - Performance Incentives and Goals - and Performance Targets Linking Goals, Performance Objectives, Measures, - Performance-Based Pay - The Coordination of Goals - A LOOK BACK AT  VAIL RESORTS - STOP & REVIEW - CHAPTER ASSIGNMENTS
• CHAPTER 13 Quality Management and Measurement - .COM DECISION POINT  A MANAGER’S FOCUS AMAZON - Systems in Quality Management The Role of Management Information
  • Enterprise Resource Planning Systems
  • Managers’ Use of MIS - of Quality Financial and Nonfinancial Measures
  • Financial Measures of Quality
  • Nonfinancial Measures of Quality
  • Measuring Service Quality - Measuring Quality: An Illustration - Evaluating the Costs of Quality - Evaluating Nonfinancial Measures of Quality - The Evolving Concept of Quality - Recognition of Quality - A LOOK BACK AT  AMAZON.COM - STOP & REVIEW - CHAPTER ASSIGNMENTS
    • and Transfer Pricing CHAPTER 12 Pricing Decisions, Including Target Costing
    • DECISION POINT  A MANAGER’S FOCUS LAB
    • The Pricing Decision and the Manager
    • Pricing Policies
    • Pricing Policy Objectives
    • Pricing and the Management Process
    • External and Internal Pricing Factors
    • Economic Pricing Concepts
    • Total Revenue and Total Cost Curves
    • Marginal Revenue and Marginal Cost Curves
    • Auction-Based Pricing
    • Cost-Based Pricing Methods
    • Gross Margin Pricing
    • Return on Assets Pricing
    • Summary of Cost-Based Pricing Methods
    • Pricing Services - Factors Affecting Cost-Based Pricing Methods - Pricing Based on Target Costing - Costing Differences Between Cost-Based Pricing and Target - Management Environment Target Costing Analysis in an Activity-Based - and Services Pricing for Internal Providers of Goods - Transfer Pricing - Developing a Transfer Price - Other Transfer Price Issues - Using Transfer Prices to Measure Performance - A LOOK BACK AT  LAB - STOP & REVIEW - CHAPTER ASSIGNMENTS
• CHAPTER 14 Financial Analysis of Performance Contents xiii - CORPORATION DECISION POINT  A MANAGER’S FOCUS STARBUCKS - Measurement Foundations of Financial Performance - Objectives Financial Performance Measurement: Management’s - Investors’ Objectives Financial Performance Measurement: Creditors’ and - Standards of Comparison - Sources of Information - Executive Compensation - Analysis Tools and Techniques of Financial - Horizontal Analysis - Trend Analysis - Vertical Analysis - Ratio Analysis - Analysis Comprehensive Illustration of Ratio - Evaluating Liquidity - Evaluating Profitability - Evaluating Long-Term Solvency - Evaluating the Adequacy of Cash Flows - Evaluating Market Strength - A LOOK BACK AT  STARBUCKS CORPORATION - STOP & REVIEW - CHAPTER ASSIGNMENTS
  • APPENDIX A Present Value Tables
    • Endnotes
    • Company Index
    • Subject Index

PREFACE

Accounting

in Motion!

This revision of Managerial Accounting is based on an understanding of the

nature, culture, and motivations of today’s undergraduate students and on exten-

sive feedback from many instructors who use our book. These substantial changes

meet the needs of these students, who not only face a business world increasingly

complicated by ethical issues, globalization, and technology but who also have

more demands on their time. To assist them to meet these challenges, the authors

carefully show them how the effects of business transactions, which are the result

of business decisions, are recorded in a way that will be reflected on the finan-

cial statements. Instructors will find that building on the text’s historically strong

pedagogy, the authors have strengthened transaction analysis and its link to the

accounting cycle.

Updated Content,

Organization

and Pedagogy

Strong Pedagogical System

Managerial Accounting originated the pedagogical system of Integrated

Learning Objectives. The system supports both learning and teaching by provid-

ing flexibility in support of the instructor’s teaching of first-year accounting. The

chapter review and all assignments identify the applicable learning objective(s)

for easy reference.

