Table Of Contents:

Managerial Accounting and the Business Environment 2(32)

The Work of Management and the Need for Managerial Accounting Information 4(2)

Planning 5(1)

Directing and Motivating 5(1)

Controlling 5(1)

The End Results of Managers' Activities 6(1)

The Planning and Control Cycle 6(1)

Comparison of Financial and Managerial Accounting 6(3)

Emphasis on the Future 6(2)

Relevance of Data 8(1)

Less Emphasis on Precision 8(1)

Segments of an Organization 8(1)

Generally Accepted Accounting Principles (GAAP) 9(1)

Managerial Accounting---Not Mandatory 9(1)

Organizational Structure 9(3)

Decentralization 9(1)

Line and Staff Relationships 10(1)

The Chief Financial Officer 11(1)

The Changing Business Environment 12(8)

Just-In-Time (JIT) 12(2)

JIT Consequences 14(1)

Benefits of a JIT System 15(1)

Total Quality Management (TQM) 15(1)

Process Reengineering 16(1)

The Theory of Constraints (TOC) 17(1)

International Competition 18(1)

E-Commerce 19(1)

Professional Ethics 20(7)

Code of Conduct for Management Accountants 22(2)

Company Codes of Conduct 24(2)

Codes of Conduct on the International Level 26(1)

The Certified Management Accountant (CMA) 27(7)

Summary 27(1)

Glossary 28(1)

Questions 29(1)

Exercises 30(1)

Problems 31(2)

Group and Internet Exercises 33(1)

Cost Terms, Concepts, and Classifications 34(52)

General Cost Classifications 36(2)

Manufacturing Costs 36(1)

Direct Materials 36(1)

Direct Labor 36(1)

Manufacturing Overhead 37(1)

Nonmanufacturing Costs 38(1)

Product Costs versus Period Costs 38(3)

Product Costs 38(1)

Period Costs 39(2)

Cost Classifications on Financial Statements 41(4)

The Balance Sheet 41(1)

The Income Statement 42(1)

Schedule of Cost of Goods Manufactured 43(2)

Product Cost Flows 45(3)

Inventoriable Costs 45(1)

An Example of Cost Flows 46(2)

Cost Classifications for Predicting Cost Behavior 48(2)

Variable Cost 48(1)

Fixed Cost 49(1)

Cost Classifications for Assigning Costs to Cost Objects 50(1)

Direct Cost 50(1)

Indirect Cost 50(1)

Cost Classifications for Decision Making 51(35)

Differential Cost and Revenue 51(1)

Opportunity Cost 52(1)

Example 1 52(1)

Example 2 52(1)

Example 3 52(1)

Sunk Cost 53(1)

Summary 53(1)

Review Problem 1: Cost Terms 54(1)

Review Problem 2: Schedule of Cost of Goods Manufactured and Income Statement 55(2)

Glossary 57(1)

Appendix 2A: Further Classification of Labor Costs' 58(1)

Appendix 2B: Cost of Quality 59(9)

Questions 68(1)

Exercises 69(4)

Problems 73(9)

Cases 82(2)

Group and Internet Exercises 84(2)

Systems Design: Job-Order Costing 86(58)

Process and Job-Order Costing 88(1)

Process Costing 88(1)

Job-Order Costing 89(1)

Job-Order Costing---An Overview 89(9)

Measuring Direct Materials Cost 90(1)

Job Cost Sheet 91(1)

Measuring Direct Labor Cost 91(2)

Application of Manufacturing Overhead 93(1)

Using the Predetermined Overhead Rate 94(1)

The Need for a Predetermined Rate 94(2)

Choice of an Allocation Base for Overhead Cost 96(1)

Computation of Unit Costs 96(1)

Summary of Document Flows 96(2)

Job-Order Costing---The Flow of Costs 98(6)

The Purchase and Issue of Materials 98(1)

Issue of Direct and Indirect Materials 98(1)

Issue of Direct Materials Only 99(1)

Labor Cost 99(1)

Manufacturing Overhead Costs 100(1)

The Application of Manufacturing Overhead 101(1)

The Concept of a Clearing Account 101(1)

