Management and cost accounting

BRIEF CONTENTS"nowieaee.•nents Management and cost accounting fundamentals manage' and management accounting 2 An mttoductjon to cost terms and purposes 3 eost.ne 4 Process costing S Cos

MANAGEMENT &

COST ACCOUNTING Alnoor Bhimani • Charles T Horngren

Srikant M Datar • Madhav V Rajan

Seveth Edition

Q Pearson

MANAGEMENT ΑΝΟ

cosT ACCOlJNTlNG

ξόωη

In memory ot Charles T Horngren 1926-2011

cost and management accounting He loved Oas "'ttoduced many new concepts He had the unvque gift of

concepts •n Simple and creative ways He epitom•sed exc&nce ytd never toed of details wtwther it was finding exactly the nght

He cornb•ned tvs great intellect With genuine humility and warmth and a

human touch that •nsp•red others to do theu best He taught us many lessons

about lite through tvs amanng disopljne, his ability to make everyone feel welcome and tvs love ot family

It was a great privilege pleasure and honour to have known Chuck Horngren Few individuals Will have the enormous influence that Chuck had on the

accounting protess•on Fewer still will be able to do it with the class and style

that was tus hallmark He was unique special and amazing in many, many

ways and at once a role model, teacher mentor and friend.

He rs deeply mtssed

Alnoor Ohimani

London School of Economics and Political Soence

Srikant M, Datar

Harvard University Madhav V Rajan Unjv•eryty ot Chicago

AB: For all women who bring balance to the world

SD: Swat', Radhika Gayatri, Sidharth

MVR: Gayathri, Sanjana Anupama

BRIEF CONTENTS

"nowieaee.•nents

Management and cost accounting fundamentals

manage' and management accounting

2 An mttoductjon to cost terms and purposes

3 eost.ne

4 Process costing

S Cost allocation

6 Cost allocatvon joint-cost Situations

7 Income effects of stock-costing methods Pan I Case study problems

124 179

PART Il Accounting information for decision making

8 Cost-volume-profit analysjs 216

Determjmng how costs behave 244

10 Relevant information for dectsjon making

Actwty-based costing 316

12 Pnc.ng target costing and customer profitability analysts

13 C.apttal investment

Part n Case study problems

PART Ill Planning and budgetary control systems

14 Motivation, budgets and responsibility accounting 424

15 Flexible budgets, vanances and management control

16 Flexible budgets vanancesand management control Il

17 Measunng Yield, rmx and quantity effects Part Ill Case study problems

PART systems and Fdo•rnance

PART V Strategy quality time and emetgjng issues

at*' untaifUb&ty

•ntetest and •nterest taues

Lecturer Resources

CHAPTER 3

Job cosung

The and

CHAPTER 4

0<ΑΠΙ:• 2

Αη ΙΟ

PART i Case study problems

PART 11

Accounting informatso,n for

making

CHAPTER 8

Cost-volume-profit analysis

CHAPTER 9

Determining how costs behave

CHAPTER 10

Relevant information for decision

of relevance choosang

and dec:vsaons

• Costs outsourc.ng politics

and capacgy

276

285

286

288

291

291 294

• Ouøourc•ng wsus autom.ation

deos.ms under capacity constraints

• in aa•om Slash.ry cost at LEGO

Cun— and relevant costs

pag and

Larear

and

CHAPTER 11

Activity-based costing

Undercostif' and overcosong

Covor•g system masom Umtted

a system

based costing

costing

297 298 299 300

303

304

305

309

316

CHAPTER 12

Pricing target costing and customer profitability analysis

Major it•vnuences on WKjng

Costing and pnc.ng for the short run

Costing and pnc•ng for the run

• Concepts in action: Pnong and

Target costing for target pncing

Achieving the target cost per unit for Cost-plus pncing

• Concepts in action: Target pncjry ire

car market Life-cycle product budgeting and costing

Customer profitability anatysas

Customer revenues Customer costs

Customer profitability profiles

• Concepts in action: Anuzon

portabil.•ry

Key terns

References furthe•

Assessment matenaj

CHAPTER 13

Capital investment decisions

Star o' capo

• Concepts in action:

Pvno•••

cash anajv•es

R&vant

Ote

CHAPTER 16 flexible budgets variances and COnttd management control: Il

ami cmts vanaueowthead rates

WuNe-m«twad cost van-ances

and re.onsibdity tx•eted fixed overhead rate

cost vanances

vanance 'nt«ated analy•sjs ot overhead cost vanances Went Barposes ot manufactunng overhead cost anatv•us

entnes for overhead costs and vanances

• C.mcepts in action• Vanance amlys.•s and

costing hedpgng Sandoz manage

dtscretvonary and infrastructure cmtS and non -f•nanoal performance meas•m

ruma' and standard costing

costing and vanance su

W•ence reading

Measuring yield mix and quantity

effects

ma

sø

Manqe•nent Ctntrol systems and

PART IV Case study problems

CHAPTER

syaems md transfer pnc•ng

PART V

Strategy quality time and emerg.ng

CHAPTER 20

Strategy the balanced scorecard

and quality

CHAPTER

Control syaems and performance

CHAPTtn 21

Accountew ome and efficiency

• Kou data and

axerelated

•n muu/actunng

and

•domed cont'01 loop

•Ad readine

690

691

692 692

693

accounting xeounun,g changes highlight

context

• in action Stonytie•ki faun a

famung

Key terms

Re•tetences and further reading

Assessment matenal

PART V Case study problems

SOI High-Tech Limited

502 Tanner Pharmaceuticals and the

pnce of a new drug

503 Osram

Appendix A: Solutions to selected exercises Appendix B: Notes on compound interest

and interest tables

Names index Subject index

of

716

717 718

720

726 726

733

737

742

817 830 832

CHAPTER 22

Emerpng issues digital technologies,

governance and sustainability