Each learning objective refers to a specific content area, usually either con-

ceptual content or procedural techniques, in short and easily understandable seg-

ments. Each segment is followed by a “ Stop and Apply ” section that illustrates

and solves a short exercise related to the learning objective.

xv

STOP^ & APPLY

Match the letter of each item below with the numbers of the related items: a. An inventory cost b. An assumption used in the valuation of inventory c. Full disclosure convention d. Conservatism convention e. Consistency convention f. Not an inventory cost or assumed flow ____ 1. Cost of consigned goods ____ 2. A note to the financial statements explaining inventory policies

____ 3. Application of the LCM rule ____ 4. Goods flow ____ 5. Transportation charge for mer- chandise shipped FOB shipping point ____ 6. Cost flow ____ 7. Choosing a method and sticking with it ____ 8. Transportation charge for mer- chandise shipped FOB destination

SOLUTION

1. f; 2. c; 3. d; 4. b; 5. a; 6. f; 7. e; 8. f

xvi Preface

To make the text more visually appealing and readable, it is divided into

student-friendly sections with brief bulleted lists, new art, photographs, and end-

of-section review material.

Further, to reduce distractions, the margins of the text include only Study

Notes , which alert students to common misunderstandings of concepts and tech-

niques; key ratio and cash flow icons, which highlight discussions of profitability

and liquidity; and accounting equations.

In this edition, we reduced excessive detail, shortened headings, simplified

explanations, and increased readability in an effort to reduce the length of each

chapter.

To avoid financial distress, a company must be able to pay its bills on time. Because the timing of cash flows is critical to maintaining adequate liquidity to pay bills, managers and other users of financial information must understand the difference between transactions that generate immediate cash and those that do not. Con- sider the transactions of Miller Design Studio shown in Figure 2-3. Most of them involve either an inflow or outflow of cash. As you can see in Figure 2-3, Miller’s Cash account has more transactions than any of its other accounts. Look at the transactions of July 10, 15, and 22:  July 10: Miller received a cash payment of $2,800.  July 15: The firm billed a customer $9,600 for a service it had already per- formed.  July 22: The firm received a partial payment of $5,000 from the customer, but it had not received the remaining $4,600 by the end of the month. Because Miller incurred expenses in providing this service, it must pay careful attention to its cash flows and liquidity. One way Miller can manage its expenditures is to rely on its creditors to give it time to pay. Compare the transactions of July 3, 5, and 9 in Figure 2-3.

Cash Flows

and the Timing

of Transactions

LO 5 Show how the timing of transactions affects cash flows and liquidity.

Enhanced Real-

World Examples

Demonstrate

Accounting

in Motion

IFRS, Fair Value, and Other Updates

International Financial Reporting Standards and fair value have been integrated

throughout the book where accounting standards have changed and also in the

Business Focus features where applicable. All current events, statistics, and tables

have been updated with the latest data.

Study Note

After Step 1 has been completed,

the Income Summary account

reflects the account balance of

the Design Revenue account

before it was closed.

xviii Preface

CVS Caremark Corporation Consolidated Statements of Operations

Fiscal Year Ended Dec. 31, 2008 Dec. 29, 2007 Dec. 30, 2006 (In millions, except per share amounts) (52 weeks) (52 weeks) (53 weeks) Net revenues $87,471.9 $76,329.5 $43,821. Cost of revenues 69,181.5 60,221.8 32,079. Gross profit 18,290.4 16,107.7 11,742. Total operating expenses 12,244.2 11,314.4 9,300. Operating profit 1 6,046.2 4,793.3 2,441. Interest expense, net^2 509.5 434.6 215. Earnings before income tax provision 5,536.7 4,358.7 2,225. Loss from discontinued operations, (132) — — net of income tax benefit of $82. Income tax provision 2,192.6 1,721.7 856. Net earnings 3 3,212.1 2,637.0 1,368. Preference dividends, net of income tax benefit^4 14.1 14.2 13. Net earnings available to common shareholders $ 3,198.0 $ 2,622.8 $ 1,355. BASIC EARNINGS PER COMMON SHARE:^5 Net earnings $ 2.23 $ 1.97 $ 1. Weighted average common shares outstanding 1,433.5 1,328.2 820. DILUTED EARNINGS PER COMMON SHARE: Net earnings $ 2.18 $ 1.92 $ 1. Weighted average common shares outstanding 1,469.1 1,371.8 853.