Nonmanufacturing Costs 102(1)

Cost of Goods Manufactured 103(1)

Cost of Goods Sold 103(1)

Summary of Cost Flows 104(1)

Problems of Overhead Application 104(8)

Underapplied and Overapplied Overhead 104(5)

Disposition of Under- or Overapplied Overhead Balances 109(1)

Closed Out to Cost of Goods Sold 109(1)

Allocated between Accounts 110(1)

A General Model of Product Cost Flows 110(1)

Multiple Predetermined Overhead Rates 110(1)

Job-Order Costing in Service Companies 111(1)

Use of Information Technology 112(32)

Summary 113(1)

Review Problem: Job-Order Costing 114(2)

Glossary 116(1)

Appendix 3A: The Predetermined Overhead Rate and Capacity 117(1)

Questions 118(1)

Exercises 119(7)

Problems 126(12)

Cases 138(4)

Group and Internet Exercises 142(2)

Systems Design: Process Costing 144(38)

Comparison of Job-Order and Process Costing 146(1)

Similarities between Job-Order and Process Costing 146(1)

Differences between Job-Order and Process Costing 146(1)

A Perspective of Process Cost Flows 147(5)

Processing Departments 147(1)

The Flow of Materials, Labor, and Overhead Costs 148(1)

Materials, Labor, and Overhead Cost Entries 148(1)

Materials Costs 149(1)

Labor Costs 149(1)

Overhead Costs 150(1)

Completing the Cost Flows 150(2)

Equivalent Units of Production 152(1)

Weighted-Average Method 152(1)

Production Report---Weighted-Average Method 153(6)

Step 1: Prepare a Quantity Schedule and Compute the Equivalent Units 155(1)

Step 2: Compute Costs per Equivalent Unit 156(1)

Step 3: Prepare a Cost Reconciliation 156(1)

Example of a Cost Reconciliation 156(3)

Operation Costing 159(23)

Summary 159(1)

Review Problem: Process Cost Flows and Reports 160(2)

Glossary 162(1)

Appendix 4A: FIFO Method 162(6)

Questions 168(1)

Exercises 169(5)

Problems 174(6)

Cases 180(1)

Group and Internet Exercises 181(1)

Cost Behavior: Analysis and Use 182(46)

Types of Cost Behavior Patterns 184(12)

Variable Costs 184(1)

The Activity Base 185(1)

Extent of Variable Costs 186(1)

True Variable versus Step-Variable Costs 187(1)

True Variable Costs 187(1)

Step-Variable Costs 187(1)

The Linearity Assumption and the Relevant Range 188(1)

Fixed Costs 188(2)

Types of Fixed Costs 190(1)

Committed Fixed Costs 190(1)

Discretionary Fixed Costs 191(1)

The Trend toward Fixed Costs 192(1)

Is Labor a Variable or a Fixed Cost? 192(1)

Fixed Costs and the Relevant Range 193(1)

Mixed Costs 194(2)

The Analysis of Mixed Costs 196(10)

Diagnosing Cost Behavior with a Scattergraph Plot 198(3)

The High-Low Method 201(3)

The Least-Squares Regression Method 204(2)

Multiple Regression Analysis 206(1)

The Contribution Format Income Statement 206(22)

Why a New Income Statement Format? 206(1)

The Contribution Approach 207(1)

Summary 207(1)

Review Problem 1: Cost Behavior 208(1)

Review Problem 2: High-Low Method 209(1)

Glossary 210(1)

Appendix 5A: Least-Squares Regression Using Microsoft® Excel 210(2)

Questions 212(1)

Exercises 213(4)

Problems 217(6)

Cases 223(4)

Group and Internet Exercises 227(1)

Cost-Volume-Profit Relationships 228(46)

The Basics of Cost-Volume-Profit (CVP) Analysis 231(4)

Contribution Margin 231(2)

CVP Relationships in Graphic Form 233(1)

Preparing the CVP Graph 233(2)

Contribution Margin Ratio (CM Ratio) 235(1)

Some Applications of CVP Concepts 236(3)

