Managerial Accounting: Tools for Business Decision Making, 8e
Managerial accounting provides economic and fi nancial information for managers and other internal users. The skills that you learn in this course will be vital to your future success in business. You don’t believe us? Let’s look at some examples of some of the crucial activities of employees at Current Designs and where those activities are addressed in this textbook.
In order to know whether it is making a profi t, Current Designs needs accurate information about the cost of each kayak (Chapters 2, 3, and 4). To be profi table, Current Designs adjusts the number of kayaks it produces in response to changes in economic conditions and consumer tastes. It needs to understand how changes in the number of kayaks it produces impact its production costs and profi tability (Chapters 5 and 6). Further, Current Designs’ managers often consider alternative courses of action. For example, should the company accept a special order from a customer, produce a particular kayak component internally or outsource it, or continue or discontinue a particular product line (Chapter 7)? Finally, one of the most important and most difficult decisions is what price to charge for the kayaks (Chapter 8).
In order to plan for the future, Current Designs prepares budgets (Chapter 9), and it then compares its budgeted numbers with its actual results to evaluate performance and identify areas that need to change (Chapters 10 and 11). Finally, it sometimes needs to make substantial investment decisions, such as the building of a new plant or the purchase of new equipment (Chapter 12).
Someday, you are going to face decisions just like these. You may end up in sales, marketing, management, production, or fi nance. You may work for a company that provides medical care, produces software, or serves up mouth-watering meals. No matter what your position is and no matter what your product, the skills you acquire in this class will increase your chances of business success. Put another way, in business you can either guess or you can make an informed decision. As a CEO of Microsoft once noted: “If you’re supposed to be making money in business and supposed to be satisfying customers and building market share, there are numbers that characterize those things. And if somebody can’t speak to me quantitatively about it, then I’m nervous.” This course gives you the skills you need to quantify information so you can make informed business decisions.
Comparing Managerial and Financial Accounting
There are both similarities and differences between managerial and financial accounting. First, each field of accounting deals with the economic events of a business. For example, determining the unit cost of manufacturing a product is part of managerial accounting. Reporting the total cost of goods manufactured and sold is part of financial accounting. In addition, both managerial and financial accounting require that a company’s economic events be quantifi ed and communicated to interested parties. Illustration 1.1 summarizes the principal differences between financial accounting and managerial accounting
Cost Concepts for Decision-Makers
1 Managerial Accounting 1-1
2 Job Order Costing 2-1
2A Job Order Costing (non-debit and credit approach)*
3 Process Costing 3-1
3A Process Costing (non-debit and credit approach)*
4 Activity-Based Costing 4-1
5 Cost-Volume-Profit 5-1
6 Cost-Volume-Profit Analysis: Additional Issues 6-1
7 Incremental Analysis 7-1
8 Pricing 8-1
Planning and Control Concepts
9 Budgetary Planning 9-1
10 Budgetary Control and Responsibility Accounting 10-1
11 Standard Costs and Balanced Scorecard 11-1
12 Planning for Capital Investments 12-1
Performance Evaluation Concepts
13 Statement of Cash Flows 13-1
14 Financial Analysis: The Big Picture 14-1
APPENDIX A Time Value of Money A-1
CASES FOR MANAGERIAL DECISION MAKING*
COMPANY INDEX / SUBJECT INDEX I-1
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|March 10, 2021|