Consolidated means that data from all companies owned by CVS are combined.

CVS’s fiscal year ends on the Saturday closest to December 31.

Revised and Expanded Assignments

Assignments have been carefully scrutinized for direct relevancy to the learning

objectives in the chapters. Names and numbers for all Short Exercises, Exercises,

and Problems have been changed except those used on videos. We have reversed

the alternate and main problems from the previous edition. Most importantly,

alternative problems have been expanded so that there are ample problems for

any course.

All of the cases have been updated as appropriate and the number of cases in

each chapter has been reduced in response to user preferences. The variety of cases

in each chapter depends on their relevance to the chapter topics, but throughout

the text there are cases involving conceptual understanding, ethical dilemmas,

interpreting financial reports, group activities, business communication, and the

Internet. Annual report cases based on CVS Caremark and Southwest Airlines

can be found at the end of the chapter.

Use of Well-Known Public Companies

This textbook also offers examples from highly recognizable public companies,

such as CVS Caremark, Southwest Airlines, Dell Computer, and Netflix, to relate

basic accounting concepts and techniques to the real world. The latest available

data is used in exhibits to incorporate the most recent FASB pronouncements.

The authors illustrate current practices in financial reporting by referring to data

from Accounting Trends and Techniques (AICPA) and integrate international top-

ics wherever appropriate.

Preface xix

Specific Chapter Changes

The following chapter-specific changes have been made in this edition of

Managerial Accounting:

Chapter 1 The Changing Business Environment: A Manager’s Perspective

• Updated definition of management accounting in LO
• Lean production introduced as a key term in LO
• Sections on total quality management and activity based management in LO

revised

• Updated Focus on Business Practice box on how to blow the whistle on fraud

Chapter 2 Cost Concepts and Cost Allocation

• New company (Hershey’s) used as example in the Decision Point
• Discussions of costs in LO2 in previous edition incorporated in LO
• Introduction to methods of product cost measurement added and section on

computing service unit cost shortened in new LO

• LO7 and LO8 in previous edition (the traditional and ABC approaches to

allocating overhead) streamlined and incorporated in new LO

Chapter 3 Costing Systems: Job Order Costing

• Chapter 3 in previous edition separated into two chapters, with new

Chapter 3 focusing on job order costing and new Chapter 4 focusing on

process costing

• Operations costing system introduced as a key concept
• Discussions of manufacturer’s job order cost card, computation of unit cost,

and job order costing in a service organization included in new LO

Chapter 4 Costing Systems: Process Costing

• New chapter (part of Chapter 3 in previous edition)

Chapter 5 Value-Based Systems: ABM and Lean

• Chapter revised to emphasize value-based systems
• LO1, LO2, and LO3 in last edition revised and incorporated in new LO
• New listing of the disadvantages of activity-based costing in LO
• New focus on lean operations in LO3 and section on accounting for product

costs added

Chapter 6 Cost Behavior Analysis

• New company (Flickr) used as example in the Decision Point
• Sections on variable, fixed, and mixed costs, which were in LO2 in last edi-

tion, now included in LO

• Concept of a step cost introduced in discussion of fixed costs in LO
• Methods used to separate the components of mixed costs and the contribu-

tion margin income statement now the focus of LO

• Material in LO4 reformatted to clarify concepts