Change in Fixed Cost and Sales Volume 236(1)

Change in Variable Costs and Sales Volume 237(1)

Change in Fixed Cost, Sales Price, and Sales Volume 237(1)

Change in Variable Cost, Fixed Cost, and Sales Volume 238(1)

Change in Regular Sales Price 239(1)

Break-Even Analysis 239(5)

Break-Even Computations 239(1)

The Equation Method 239(1)

The Contribution Margin Method 240(1)

Target Profit Analysis 241(1)

The CVP Equation 241(1)

The Contribution Margin Approach 242(1)

The Margin of Safety 242(2)

CVP Considerations in Choosing a Cost Structure 244(3)

Cost Structure and Profit Stability 244(2)

Operating Leverage 246(1)

Structuring Sales Commissions 247(1)

The Concept of Sales Mix 248(2)

The Definition of Sales Mix 248(1)

Sales Mix and Break-Even Analysis 248(2)

Assumptions of CVP Analysis 250(24)

Summary 251(1)

Review Problem: CVP Relationships 251(3)

Glossary 254(1)

Questions 254(1)

Exercises 255(5)

Problems 260(8)

Cases 268(4)

Group and Internet Exercises 272(2)

Variable Costing: A Tool for Management 274(38)

Overview of Absorption and Variable Costing 276(2)

Absorption Costing 276(1)

Variable Costing 276(1)

Unit Cost Computations 277(1)

Income Comparison of Absorption and Variable Costing 278(2)

Extended Comparison of Income Data 280(4)

Effect of Changes in Production on Net Operating Income 284(4)

Variable Costing 285(1)

Absorption Costing 285(3)

Choosing a Costing Method 288(24)

The Impact on the Manager 288(1)

CVP Analysis and Absorption Costing 289(1)

Decision Making 290(1)

External Reporting and Income Taxes 290(1)

Advantages of Variable Costing and the Contribution Approach 291(1)

Variable Costing and the Theory of Constraints 292(1)

Impact of JIT Inventory Methods 292(1)

Summary 293(1)

Review Problem: Contrasting Variable and Absorption Costing 293(2)

Glossary 295(1)

Questions 295(1)

Exercises 296(4)

Problems 300(6)

Cases 306(4)

Group and Internet Exercises 310(2)

Activity-Based Costing: A Tool to Aid Decision Making 312(64)

How Costs Are Treated under Activity-Based Costing 315(2)

Nonmanufacturing Costs and Activity-Based Costing 315(1)

Manufacturing Costs and Activity-Based Costing 315(1)

Plantwide Overhead Rate 315(1)

Departmental Overhead Rates 316(1)

The Costs of Idle Capacity in Activity-Based Costing 317(1)

Designing an Activity-Based Costing (ABC) System 317(6)

Step 1: Identify and Define Activities and Activity Cost Pools 320(3)

The Mechanics of Activity-Based Costing 323(7)

Step 2: Whenever Possible, Directly Trace Overhead Costs to Activities and Cost Objects 323(1)

Step 3: Assign Costs to Activity Cost Pools 324(3)

Step 4: Calculate Activity Rates 327(1)

Step 5: Assign Costs to Cost Objects 328(2)

Step 6: Prepare Management Reports 330(1)

Comparison of Traditional and ABC Product Costs 330(5)

Product Margins Computed Using the Traditional Cost System 330(1)

The Differences between ABC and Traditional Product Costs 331(4)

Targeting Process Improvements 335(2)

Activity-Based Costing and External Reports 337(1)

The Limitations of Activity-Based Costing 338(38)

Summary 339(1)

Review Problem: Activity-Based Costing 340(1)

Glossary 341(1)

Appendix 8A: ABC Action Analysis 342(8)

Questions 350(1)

Exercises 351(10)

Problems 361(8)

Cases 369(6)

Group and Internet Exercises 375(1)

Profit Planning 376(50)

The Basic Framework of Budgeting 378(9)

Personal Budgets 378(1)

Difference between Planning and Control 378(1)

Advantages of Budgeting 378(1)

Responsibility Accounting 379(1)

Choosing a Budget Period 380(1)

The Self-Imposed Budget 381(1)

Human Factors in Budgeting 382(1)

Zero-Based Budgeting 382(2)

The Budget Committee 384(1)

The Master Budget: An Overview 385(1)

The Sales Budget 385(1)

The Cash Budget 385(1)

Sales Forecasting---A Critical Step 385(2)

Preparing the Master Budget 387(12)

The Sales Budget 389(1)

The Production Budget 390(1)

Inventory Purchases---Merchandising Company 391(1)

The Direct Materials Budget 391(2)

The Direct Labor Budget 393(1)

The Manufacturing Overhead Budget 394(1)

The Ending Finished Goods Inventory Budget 395(1)

The Selling and Administrative Expense Budget 395(1)

The Cash Budget 396(3)

The Budgeted Income Statement 399(3)

The Budgeted Balance Sheet 400(2)

International Aspects of Budgeting 402(24)

Summary 403(1)

Review Problem: Budget Schedules 403(2)

Glossary 405(1)

Questions 406(1)

Exercises 406(2)

Problems 408(13)

Cases 421(4)

Group and Internet Exercises 425(1)

Standard Costs and the Balanced Scorecard 426(64)

Standard Costs---Management by Exception 429(2)

Who Uses Standard Costs? 430(1)

Setting Standard Costs 431(4)

Ideal versus Practical Standards 431(1)

Setting Direct Materials Standards 432(1)

Setting Direct Labor Standards 432(2)

Setting Variable Manufacturing Overhead Standards 434(1)

Are Standards the Same as Budgets? 435(1)

A General Model for Variance Analysis 435(1)

Price and Quantity Variances 435(1)

Using Standard Costs---Direct Materials Variances 436(5)

Materials Price Variance---A Closer Look 438(1)

Isolation of Variances 439(1)

Responsibility for the Variance 439(1)

Materials Quantity Variance---A Closer Look 440(1)

Using Standard Costs---Direct Labor Variances 441(2)

Labor Rate Variance---A Closer Look 441(1)

Labor Efficiency Variance---A Closer Look 442(1)

Using Standard Costs---Variable Manufacturing Overhead Variances 443(2)

Manufacturing Overhead Variances---A Closer Look 443(2)

Variance Analysis and Management by Exception 445(2)

International Uses of Standard Costs 447(1)

Evaluation of Controls Based on Standard Costs 447(2)

Advantages of Standard Costs 447(1)

Potential Problems with the Use of Standard Costs 448(1)

Balanced Scorecard 449(41)

Common Characteristics of Balanced Scorecards 450(2)

A Company's Strategy and the Balanced Scorecard 452(2)

Tying Compensation to the Balanced Scorecard 454(1)

Advantages of Timely and Graphic Feedback 454(2)

Some Measures of Internal Business Process Performance 456(1)

Delivery Cycle Time 456(1)

Throughput (Manufacturing Cycle) Time 456(1)

Manufacturing Cycle Efficiency (MCE) 457(1)

Some Final Observations Concerning the Balanced Scorecard 458(1)

Summary 459(1)

Review Problem: Standard Costs 459(2)

Glossary 461(1)

Appendix 10A: General Ledger Entries to Record Variances 462(2)

Questions 464(1)

Exercises 465(6)

Problems 471(13)

Cases 484(4)

Group and Internet Exercises 488(2)

Flexible Budgets and Overhead Analysis 490(48)

Flexible Budgets 492(6)

Characteristics of a Flexible Budget 492(1)

Deficiencies of the Static Budget 493(1)

How a Flexible Budget Works 494(1)

Using the Flexible Budgeting Concept in Performance Evaluation 495(3)

The Measure of Activity---A Critical Choice 498(1)

Variable Overhead Variances---A Closer Look 498(4)

Actual versus Standard Hours 498(1)

Spending Variance Alone 499(1)

Interpreting the Spending Variance 500(1)

Both Spending and Efficiency Variances 500(1)

Interpreting the Efficiency Variance 500(1)

Control of the Efficiency Variance 501(1)

Activity-Based Costing and the Flexible Budget 502(1)

Overhead Rates and Fixed Overhead Analysis 502(36)

Flexible Budgets and Overhead Rates 502(1)

Denominator Activity 503(1)

Computing the Overhead Rate 504(1)

Overhead Application in a Standard Cost System 505(1)

The Fixed Overhead Variances 505(1)

The Budget Variance---A Closer Look 506(1)

The Volume Variance---A Closer Look 507(1)

Graphic Analysis of Fixed Overhead Variances 508(1)

Cautions in Fixed Overhead Analysis 509(1)

Overhead Variances and Under- or Overapplied Overhead Cost 509(1)

Summary 509(1)

Review Problem: Overhead Analysis 510(2)

Glossary 512(1)

Questions 513(1)

Exercises 513(6)

Problems 519(12)

Cases 531(4)

Group and Internet Exercises 535(3)

Segment Reporting and Decentralization 538(62)

Decentralization in Organizations 540(1)

Advantages and Disadvantages of Decentralization 540(1)

Responsibility Accounting 541(2)

Cost, Profit, and Investment Centers 541(1)

Cost Center 541(1)

Profit Center 541(1)

Investment Center 542(1)

An Organizational View of Responsibility Centers 542(1)

Decentralization and Segment Reporting 543(10)

Building a Segmented Income Statement 543(3)

Levels of Segmented Statements 546(1)

Sales and Contribution Margin 546(2)

Traceable and Common Fixed Costs 548(1)

Identifying Traceable Fixed Costs 548(1)

Activity-Based Costing 548(2)

Traceable Costs Can Become Common Costs 550(1)

Segment Margin 550(2)

Segmented Financial Information on External Reports 552(1)

Hindrances to Proper Cost Assignment 553(2)

Omission of Costs 553(1)

Inappropriate Methods for Assigning Traceable Costs among Segments 554(1)

Failure to Trace Costs Directly 554(1)

Inappropriate Allocation Base 554(1)

Arbitrarily Dividing Common Costs among Segments 554(1)

Evaluating Investment Center Performance---Return on Investment 555(6)

The Return on Investment (ROI) Formula 556(1)

Net Operating Income and Operating Assets Defined 556(1)

Understanding ROI---The DuPont Perspective 556(2)

Example 1: Increased Sales without Any Increase in Operating Assets 558(1)

Example 2: Decreased Operating Expenses with No Change in Sales or Operating Assets 559(1)

Example 3: Decreased Operating Assets with No Change in Sales or Operating Expenses 559(1)

Example 4: Invest in Operating Assets to Increase Sales 560(1)

ROI and the Balanced Scorecard 560(1)

Criticisms of ROI 561(1)

Residual Income 561(39)

Motivation and Residual Income 563(1)

Divisional Comparison and Residual Income 563(2)

Summary 565(1)

Review Problem 1: Segmented Statements 565(1)

Review Problem 2: Return on Investment (ROI) and Residual Income 565(2)

Glossary 567(1)

Appendix 12A: Transfer Pricing 568(6)

Review Problem 3: Transfer Pricing 574(2)

Questions 576(1)

Exercises 576(6)

Problems 582(12)

Cases 594(3)

Group and Internet Exercises 597(3)

Relevant Costs for Decision Making 600(52)

Cost Concepts for Decision Making 601(8)

Identifying Relevant Costs and Benefits 601(1)

Different Costs for Different Purposes 602(1)

An Example of Identifying Relevant Costs and Benefits 602(4)

Reconciling the Total and Differential Approaches 606(2)

Why Isolate Relevant Costs? 608(1)

Adding and Dropping Product Lines and Other Segments 609(4)

An Illustration of Cost Analysis 609(2)

A Comparative Format 611(1)

Beware of Allocated Fixed Costs 611(2)

The Make or Buy Decision 613(2)

Strategic Aspects of the Make or Buy Decision 613(1)

An Example of Make or Buy 614(1)

Opportunity Cost 615(1)

Special Orders 616(2)

Utilization of a Constrained Resource 618(4)

Contribution in Relation to a Constrained Resource 618(2)

Managing Constraints 620(1)

The Problem of Multiple Constraints 621(1)

Joint Product Costs and the Contribution Approach 622(3)

The Pitfalls of Allocation 622(1)

Sell or Process Further Decisions 622(3)

Activity-Based Costing and Relevant Costs 625(27)

Summary 626(1)

Review Problem: Relevant Costs 626(1)

Glossary 627(1)

Questions 628(1)

Exercises 628(6)

Problems 634(8)

Cases 642(8)

Group and Internet Exercises 650(2)

Capital Budgeting Decisions 652(64)

Capital Budgeting---Planning Investments 654(1)

Typical Capital Budgeting Decisions 654(1)

The Time Value of Money 654(1)

Discounted Cash Flows---The Net Present Value Method 655(6)

The Net Present Value Method Illustrated 655(2)

Emphasis on Cash Flows 657(1)

Typical Cash Outflows 657(1)

Typical Cash Inflows 657(1)

Recovery of the Original Investment 658(1)

Simplifying Assumptions 658(1)

Choosing a Discount Rate 659(1)

An Extended Example of the Net Present Value Method 659(2)

Discounted Cash Flows---The Internal Rate of Return Method 661(2)

The Internal Rate of Return Method Illustrated 661(1)

Salvage Value and Other Cash Flows 661(1)

Using the Internal Rate of Return 662(1)

The Cost of Capital as a Screening Tool 662(1)

Comparison of the Net Present Value and the Internal Rate of Return Methods 662(1)

Expanding the Net Present Value Method 663(4)

The Total-Cost Approach 663(2)

The Incremental-Cost Approach 665(1)

Least-Cost Decisions 666(1)

Uncertain Cash Flows 667(2)

An Example 668(1)

Real Options 668(1)

Preference Decisions---The Ranking of Investment Projects 669(1)

Internal Rate of Return Method 669(1)

Net Present Value Method 670(1)

Other Approaches to Capital Budgeting Decisions 670(6)

The Payback Method 671(1)

Evaluation of the Payback Method 671(2)

An Extended Example of Payback 673(1)

Payback and Uneven Cash Flows 674(1)

The Simple Rate of Return Method 674(2)

Criticisms of the Simple Rate of Return 676(1)

Postaudit of Investment Projects 676(40)

Summary 677(1)

Review Problem I: Basic Present Value Computations 678(1)

Review Problem 2: Comparison of Capital Budgeting Methods 679(1)

Glossary 680(1)

Appendix 14A: The Concept of Present Value 681(3)

Appendix 14B: Inflation and Capital Budgeting 684(3)

Appendix 14C: Future Value and Present Value Tables 687(4)

Appendix 14D: Income Taxes in Capital Budgeting Decisions 691(4)

Questions 695(1)

Exercises 696(6)

Problems 702(8)

Cases 710(4)

Group and Internet Exercises 714(2)

Service Department Costing: An Activity Approach 716(32)

Allocations Using the Direct and Step Methods 718(5)

Selecting Allocation Bases 718(1)

Interdepartmental Services 719(1)

Direct Method 720(1)

Step Method 721(1)

Reciprocal Method 722(1)

Revenue Producing Departments 723(1)

Allocating Costs by Behavior 723(4)

Variable Costs 723(1)

Fixed Costs 723(1)

Should Actual or Budgeted Costs Be Allocated? 724(1)

A Summary of Cost Allocation Guidelines 725(1)

Implementing the Allocation Guidelines 725(1)

Base Allocation Techniques 725(2)

Effect of Allocations on Operating Departments 727(1)

An Extended Example 728(1)

Some Cautions in Allocating Service Department Costs 729(19)

Pitfalls in Allocating Fixed Costs 729(2)

Beware of Sales Dollars as an Allocation Base 731(1)

Summary 732(1)

Review Problem: Direct and Step Methods 733(1)

Glossary 734(1)

Questions 734(1)

Exercises 734(4)

Problems 738(5)

Cases 743(3)

Group and Internet Exercises 746(2)

``How Well Am I Doing?'' Statement of Cash Flows 748(38)

The Basic Approach to a Statement of Cash Flows 750(3)

Definition of Cash 750(1)

Constructing the Statement of Cash Flows Using Changes in Noncash Balance Sheet Accounts 751(2)

An Example of a Simplified Statement of Cash Flows 753(3)

Constructing a Simplified Statement of Cash Flows 753(2)

The Need for a More Detailed Statement 755(1)

Organization of the Full-Fledged Statement of Cash Flows 756(2)

Operating Activities 756(1)

Investing Activities 757(1)

Financing Activities 757(1)

Other Issues in Preparing the Statement of Cash Flows 758(1)

Cash Flows: Gross or Net? 758(1)

Operating Activities: Direct or Indirect Method? 758(1)

Direct Exchange Transactions 759(1)

An Example of a Full-Fledged Statement of Cash Flows 759(27)

Eight Basic Steps to Preparing the Statement of Cash Flows 759(2)

Setting Up the Worksheet (Steps 1--4) 761(1)

Adjustments to Reflect Gross, Rather than Net, Amounts (Step 5) 762(2)

Classifying Entries as Operating, Investing, or Financing Activities (Step 6) 764(1)

The Completed Statement of Cash Flows (Steps 7 and 8) 765(1)

Interpretation of the Statement of Cash Flows 765(1)

Depreciation, Depletion, and Amortization 766(1)

Summary 767(1)

Review Problem 768(2)

Glossary 770(1)

Appendix 16A: The Direct Method of Determining the Net Cash Provided by Operating Activities 771(1)

Questions 772(1)

Exercises 773(3)

Problems 776(7)

Group and Internet Exercises 783(3)

``How Well Am I Doing?'' Financial Statement Analysis 786(38)

Limitations of Financial Statement Analysis 788(1)

Comparison of Financial Data 788(1)

The Need to Look beyond Ratios 788(1)

Statement in Comparative and Common-Size Form 789(5)

Dollar and Percentage Changes on Statements 789(1)

Common-Size Statements 789(5)

Ratio Analysis---The Common Stockholder 794(4)

Earnings per Share 794(1)

Price-Earnings Ratio 794(1)

Dividend Payout and Yield Ratios 795(1)

The Dividend Payout Ratio 795(1)

The Dividend Yield Ratio 795(1)

Return on Total Assets 795(1)

Return on Common Stockholders' Equity 796(1)

Financial Leverage 796(1)

Book Value per Share 797(1)

Ratio Analysis---The Short-Term Creditor 798(3)

Working Capital 798(1)

Current Ratio 798(1)

Acid-Test (Quick) Ratio 799(1)

Accounts Receivable Turnover 800(1)

Inventory Turnover 800(1)

Ratio Analysis---The Long-Term Creditor 801(1)

Times Interest Earned Ratio 801(1)

Debt-to-Equity Ratio 802(1)

Summary of Ratios and Sources of Comparative Ratio Data 802(22)

Summary 802(2)

Review Problem: Selected Ratios and Financial Leverage 804(3)

Glossary 807(1)

Questions 807(1)

Exercises 807(5)

Problems 812(12)

Appendix Pricing Products and Services 824(16)

Introduction 825(1)

The Economists' Approach to Pricing 825(5)

Elasticity of Demand 826(1)

The Profit-Maximizing Price 827(3)

The Absorption Costing Approach to Cost-Plus Pricing 830(3)

Setting a Target Selling Price Using the Absorption Costing Approach 830(1)

Determining the Markup Percentage 831(1)

Problems with the Absorption Costing Approach 832(1)

Target Costing 833(7)

Reasons for Using Target Costing 833(1)

An Example of Target Costing 834(1)

Summary 834(1)

Glossary 835(1)

Questions 835(1)

Exercises 835(1)

Problems 836(4)

Appendix Profitability Analysis 840(13)

Introduction 841(1)

Absolute Profitability 841(1)

Relative Profitability 841(3)

Volume Trade-Off Decisions 844(2)

Managerial Implications 846(7)

Summary 847(1)

Glossary 848(1)

Questions 848(1)

Exercises 848(1)

Problems 849(3)

Cases 852(1)
Photo Credits 853(1)
Index 854